**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      DC 20549**


**Form
      10-KSB**





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


For
      the
      fiscal year ended December 31, 2005





o
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934





Commission
      file number 333-45678





**SEQUIAM
      CORPORATION**


(Name
      of
      small business issuer in its charter)




California
            
            33-0875030(State
                or other jurisdiction of incorporation)
            
            (IRS
                Employer Identification No.)300
                SUNPORT LANE, ORLANDO, FLORIDA
            
            32809(Address
                of principal executive offices)
            
            (Zip
                Code)





Issuers
      telephone number  (407) 541-0773





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





Securities
      registered pursuant to Section 12(g) of the Exchange
      Act:  None





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act o





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. x Yes o No




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant's knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this form 10-KSB x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


o Yes x No





Issuer's
      revenues for its most recent fiscal year:  $625,920.





The
      aggregate market value of the Common Stock held by nonaffiliates of the
      Registrant as of March 14, 2006, was approximately $19,982,080 based upon the
      closing price of the Registrant’s Common Stock on such date.





There
      were 64,458,321 shares of Common Stock outstanding as of March 14,
      2006.





Documents
      incorporated by reference.  None.


Transitional
      Small Business Disclosure Format (Check one):  Yes o ;
      No x
















TABLE
      OF CONTENTS






PART
                IITEM
                1.
            DESCRIPTION
                OF BUSINESS
            1ITEM
                2.
            DESCRIPTION
                OF PROPERTY
            15ITEM
                3.
            LEGAL
                PROCEEDINGS
            16ITEM
                4.
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY
                HOLDERS
            16PART
                IIITEM
                5.
            MARKET
                FOR COMMON EQUITY AND RELATED STOCKHOLDER
                MATTERS
            17ITEM
                6.
            MANAGEMENT'S
                DISCUSSION AND ANALYSIS
            17ITEM
                7.
            FINANCIAL
                STATEMENTS
            35ITEM
                8.
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                AND FINANCIAL DISCLOSURE
            36ITEM
                8A
            CONTROLS
                AND PROCEDURES
            36ITEM
                8B
            OTHER
                INFORMATION
            36PART
                IIIITEM
                9
            DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
                PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
                ACT.
            36ITEM
                10.
            EXECUTIVE
                COMPENSATION
            38ITEM
                11
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                MANAGEMENT AND RELATED STOCKHOLDER MATTERS
            40ITEM
                12
            CERTAIN
                RELATIONSHIPS AND RELATED
                TRANSACTIONS
            42ITEM
                13.
            EXHIBITS
            45ITEM
                14.
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            50





i
 *Table
            of Contents*




**INTRODUCTORY
      NOTE**





This
      Report and other Company communications and statements may contain
“forward-looking” statements within the meaning of Section 27A of the Securities
      Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as well
      as
      historical information. Although we believe that the expectations reflected
      in
      these forward-looking statements are reasonable, we can give no assurance that
      the expectations reflected in these forward-looking statements will prove to
      be
      correct. Our actual results could differ materially from those anticipated
      in
      forward-looking statements as a result of certain factors. Forward-looking
      statements include those that use forward-looking terminology, such as the
      words
“anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “project,”
“plan,” “will,” “shall,” “should,” and similar expressions, including when used
      in the negative. Although we believe that the expectations reflected in these
      forward-looking statements are reasonable and achievable, these statements
      involve risks and uncertainties and no assurance can be given that actual
      results will be consistent with these forward-looking statements. For
      information concerning these factors and related matters, see Item 6,
“Management's Discussion and Analysis.”





All
      forward-looking statements attributable to us are expressly qualified in their
      entirety by these and other factors. We undertake no obligation to update or
      revise these forward-looking statements, whether to reflect events or
      circumstances after the date initially filed or published, to reflect the
      occurrence of unanticipated events or otherwise.





**PART
      I**





**ITEM
                1.**
            **DESCRIPTION
                OF BUSINESS**





**Overview**





We
      were
      incorporated in California on September 21, 1999 as Wedge Net Experts, Inc.
      On
      or about May 1, 2002, we changed our name to Sequiam Corporation and changed
      our
      stock symbol on the OTC Bulletin Board from “WNXP” to “SQUM.OB”. On May 19,
      2004, our common stock was formally listed on the Frankfurt Stock Exchange
      under
      the symbol RSQ. We believe that listing our shares of common stock on the
      Frankfurt Stock Exchange will increase our profile with investors, both
      institutional and retail, in Germany and across Europe.





Until
      the
      acquisition of Smart Biometrics, Inc. in 2003, we were primarily focused on
      developing a portfolio of Internet and print enterprise-wide software products
      and developing custom software, databases and websites for businesses. We also
      operated as an Internet Service Provider and provided Internet access and web
      site hosting for our customers who required those services. During this period,
      our business was operated under one operating segment through our subsidiaries:
      Sequiam Software, Inc. and Sequiam Communications, Inc.





In
      2003,
      we decided to expand our portfolio of product offerings to include biometric
      technology products. The expansion into the biometric technology industry was
      based on our belief that the terrorist events of September 11, 2001 and the
      increased focus on national and personal security created an increased demand
      for biometric technology solutions. Because of these national and global issues,
      and because of our existing expertise in software design and development, we
      believed that we were uniquely positioned to enter the biometric industry.
      Furthermore, our Chief Technology Officer, Alan McGinn, played an instrumental
      role in connection with the research and development of the BioVault TM while
      associated with Smart Biometrics, Inc.





Today,
      our operations are divided into two distinct operating segments: Safety and
      Security and Information Management. We formed our Safety and Security segment
      after our acquisition of Smart Biometrics, Inc. and Fingerprint Detection
      Technologies, Inc. Through these acquisitions, we acquired: (a) a fingerprint
      biometric access control system, which will be a key feature in our future
      product offerings; and (b) a fingerprint detection system which we believe
      represents a new advancement in that science. Since the implementation of our
      Safety and Security segment, our focus has been on developing a portfolio of
      biometric products. Our Information Management segment utilizes our custom
      software skills, our contacts with the world sports communities and interactive
      web-based technologies.





*Table
            of Contents*





Our
      Safety and Security segment consists of the following subsidiaries: (a) Sequiam
      Biometrics, Inc.; (b) Fingerprint Detection Technologies, Inc.; and (c)
      Constellation Biometrics Corporation. Constellation is the parent company of
      a
      wholly owned subsidiary, Biometric Security (PTY) LTD. (a/k/a Secure Biometrics
      or Biometrics.co.za), a South African company, engaged in the development,
      marketing and sale of biometric technology products. Our Information Management
      segment consists of the following subsidiaries: (a) Sequiam Software, Inc.;
      (b)
      Sequiam Sports, Inc.; and (c) Sequiam Education, Inc.





**Development
      of the Business**





**Safety
      and Security Segment**





**Acquisition
      of the Assets of Smart Biometrics, Inc.** On
      May 9,
      2003, we acquired substantially all of the assets of Smart Biometrics, Inc.
      located in Sanford, Florida. We accounted for this transaction as an acquisition
      of the business of Smart Biometrics, Inc. Smart Biometrics, Inc. is engaged
      in
      the development of biometric technologies. The BioVaultTM technology, which is a
      secure access denial device that utilizes biometric technology and protocols
      to
      recognize a person’s fingerprint to unlock, was the major asset of Smart
      Biometrics, Inc. Today, our subsidiary Sequiam Biometrics, Inc., conducts the
      business of Smart Biometrics, Inc. which is a part of our Safety and Security
      segment.





**Acquisition
      of Fingerprint Detection Technologies, Inc** ***.*** **** On
      September 11, 2003, we acquired 100% of the issued and outstanding shares of
      common stock of Fingerprint Detection Technologies, Inc., a Florida corporation.
      Fingerprint Detection Technologies, Inc. has the rights to develop and market
      a
      patented and proprietary technology for fingerprint analysis using a
      light-emitting diode, or LED, intense headband light source. Because Fingerprint
      Detection Technologies, Inc. had no operating history and had not generated
      any
      revenues, we accounted for the acquisition as a purchase of its assets. Today,
      Fingerprint Detection Technologies, Inc. is one of our subsidiaries and is
      part
      of our Safety and Security segment.





**Acquisition
      of Constellation Biometrics Corporation.** On
      June
      7, 2005, we acquired 100% of Constellation Biometrics Corporation, a Florida
      corporation, effective May 31, 2005, pursuant to a stock purchase agreement
      dated May 31, 2005 by and among us, Constellation and the shareholders of
      Constellation. We accounted for this transaction as a purchase. Constellation
      is
      the parent company of a wholly owned subsidiary Biometric Security (PTY) LTD.
      (a/k/a Secure Biometrics or Biometrics.co.za), a South African company, engaged
      in the development, marketing and sale of biometric technology
      products.





**Information
      Management Segment**





Three
      principal shareholders, Nicholas VandenBrekel, Mark Mroczkowski and James
      Rooney, formed Sequiam Software, Inc. (formerly Sequiam, Inc.) on January 23,
      2001, to research, develop, produce and market a document management software
      product. From its inception until April 1, 2002, Sequiam Software, Inc.’s sole
      business activity was the development of its software product, Sequiam Document
      Management System, also referred to as Sequiam DMS.





**Acquisition
      of Brekel Group, Inc.** In
      2002,
      we acquired 99.38% of the issued and outstanding common stock of Brekel Group,
      Inc. We acquired Brekel Group, Inc. for its expertise in digital on-demand
      publishing and printing and the innovations that it brings to our document
      management, Internet remote print and print on-demand software applications.
      We
      also acquired Brekel Group, Inc. for its contract with the World Olympians
      Association and its Internet and ExtraNet expertise and product development
      gained from that project (as more fully described below under the heading
“Sequiam Communications, Inc.”). Today, the business of Brekel Group, Inc. is
      conducted by our subsidiary Sequiam Sports, Inc., which is part of our
      Information Management segment.





**Acquisition
      of the Assets of W.M.W. Communications, Inc.** Effective
      November 1, 2002, we acquired all of the assets of W.M.W. Communication, Inc.,
      doing business as Access Orlando. We accounted for this transaction as an
      acquisition of the business of W.M.W. Communications, Inc. We acquired W.M.W.
      Communications, Inc. for its Internet Remote Print, commonly referred to as
      “IRP” and Internet Remote Print Duplicator, commonly referred to as
“IRPlicator,” software products. IRP is a software product that allows computer
      users to print remotely to any printer via the Internet. Because IRP is highly
      complementary to the Sequiam DMS product, we have integrated the two products.
      W.M.W. Communications, Inc. also acted as an Internet Service Provider, which
      we
      incorporated into our business. Through our Internet hosting and collocation
      services, we host third-party web content on either our server located at our
      remote network operations center, or on the third party’s server that is located
      at our remote network operations center. Today, our subsidiary Sequiam Software,
      Inc. conducts the business of W.M.W. Communication, Inc. which is part of our
      Information Management segment.





2
 *Table
            of Contents*





**Acquisition
      of the Assets of Telepartners, Inc.** On
      June
      1, 2003, we acquired substantially all of the assets of Telepartners, Inc.
      located in West Palm Beach, Florida. We accounted this transaction as an
      acquisition of the business of Telepartners, Inc. Telepartners, Inc. developed
      supplemental educational products for schoolchildren in grades 1 through 12.
      The
      major asset acquired from Telepartners, Inc. was the Extended ClassroomTM
software, which is a supplemental, educational program consisting of a video
      lesson library containing the same lesson concepts that are taught in our public
      school classrooms in the United States. Each lesson summary has been produced
      in
      high quality and digitally mastered, allowing for Internet and television
      broadcast distribution as well as being offered in CD and video formats. Today,
      our subsidiary Sequiam Education, Inc., conducts the business of Telepartners,
      Inc. **** which is
      part of our Information Management segment.





The
      following chart reflects an overview of our corporate organization (including
      jurisdictions of incorporation and percentages owned by the parent corporation)
      as of December 31, 2005.









**Description
      of the Biometrics Industry**





The
      use
      of unique physical traits to verify a person's identity is known as biometric
      identification. Biometric identification includes fingerprinting, hand geometry,
      iris scanning, retinal scanning, voice recognition, face recognition and
      signature analysis. Biometric technology has been used for decades in government
      and law enforcement applications. Until recently, these systems were too
      expensive to manufacture to make retail marketing realistic. However, due to
      the
      development of more advanced computers and software applications, we believe
      that biometric identification techniques can be adapted for commercial purposes
      on an economically feasible basis. In addition, we believe that, as biometric
      technology becomes more familiar, that its presence in safety and security
      applications will grow.





There
      are
      many alternatives in the biometrics industry that include, but are not limited
      to, fingerprint recognition, facial recognition, voice recognition, palm
      recognition, iris scanning and retinal scanning. Many providers have used these
      different methods in different applications. We believe that, although the
      biometric industry is in its infancy, biometric technology is a rapidly maturing
      science. Presently, although many companies have entered the biometric detection
      and application industry, many companies have failed to create a marketable
      product.





We
      believe that fingerprint identification is more effective at authenticating
      a
      person's identity than current processes. We also believe that fingerprint
      verification is less intrusive, more widely accepted and more cost effective
      than other available forms of biometric identification, and as a result, we
      believe that the use of biometrics for access control is becoming widely
      accepted in the marketplace.





3
 *Table
            of Contents*





**Products**





**Safety
      and Security Segment**





**A.**
            **Sequiam
                Biometrics, Inc.**





Sequiam
      Biometrics, Inc. focuses on the BioVault TM and the
      BioLock.





**BioVault** **TM**





We
      market
      a personal access denial device called BioVault TM that
      uses patent-pending fingerprint recognition technology as the sole means to
      control access, and requires no key, card or combination. The
      BioVault TM is
      constructed of heavy-duty 12-gauge steel. The BioVault TM can be
      plugged into a house AC current or run independently on three D-cell batteries
      for up to one year, and is the only access denial device currently on the market
      with no manual override system. The BioVault TM uses the
      same non-volatile memory as cell phones to retain fingerprint information in
      the
      absence of any power source. When power is low, the BioVault TM signals
      the user like a smoke detector.





The
      BioVault TM measures
      12.5 inches wide, by 17 inches long, by 3.5 inches deep, and provides room
      for
      two handguns plus ammunition, or valuables such as jewelry, stock certificates
      and other documents. The BioVault TM is
      easy
      to program and stores up to 15 authorized fingerprints. We believe that handgun
      owners are the largest market for this product. Through our agreement with
      T&N Enterprises, we have developed a relationship with the National Rifle
      Association for the sale of the BioVault TM through
      the National Rifle Association web site. For the fiscal year ended December
      31,
      2005, we had $19,854 in revenues from sales of the BioVault TM .





We
      have
      re-designed, re-engineered and re-tooled the BioVault and we are preparing
      to
      introduce it as the Bio Vault 2.0. The re-designed BioVault 2.0 includes
      features requested by partners who required improvements to be incorporated
      in
      order to commit to the product to a high degree. Some of these features include
      doors that open shallow enough to be in small spaces, a polished fit and finish,
      ability to wire mount in hotel rooms, ability to mount in police and other
      vehicles, an LCD screen to display helpful information for end users and most
      importantly a much lower price point. All the requested features have been
      successfully integrated into the new BioVault 2.0’s design. In addition to our
      partnership with the National Rifle Association, we are in discussions with
      several distributors, retail outlets and partners who may sell the new and
      improved version. Henyue Manufacturing of Guangzhou, China, a leading
      manufacturer of consumer products for the U.S. market will manufacture the
      Sequiam BioVault 2.0 and expects to make initial deliveries in April
      2006.





**BioLock**





On
      September 13, 2005, Sequiam entered into a five-year, Exclusive Co-Operative
      Development and Supply Agreement with Black & Decker’s subsidiary, Kwikset
      Corporation. The purpose of this agreement is to establish the business
      relationship between Kwikset and us in respect to the development, marketing
      and
      sales of biometric enabled security door hardware and systems.





We,
      together with Kwikset Corporation, have recently developed the BioLock: a
      biometrically accessible door lock system to be applied to external and internal
      doors.





The
      system uses a Kwikset deadbolt and a biometric sensor with matcher developed
      at
      our laboratories in Orlando, Florida. When a valid finger is detected on the
      biometric sensor, it activates the remote control accessory module to open
      the
      lock.





4
 *Table
            of Contents*





The
      BioLock biometric module is a completely self-encapsulated device that
      incorporates advanced AC Capacitive biometric sensing technology. The technology
      can read through dirt and oil and overcomes many of the common ‘real world’
failings of previous biometric devices. The BioLock features a simple 3-step
      enrollment of fingerprints on the sensor and no computers or servers are
      required. The BioLock can hold up to 50 fingerprints and operates using either
      battery power or house low voltage power for at least 12 months average
      operation without the need to replace batteries. The BioLock features automatic
      detection of the bolt position and avoids the common issue of the consumer
      having to worry about the position of the bolt when they leave their home.
      The
      BioLock also features a user-friendly interface via an integrated LCD screen
      that allows users to be named and features such as automatic timing out of
      fingerprint records. The BioLock also comes with 2 keys for backup in case
      of
      battery failure, a low battery warning indicator and a lifetime finish warranty.
      For the fiscal year ended December 31, 2005, we had no revenues from the
      development of the BioLock. We intend to begin marketing the BioLock in April
      2006.





**OEM
      Kits 1 and 2**





OEM
      1 is
      intended for customers who want to quickly develop products that incorporate
      biometric lock actuation for a very low cost. Products that range from opening
      safes, garage doors, cabinets—anything that would normally require a key. Even a
      television remote control could be biometrically enabled with OEM 1 technology.
      OEM1 also provides support for a variety of fingerprint sensors. Different
      environments require fingerprint sensors that are designed for effective use
      within that environment. This applies to customers who plan to create products
      that operate in hot or cold temperatures and/or moist areas.





OEM
      2 is
      a biometric board assembly that can be used in a wide variety of biometric
      devices. Unlike OEM 1, OEM 2 provides a feature set that allows OEMs to develop
      products such as time and attendance boxes, biometric medical devices, access
      control devices, governmental related access projects and biometric video
      time-stamping products. OEM 2 is designed for any product that needs memory
      and
      processing power on a biometric OEM device.





Both
      products will have full support from our easy to use suite of developers’ kits
      allowing any home computer to manage or develop new applications using these
      products. For the fiscal year ended December 31, 2005, we had no revenues from
      the development of either OEM Kits 1 or 2. Production of OEM Kits 1 and 2 are
      anticipated to begin in April 2006 and July 2006, respectively.





**B.**
            **Constellation
                Biometrics Corporation**





**High
      Speed Biometric Algorithm**





The
      Biometric Algorithm is our biometric matching intellectual property acquired
      with Biometric Security (Pty) Ltd. The matcher works in 3 phases. First the
      system extracts fingerprint minutiae from a fingerprint graphic provided by
      any
      standard 500Dpi fingerprint sensor. Each print from the same finger entered
      into
      the enroll process is then averaged in to an amalgam via our advanced
      fingerprint averaging algorithm. Once the averaging is completed the fingerprint
      is stored in the fingerprint database. This allows a highly robust matching
      process since much more data is stored per fingerprint in the
      database.





Our
      Biometric Algorithm identifies people by comparing their fingerprints to ones
      in
      the database at a high rate of speed using common computer equipment. We have
      been able to utilize the Biometric Algorithm in our own products avoiding the
      costly licensing of matching systems from our competitors.





The
      Biometric Algorithm is available for licensing to customers in embedded, Linux
      and Windows versions. For the fiscal year ended December 31, 2005, we had no
      revenues from the licensing of the High Speed Biometric Algorithm.





**BioTime**





BioTime
      is our fraud-free, easy-to-use computerized access control, attendance and
      recording tool. All staff activity is recorded automatically at the points
      of
      entry and exit. Upon arrival at work, employees login quickly and easily. Upon
      exiting the premises at the end of the working day, this process is repeated.
      Because the system accurately and instantly identifies each employee, no
      unauthorized people can enter the facility, and all staff movement is fully
      recorded. BioTime is a software program that can work with a variety of
      biometric and other devices.





5
 *Table
            of Contents*





BioTime
      automatically eradicates time disputes, or “buddy clocking” by other staff
      members. These records can then be saved or printed, and analyzed at any time.
      Also, the figures can be integrated with the most popular payroll packages,
      allowing for the complete automation of the entire payroll calculation process.





BioTime
      is a complete ready-to-use system that includes software, a clocking-in
      terminal, communications cables, a “Getting Started” guide, and a full
      installation manual. Since the software is completely menu-driven and
      exceptionally easy to use, it can be quickly installed and operated by a person
      with little computer experience. A typical installation takes less than one
      hour
      and individuals can be added to the system in a matter of minutes. For the
      fiscal year ended December 31, 2005, we had approximately $116,000 in revenues
      from sales of BioTime.





**BioTools**





BioTools
      is a biometric development kit (SDK) that consists of an ActiveX controls
      toolkit that can be used by developers, OEM's and system integrators as a
      biometric “front-end” to any commercial or custom-written software package. The
      toolkit considerably decreases (from weeks to minutes) the process of adding
      biometric security, and it comes complete with sample code to facilitate quick,
      smooth, trouble-free integration. The toolkit supports Windows 95, 98, NT,
      2000,
      XP, IIS 4 & 5 and the Microsoft Access and SQL Server databases. It is also
      ODBC-compliant, enabling it to integrate with most database
      systems.





Biometric
      devices supported include: Authentec, BioLink, Digent, Digital Persona,
      Ethentica, Kingston Technology, Lifeview, Microsoft, Nitgen, Precise Biometrics,
      Sagem, Secugen, Sony, Suprema, Tacoma, Tai-Hao and Targus.





The
      toolkit is available in two versions - Standard and Professional. The BioTools
      Professional Toolkit extends the Standard Toolkit by adding web server samples
      and support tools, web-cam support, and Smart Card (chip card) support. For
      the
      fiscal year ended December 31, 2005, we had approximately $39,000 in revenues
      from sales of the BioTools.





**BioWeb**





BioWeb
      is
      our state-of-the-art Internet Security system with no PIN's, passwords and
      limited possibility of fraud. BioWeb offers the ability to identify and
      authorize all communication over the Internet and networks, completely
      protecting your money and information from fraud or hacking.





BioWeb
      is
      an easily installed, ready-to-use software package that allows the instant
      biometric enabling of any website hosted on Windows IIS server infrastructure.
      It is ideal for secure business-to-business sites, payment authentication and
      general website access security. For the fiscal year ended December 31, 2005,
      BioWeb had no revenues from sales.





**BioAccess**





BioAccess
      is our easy-to-use computerized access control and recording tool used to track
      who went where, and when. Activity in and out of buildings, strong rooms, server
      rooms, and rooms housing sensitive documents, etc., can be 100% securely
      controlled. Printed reports can then be generated about this traffic.





BioAccess
      is a complete ready-to-use system that includes software, a clocking-in
      terminal, communications cables, a “Getting Started” guide, and a full
      installation manual. Since the software is completely menu-driven and
      exceptionally easy to use, it can be quickly installed and operated by a person
      with little computer experience. For the fiscal year ended December 31, 2005,
      BioAccess had no revenues from sales. ****





6
 *Table
            of Contents*





**BioSmartCard**





BioSmartCard
      is a totally secure, biometrically locked Smartcard that allows only the
      rightful owner to access and use the card. Smartcards are credit-card sized
      cards with processing chips embedded into them. This technology is on the verge
      of revolutionizing remote transactions. Because the use of other cards rely
      on
      people interacting based on what they have, and what they know, i.e. a card
      and
      a PIN, the technology remains almost as flawed as regular credit card
      systems.





People
      lose cards. They lose them through theft, by accident, or even by hiding them
      “too well”. Moreover, if they do manage to keep the card, they invariably forget
      the PIN. BioSmartCards allow users to rely instead on who they are, which is
      something that cannot be lost, forgotten or copied.





BioSmartCards
      rely on the unique characteristics of a person's fingerprint. To register,
      the
      owner's fingerprint is digitally embedded into the card. When the owner needs
      to
      use the card, instead of entering a PIN he/she simply presses a finger onto
      a
      scanner. The fingerprint is scanned and compared with that embedded in the
      card.
      If the scanned fingerprint does not match the embedded fingerprint in the card,
      the card remains un-usable. If they match, the bona fide ownership is
      established beyond doubt, thus eliminating fraud, rendering stolen or lost
      cards
      useless and protecting the vital information belonging to the owner.





Without
      the rightful owner's body being present, the information remains hidden and
      totally secure. Only the correct fingerprint can unlock the BioSmartCard. For
      the fiscal year ended December 31, 2005, we had not generated any revenues
      from
      sales of the BioSmartCard because the product is not sold separately, it is
      included in BioTools Professional.





**BioRegister**





The
      BioRegister system quickly, easily, and securely registers and administers
      all
      necessary group information.





The
      system has the following features: Track and store up-to-date information
      on all group members, no false identities or membership frauds, add or restrict
      members instantly from anywhere in the world, no lost or stolen Personal
      Identification Numbers, cards or ID’s, remote updating and management of entire
      database, manages groups of all sizes. For the fiscal year ended December 31,
      2005, we had no revenues from sales of the BioRegister.




**BioRollCall**





BioRollCall
      is designed for monitoring the movements of your employees. The software
      includes a built in Export module. BioRollCall is a Time & Attendance
      solution that uses fingerprint biometrics for authentication. It is very easy
      to
      use and intuitive and can be used for church, school or club attendance
      tracking. Records are stored in a standard Microsoft Access database for ease
      of
      use. BioRollCall is ideal for small to medium installations requiring a
      roll-call function only. For the fiscal year ended December 31, 2005, we had
      no
      revenues from sales of the BioRollCall.





**BioCareTrack**





BioCareTrack
      was specifically developed for the home healthcare market and allows providers
      to verify health care visits, track treatments and eliminate fraud. The system
      functions as described below, however, it can easily be modified to accommodate
      specific procedures and work flows. The system is entirely automatic and only
      requires the caregiver to enter a code and touch the sensor, once the patient
      touches the sensor confirming that care was given, the transaction is
      completed.





According
      to the National Association of Home Health Care, there were over 7.6 million
      Americans requiring home healthcare in 2005. This is a large market and growing
      larger each day as the baby boomer generation grows older. On September 13,
      2005, Sequiam Biometrics, Inc. signed an exclusive distribution agreement with
      Kelimo Incorporated for BioCareTrack. Production of the BioCareTrack is expected
      in April 2006.





7
 *Table
            of Contents*





**BioMail**





BioMail’s
      combination of fingerprint biometric security and encryption brings you secure
      email management. With BioMail, no one gets to see your private communication.
      BioMail works by sending your fingerprint template to your intended confidential
      correspondent as a standard email attachment in Outlook. This template is stored
      in his/her address book under your contact details. Whenever he/she wants to
      send you a confidential email, the contents are encrypted automatically when
      she
      adds your name to the “To” field at the top of the email and by clicking on the
      encrypt icon.





In
      transit and on arrival, the documents remain encrypted until your fingerprint
      is
      read on a biometric fingerprint scanner. This means that no one other than
      the
      intended recipient can open, view, or copy the document. For the fiscal year
      ended December 31, 2005, we had no revenues from sales of BioMail.





**USB
      Fingerprint Sensor**





The
      USB
      Fingerprint Sensor products are designed to provide security access for PC’s and
      servers with full integration into Windows, Macintosh and Linux login services.
      The system is also designed to provide logins for applications that do not
      utilize login services provided by the operating system. This will allow a
      great
      many applications to be  compatible with the security offered by the devices.





The
      devices will be offered with two fingerprint sensors, one from Tacoma and a
      version from Fujitsu Microelectronics America (FMA). These devices will be
      fully
      supported by our SDK development kits, BioTools, BioTools Pro and BioWeb,
      allowing the ability for software developers to develop robust applications
      using these fingerprint devices. For the fiscal year ended December 31, 2005,
      we
      had no revenues from the sale of the USB Fingerprint Sensor. Production on
      these
      devices is expected in April 2006.





**C.**
            **Fingerprint
                Detection Technologies,
                Inc.**





Fingerprint
      Detection Technologies, Inc. is focused on our BritePrint  technology.





**BritePrint**





The
      BritePrint technology is a light-emitting, diode-based, headband-mounted light
      source developed to enhance the detection of dusted latent fingerprints. The
      BritePrint system offers a low-cost, hands-free device to be used during the
      investigative process by law enforcement. This technology, when used in
      conjunction with traditional dust detection methods, reveals otherwise invisible
      fingerprints, footprints, and other latent markings at crime scenes and may
      save
      valuable time in the investigative process.





Using
      an
      array of light emitting diodes, or LED, the BritePrint device emits
      wavelength-specific light of sufficient intensity to cause areas brushed with
      a
      dye to visibly fluoresce. Wearing light-filtering goggles to make the markings
      easily detectable to the human eye (orange goggles in the case where rhodamine
      6G dye is used), an analyst can quickly proceed with the on-site identification
      and analysis of the markings. Video cameras can be fitted with specially colored
      lenses or other optical scanning devices to provide additional possibilities
      for
      recording critical crime scene evidence.





We
      acquired the BritePrint technology from the Westinghouse Savannah River Company
      under the terms of a license agreement. Westinghouse Savannah River Company
      is
      recognized as a world-class center of excellence for the development and
      application of unique and innovative science and technology solutions.
      Westinghouse Savannah River Company is the applied research and development
      laboratory for the U.S. Department of Energy. The inventor of the BritePrint
      technology is Eliel Villa-Aleman. For the fiscal year ended December 31, 2005,
      we had no revenues from sales of the BritePrint and are currently looking to
      license this product. On March 8, 2005 Westinghouse Savannah River Company
      was
      granted patent number 6,685,285 B1 for the BritePrint technology.





**Information
      Management Segment**





**A.**
            **Sequiam
                Software, Inc.**





Sequiam
      Software, Inc. is focused on the following products:





8
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            of Contents*





**Sequiam
      IRP**





The
      IRP
      software (sometimes marketed as Print It, 123!) enables users to print or copy
      documents from their computer or scanner to printers at remote sites using
      the
      Internet with a simple “point and click” procedure. Although the software is
      highly complex in its construction, it is very simple to use. Computer users
      are
      generally able to point and click to print a document to their desktop or
      network printer. IRP allows computer users to point and click to print a
      document to a printer at a remote location such as a corporate high-speed print
      facility, a commercial printer at another office, a hotel, a convention center,
      or to any other location that has a printer.





IRP
      allows users to manage incoming print jobs and provide for easy account
      reporting. IRP also works with any MS Office or other Windows program just
      like
      any other printer on a Windows 95/98/NT/2000/XP computer. Because IRP documents
      use standard PostScript language, documents submitted to the server may be
      sent
      to any compatible print or output device. Documents may be sorted and grouped
      by
      features in the Java based Print Manager to allow maximum efficiency when
      printing. Also, IRP can extract raw print data from a printed document for
      import into other existing applications.





**Sequiam
      IRPlicator**





IRPlicator
      (sometimes marketed as Scan It, 123!) is a software system used to scan
      documents from a variety of scanning devices and send the scanned documents
      to
      the IRP Document Manager. The IRPlicator software runs on any Windows 95, 98,
      NT, 2000 or XP based computer. The IRPlicator software interfaces to the
      scanning device through the commonly used Twain or ISIS software interface.
      The
      IRPlicator software may use the scanning device’s user interface or in most
      cases will allow operation of the scanning device without the use of the
      scanning device’s user interface. The IRPlicator’s output postscript contains no
      other formatting commands other than the data itself to allow for commands
      to be
      sent to the output device independent of, and not in conflict with, the
      postscript data.





There
      are
      currently two versions of the IRPlicator: (a) IRPlicator Print Shop; and (b)
      IRP
      Remote Copy. IRPlicator Print Shop uses a custom print spooler to send document
      data to the IRP Document Manager simultaneously while other documents are
      continuously being scanned. This high-volume approach is designed for the busy
      print shop. The IRP Remote Copy software is usually located at a remote location
      along with the remote scanning device(s). Documents scanned using this version
      of IRPlicator are sent immediately after scanning from the remote location
      to
      the IRP Document Manager.





We
      have
      focused on refining the IRP and IRPlicator software products, including the
      development of an internet-only enabled version that does not require an on-site
      server installation. We have also focused on integrating Sequiam DMS into the
      IRP products by incorporating both software programs into one product working
      together. We have done this by integrating the document management aspects
      of
      Sequiam DMS into the unique print capabilities of our IRP products.
      Additionally, we have allowed Danka Corporation to extensively test the product
      and we have expended additional effort to incorporate certain changes suggested
      by them. We are now in discussions with an independent print software marketing
      firm to license both products to them on an exclusive basis. We prefer to sell
      the sales and marketing rights to this product to a third party so that we
      may
      focus all of our resources on the development and sales of our biometric
      products.





For
      the
      fiscal year ended December 31, 2005, we had not received any revenue from the
      sale of IRP or IRPlicator as we discontinued outright sales of the product
      in
      favor of service fees earned from online delivery of the product. We did receive
      $5,200 for the continued maintenance of products sold to our existing IRP and
      IRPlicator customers in prior years. For the fiscal year ended December 31,
      2005, we had revenues from user fees of $64,200 from our web based IRP products
      delivered on line.





**Book
      It, ROVER!**





Book
      It,
      ROVER! is a web-based application service that provides destination promotion
      agencies (e.g. chambers of commerce and convention and visitor bureaus) with
      a
      tool that is capable of providing full booking service to visitors exploring
      their websites. Convention and visitor bureaus, tourist development boards
      and
      other destination promotion entities are discovering the opportunity and
      advantages of providing a booking service creating revenue from their existing
      web site.





9
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            of Contents*





Book
      It,
      ROVER! allows organizations to turn their “billboard” website into an open
      ticket window, offering a revenue source not available in the past, while
      providing members a tool to increase sales without giving up control of their
      inventory or diluting their price structure. **** Book
      it, **** ROVER!
      allows one-stop shopping and immediate buying opportunities for interested
      visitors right from the existing website. For the fiscal year ended December
      31,
      2005, we had no revenues from Book It, ROVER!.





We
      are
      expending no additional resources on this product at this time nor do we plan
      to
      in the foreseeable future as we are focusing all of our resources on the
      development and sales of our biometric products.





**Access
      Orlando**





We
      provide web-hosting services to more than 90 customers in the Central Florida
      area using the Access Orlando trade name at www.ao.net. For the fiscal year
      ended December 31, 2005, we had revenues of $34,779 from our web-hosting
      services. We continue to support this product as we require a Network Operations
      Center (“ NOC ”)
      to
      support our on-line hosted products including IRP, IRPlicator, and various
      of
      the Biometric software products.





**Sequiam
      Software**





We
      also
      provide high-end web development and custom software and database development
      to
      medium-sized businesses, local governments and non-profit organizations under
      the Sequiam Software brand name. Currently, our custom software is focused
      on
      information management. For the fiscal year ended December 31, 2005, we had
      revenues of $240,433 from our custom software and web development services.
      After September 30, 2005 we ceased offering such services so that we could
      focus
      on Biometrics.





**B.**
            **Sequiam
                Sports, Inc.**





Sequiam
      Sports, Inc. is focused on the following web development products and
      services:





**World
      Olympians Association**





We
      developed the Internet site and Extranet for the World Olympians Association
      in
      connection with a contract entered into on December 5, 2001. IOC President,
      Juan
      Antonio Samaranch, created the World Olympians Association following the
      Centennial Olympic Congress, Congress of Unity, held in Paris in 1994. It is
      a
      global organization representing Olympians. The World Olympians Association
      was
      founded to involve the nearly 100,000 Olympians around the world in the
      activities of the Olympic Movement. The World Olympians Association is the
      “Fourth Pillar” of the Olympic Community and is supported by the IOC Athletes’
Advisory Commission.





In
      connection with our contract, we implemented the worldwide database for the
      official website of the Community of Olympic Athletes. Under the terms of our
      contract with the World Olympians Association, we developed the Extranet at
      our
      own cost and expense, and will receive 35% of all sponsorship revenues in
      addition to 35% of any merchandising sales prices less fixed costs.





The
      World
      Olympians Association has not been effective at generating any revenue. As
      a
      result, we have not derived any revenue from our relationship with the World
      Olympians Association. Regardless, we continue to provide email services for
      the
      electronic newsletters, “ Olympian
      Insight ,”
a
      weekly electronic publication sent to Olympic athletes and “ Olympian
      Roundup ,”
a
      monthly electronic publication sent to Olympic athletes, because we believe
      that
      our association with the Olympics will be beneficial to future business and
      we
      believe in the Olympic ideals. In addition, we believe our relationship with
      the
      World Olympians Association will generate new business for us and the cost
      of
      our continuing support is nominal compared to the goodwill that it
      generates.





**C.**
            **Sequiam
                Education, Inc.**





**Extended
      Classroom**





10
 *Table
            of Contents*





Sequiam
      Education, Inc. is focused on the Extended Classroom educational product. The
      Extended Classroom is a series of 300 internet-based educational supplement
      videos for grades 1-12 students and their parents. Written and delivered by
      full-time teachers, these Lesson Concept Summaries cover language arts, math,
      science and social studies. Furthermore, the Extended Classroom is designed
      to
      meet curriculum standards and correspond to homework assignments. The videos
      average two minutes in length, and include test preparation tools and quizzes
      that help parents and teachers assess students’ progress and achievement levels.
      These results are accessed via a unique data retrieval system. The Lesson
      Concept Summaries are delivered via the Internet, and are available on a compact
      disc form for homes without broadband access. The videos are digitally mastered
      and also available for television broadcast. For the fiscal year ended December
      31, 2005, we had no revenues from the sale of the Extended Classroom.





We
      are
      expending no additional resources on this product at this time nor do we plan
      to
      in the foreseeable future as we are focusing all of our resources on the
      development and sales of our biometric products.





**Market
      for our Products and Services**





We
      have
      had no significant sales from our primary products during 2005 as much of the
      year was spent acquiring, redeveloping and preparing our products for sale.
      Sales and marketing efforts began in the fourth quarter of 2004. Sales for
      most
      of 2005 were derived from secondary services such as our Internet Service
      Provider, web development and custom software development. We did sell one-time
      web development and custom software development services to various customers
      during 2005, for total sales of $240,433. For the fiscal year ended December
      31,
      2005, the BioVault TM generated sales of $19,854. This is attributable to our marketing efforts with
      the National Rifle Association. These sales totals were far less than expected
      in spite of very favorable feedback from the National Rifle Association email
      campaigns conducted during 2004. We believe that the high retail price of the
      BioVault TM was an
      impediment to its sales. As a result we have changed our marketing strategy
      regarding the BioVault TM .
      We also
      redesigned and reduced the cost of the original BioVault TM and we
      have re-introduced it as the BioVault 2.0. The NRA has agreed to actively market
      the product through its firearms instruction program.




For
      the
      fiscal year ended December 31, 2005, we had sales of $68,500 from our
      redesigned IRP products available over the Internet on a transaction fee basis.
      We also entered into reseller agreements with Danka Office Imaging Company
      and
      IKON Office Products for our IRP products.





We
      have
      no historical financial or market information regarding potential sales for
      the
      assets acquired from Smart Biometrics, Inc. and Telepartners, Inc. because
      both
      companies were development stage companies and neither company had any operating
      revenue. Furthermore, we only began to receive operating revenue from our IRP
      software products in the fourth quarter of 2004. Our market estimates for our
      products and services are based primarily on our own market research, market
      estimates provided to us by Danka and IKON, and market estimates for the sale
      of
      the BioVaultTM provided to us by the National Rifle
      Association.





We
      are
      targeting our sales of Biometric products primarily to leading suppliers in
      manufacturing and distribution of safety and security products.





Our
      management believes that the market for our IRP products and services includes
      small, medium and large corporations across all industry segments and non-profit
      and governmental entities.





**Distribution
      of our Products and Services**





Our
      products and services are just now coming to market after a lengthy development
      period and, to date, have been sold directly by us and, prior to its
      acquisition, W.M.W. Communications, Inc. We intend to sell our IRP and
      IRPlicator products to an independent print software-marketing firm. We are
      making no further attempts to sell Book It Rover or Extended Classroom as we
      plan to focus all of our efforts on our Biometrics products. We intend to sell
      our biometric products through “Value Added Resellers,” distributors and
      marketing alliances and through our own direct sales efforts. We will also
      license our technology to manufacturers who wish to incorporate biometric
      technologies into the products they make as we did with Black and Decker’s
      subsidiary: Kwikset Corporation. On September 13, 2005, we entered into a
      five-year, Exclusive Co-operative Development and Supply Agreement with Kwikset
      Corporation. The purpose of this agreement is to establish the business
      relationship between Kwikset and us in respect to the development, marketing
      and
      sales of biometric enabled security door hardware and systems.





11
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            of Contents*





**Value
      Added Resellers** .
      We plan
      to form additional relationships with Value Added Resellers that are software
      companies and print equipment manufacturers and distributors. Under a typical
      agreement, the Value Added Reseller will sell our software products in
      conjunction with their own products.  In some instances, a Value Added
      Reseller might convert our products to their own private-label.  Hectrix
      Limited has private labeled our software BioTime, Biometric Time and Attendance
      software. The re-branded edition was delivered to them to their specifications
      on November 29, 2005 and sales commenced in January 2006. **** BioTime
      was redesigned to interface with the ActaTek line of wall hang biometric time
      and attendance hardware. The ActaTek device won the 2004 Biometritech product
      of
      the year in 2004. This edition of BioTime is a new product and has generated
      no
      revenue at this time. Hectrix Limited will bundle BioTime “trial editions” with
      about 80% of all their hardware sold in North America.





**Distributors** .
      We plan
      to form relationships with distributors that have experience selling technology
      products in geographic areas where we do not have a physical presence. We
      currently have one distributor, BioMet Access Company, LLC in Missouri, that
      markets and sells biometric products, including the BioVault 2TM, through a
      network of approximately 240 dealers, partners and consultants. BioMet is
      committed to selling our entire biometric product line and have included them
      in
      their 2006 product catalog. We intend to grant our distributors a non-exclusive
      license to sell certain of our software products in these geographic areas.
      We
      will also permit the distributor to grant sublicenses to use our software
      products.  The distributor will earn revenue from the sublicenses it
      grants. As of March 14, 2006, we have recognized $2,852 of revenue from BioMet
      Access Company, LLC for sales of the BioVaultTM. BioMet has provided us with a
      purchase order for 1,000 BioVault 2 units in 2006.





We
      have
      an agreement with the National Rifle Association to help distribute the
      BioVaultTM. The National Rifle Association acts only as a sales agent and will
      not purchase any of our products directly. The original BioVaultTM price points
      were too high for the National Rifle Association to commit to selling the
      BioVaultTM to the desired degree. BioVault 2TM includes a 52% reduction in the
      cost to manufacture the product. This allows us to set the MSRP of the BioVault
      2TM to the level desired by the National Rifle Association. Shipments of the
      BioVault 2TM will commence in April 2006. Currently we are selling the remaining
      inventory of original BioVaults. The National Rifle Association will offer
      our
      BioVault 2TM in its online store and catalog and maintain the estimate that via
      the new price points we will be able to sell approximately 50,000 units over
      the
      twelve months following the second quarter 2006. For the fiscal year ended
      December 31, 2005, we had little revenue from this relationship because the
      National Rifle Association had not completed or commenced its overall marketing
      plan. The National Rifle Association expects to accelerate its marketing efforts
      in 2006 when we introduce a new version of the BioVault which will be redesigned
      to their specifications.





We
      are
      currently in negotiations with five other distributors to carry our lines of
      products. We believe that these distributors should be in place via agreements
      by the end of the second quarter of 2006.





**Alliance
      Partners** .
      Our
“Alliance Partners” will be companies that partner with us on hardware and
      software. We will not maintain a formal financial relationship with our Alliance
      Partners nor will our Alliance Partners receive fees in exchange for
      recommending our products. In return for these referrals, we will, if the
      occasion arises, refer management consulting services to our Alliance Partners.
      Analog Devices, an Alliance Partner, has included us in its press and marketing
      endeavors that include articles in EE Times and other publications. Another
      alliance partner is Authentec who provided millions of fingerprint sensor
      devices in 2005. Authentec is recommending us as a premier provider of biometric
      hardware and technology to facilitate their customers needs for advanced
      biometric hardware designs that include the Authentec biometric sensor. We
      are
      actively pursuing other Fortune 500 alliance partners. For the fiscal year
      ended
      December 31, 2005, we had not received significant revenue from our Alliance
      Partners, but we have contracts and commitments from two state universities
      and
      school systems as a result of their referrals.





**Competition**





**Biometric** **Industry**





12
 *Table
            of Contents*





Each
      of
      the following biometric companies generally has a biometric product or service
      that they market into a specific field or to a specific customer. Our market
      method is to sell or license our technology to other biometric companies. We
      believe that our major competitors for our biometrics products include, but
      are
      not limited to, the following companies:





*Sagem
      Morpho* - Sagem
      Morpho is the largest competitor in the biometric field. Currently Sagem has
      over 38,000 employees and market a diverse range of biometric products directly
      to the government security market and to integrators and developers that serve
      that market. One of their primary products is called the MorphoTouch - a
      hand-held device that can read fingerprints, smart cards, bar codes and more.





Our
      hardware products are expected to have a vastly superior price/performance
      ratio
      over Sagem Morpho. The current product is called the OEM 2 that competes with
      the MorphoTouch. OEM 2 has generally all the capabilities of the MorphoTouch
      and
      unlike the MorphoTouch can be integrated in a wide variety of biometric
      products.





*Digital
      Persona, Authentec, Secugen* - These
      companies are all fingerprint sensor manufacturers who market integration of
      their biometric technologies to electronics groups. They actively foster
      development of products that contain their sensor hardware. Their competitive
      products include their software development kits and reference designs. For
      example, Authentec markets both software development kits and embedded software
      development kits.





*Neurotechnologija* - this
      company develops matching systems for numerous sensor manufacturers. Their
      products allow customers to add biometric capability to any software
      application. The application they most commonly sell is called VeriFinger.
      They
      also sell an embedded development kit called FingerCell that gives embedded
      devices fingerprint stand-alone matching capability.





Sequiam
      Biometrics development kits are very similar to VeriFinger and FingerCell but
      have a price point about 40% lower, support twice as many devices and are judged
      by many easier to use and implement. The market segment this product line is
      engaged in is large at about 5.5 million devices per year and increasing
      significantly each year.





**BioVault****TM****.**
      The single competitor for the BioVaultTM is 9g Products’ flagship product, the
      INPRINTTM.
      Using
      fingerprint technology, the INPRINTTM securely stores jewelry,
      handguns, valuables, important documents, medications, and personal information
      and is similar in purpose and operation to the BioVaultTM.
      INPRINTTM is less expensive than the BioVaultTM and, in our
      opinion is also less well constructed and a less substantial product in general.
      The INPRINTTM is constructed of aluminum, while the
      BioVaultTM uses all steel construction. 9g Products Inc. was founded
      in 2002 and its only product is the INPRINTTM.





**BritePrint** .
      SceneScope, first marketed by SPEX in 1997, has been sold to dozens of U.S.
      law
      enforcement agencies at all levels. It has been sold worldwide to most national
      police agencies. The SceneScope Imager uses intensified ultra violet reflectance
      instead of fluorescence as in Forensic Light Sources. The System can detect
      fingerprints on most non-porous surfaces prior to any treatment or after a
      cyanoacrylate (Superglue) fuming. **** Fuming
      is
      required when preliminary examination yields no results. The most direct
      competitor is Blue Lightning Head Lamp offering by Lightning Powder Company,
      Inc., a subsidiary of Armor Holdings, Inc. This blue LED head lamp provides
      hands-free lighting for crime scene processing using fluorescent powders like
      Redwop®. This head lamp has settings for white light only, blue light only, or
      full power white and blue light. The blue LED’s emit light in the 470nm
      range.





Our
      patented BritePrint technology is a light-emitting, diode-based,
      headband-mounted, light source developed to enhance the detection of dusted
      latent fingerprints. The BritePrint system offers the potential of a low-cost,
      hands-free device to be used during the investigative process. This technology,
      when used in conjunction with traditional dust detection methods, reveals
      otherwise invisible fingerprints, footprints, and other latent markings at
      crime
      scenes and may save valuable time in the investigative process and is less
      expensive than competing methods.





Advantages
      of the BritePrint technology over competing methods are as follows:





13
 *Table
            of Contents*




·
            Enables
                advanced real-time field detection and
                analysis





·
            Light-emitting
                diode technology for brighter
                illumination





·
            Cost
                effective





·
            Self-powered
                and easily portable





·
            Hands-free
                operation





**Sequiam
      IRP and IRPlicator** . **** We
      are
      unaware of competitors whose products perform all of the functions performed
      by
      our software products.  We compete in the market for integrated document
      management and Internet remote print software with numerous other software
      companies whose products are used to image, print and manage documents. Our
      management believes that our products are competitive due to features such
      as
      ease of deployment, low overhead and administration, ease of use, integrated
      application suite, and appeal to broad user requirements.





**Access
      Orlando** . **** We
      are
      not concerned with competition for our managed hosting services and Internet
      access services. Competitors in Orlando are largely small to mid-sized (6 to
      20
      staff) companies including: Sales & Marketing Technologies, Xenedev
      Development Services, Web-Solvers, Digital Planet, Bridgemore Technologies
      and
      Atlantic.net. We do not plan to grow this product offering as we do not consider
      it part of our core business. We use these revenues to offset our own web
      hosting and Internet access costs for internal use, and in support of IRP,
      IRPlicator and our biometric products that are delivered over the
      web.





**Sequiam
      Software** . **** Our
      competition with custom software development business is from a variety of
      small, medium-sized and large competitors. We do not actively compete in this
      market but rather provide custom software applications to our existing customers
      as an accommodation when it benefits our relationship with them or otherwise
      presents an opportunity to develop new applications with greater market
      potential.





**Our
      Customers**





**Safety
      and Security**





Most
      of
      the customers for our biometric products are in South Africa and are new or
      existing customers of our wholly owned subsidiary Biometric Security (PTY)
      Ltd.
      The customers in South Africa include Ford Motor Company, South Africa; Wimpy,
      South Africa; Pick 'n Pay, South Africa; Receiver of Revenue, Cape Town, South
      Africa; Provincial Administration, Western Cape, South Africa; Santam; Royal
      Dutch Shell; South African Police; Free State; South Africa Hewlett Packard
      and
      others. In the US, we are starting to market the products of our South African
      company as well as our own technology.





On
      September 13, 2005, we entered into a five-year, Exclusive Co-Operative
      Development and Supply Agreement with Kwikset Corporation. The purpose of this
      agreement is to establish the business relationship between Kwikset and us
      in
      respect to the development, marketing and sales of biometric enabled security
      door hardware and systems.





**Information
      Management**





We
      provide Internet access and web-hosting services for over 700 customers. 
In the past, several of our customers have ordered additional software and
      services, occurring within a non-predictable time frame, that is, from a few
      months of the original order up to a year or more after that order.  The
      additional orders typically have been either custom programming projects or
      the
      purchase of new products as these become available.  No single customer
      accounted for more than 10% of our revenues during 2005.





14
 *Table
            of Contents*





**Intellectual
      Property**





Our
      patent pending for “BioVault TM ”
was
      recently denied. We have resubmitted our patent application with the United
      States Patent Office. We have not sought patent protection for any of our
      software products due to the length of the patent application procedure and
      the
      necessity to continually develop and improve our software products. We feel
      the
      risk of loss due to piracy is somewhat mitigated because our software is only
      offered as an application service provider via the Internet. We plan to register
      our intellectual property whose patentability time bar has expired as prior
      art
      with the Software Patent Institute database to prevent anyone else from
      patenting such intellectual property. United States Patent No. 6,865,285 B1
      relating to “BritePrint” was issued on March 8, 2005 and expires March 8,
      2025. We do not anticipate that we will file any additional patents on our
      existing biometric products at this time. We have registered “Sequiam”, “IRP”,
“Book It, ROVER!”, “Smart Biometrics”, “BioVault” and “QuestPrint” (as
      trademarks) with the U.S. Patent and Trademark Office.





Contracts
      under which we license the use and/or sale of our products include
      confidentiality clauses to protect our products and any information in
      connection with them.





Despite
      these precautions, it may be possible for unauthorized third parties to copy
      certain portions of our products or to obtain and use information that we regard
      as proprietary. There can be no assurance that our efforts will provide
      meaningful protection for our proprietary technology against others who
      independently develop or otherwise acquire substantially equivalent techniques
      or gain access to, misappropriate, or disclose our proprietary
      technology.





**Research
      and Development Activities**





**Sequiam
      Biometrics, Inc. and Constellation Biometrics
      Corporation** *.* **** We
      acquired both the “BioVaultTM” and “BritePrint” technology. Accordingly, we had
      no significant research and development costs associated with these products
      other than normal adaptations for alternate uses of the biometrics. Research
      and
      development costs for these products were not significant during 2005 and we
      do
      not expect research and development costs for these products to be significant
      during the foreseeable future. We have discontinued the BioVaultTM in favor of
      the BioVaultTM 2.0. We are more focused on licensing BritePrint product to
      companies who manufacture and sell products that will employ our
      technologies.





As
      of
      December 31, 2005, we capitalized $174,130 in product development costs related
      to the redesign of the BioVault 2.0, development of the BioLock and OEM Kits
      1
      and 2.





**Our
      Employees**





As
      of
      December 31, 2005, we employed 13 full-time employees in the United States
      and 6
      in South Africa for a total of 19. Three of these employees worked in sales
      and
      marketing; 13 worked in product development and support; and three provided
      general administrative services. No employees are represented by a labor union,
      and we consider our relations with employees to be good.





**Dependence
      on Key Management Personnel**





We
      believe that our continued success depends to a significant extent upon the
      efforts and abilities of its senior management. In particular, the loss of
      Nicholas H. VandenBrekel, our President and Chief Executive Officer, Mark L.
      Mroczkowski, our Senior Vice President and Chief Financial Officer, Alan McGinn,
      our Chief Technology Officer, or Kevin Henderson, President of Sequiam
      Biometrics, Inc. could have a material adverse effect on our business. We have
      employment contracts with each of these officers, which are more fully described
      under the heading “Management.”





**ITEM
                2.**
            **DESCRIPTION
                OF PROPERTY**





Our
      corporate headquarters are located at 300 Sunport Lane, Orlando, Florida
      32809.  On July 1, 2001, the Brekel Group, Inc., prior to our acquisition,
      entered into a lease agreement to rent approximately 60,000 square feet of
      combined office and manufacturing space through June 30, 2011. Effective July
      1,
      2002, we entered into a lease forbearance agreement for 10,000 square feet
      of
      the same space for the remaining term of the lease.  Because we determined
      to cease Brekel’s print and publishing operations before we acquired it,
      effective July 1, 2002, Brekel entered into a lease forbearance agreement for
      10,000 square feet of the same space for the remaining term of the lease. In
      April 2004, we signed a new lease agreement and note payable with the landlord
      that supercedes and replaces the lease forbearance agreement described
      above.





15
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            of Contents*





The
      lease
      is for 24,085 square feet and is effective July 1, 2004 for a period of
      seventy-two (72) months beginning July 1, 2004 and ending on June 30, 2010.
      The
      note payable was fixed at $1,600,000 together with interest thereon at a simple
      interest rate equal to six percent (6%) per annum. Commencing on August 1,
      2004
      and continuing on the first (1st) day of each month thereafter through and
      including June 1, 2010, we are scheduled to pay to Lender payments consisting
      of
      principal and interest in the amount of $26,517 per month. Payments on the
      note
      commenced July 1, 2004 and continue through June 1, 2010.





On
      May
      17, 2005, EastGroup Properties, LP agreed to an additional six (6) month
      deferment of the Company’s Promissory Note payments until December 1, 2005,
      contingent upon the payment of April and May 2005, and that all rental payments
      between now and December 2005 are kept current. EastGroup Properties, LP also
      agreed to extend the Note by twelve (12) months to represent the twelve (12)
      total deferred payments from December 2004 to November 2005.





We
      also
      lease approximately 2,100 square feet of office space in Bellville, South
      Africa. This space is used as an office for our South African operations. Rent
      is approximately $1,100 per month and the lease expires October 31,
      2008.





**ITEM
                3.**
            **LEGA****L
                PROCEEDINGS**





Sequiam
      Sports, Inc. (formerly known as Brekel Group, Inc.) entered into a note payable
      with Xerox Corporation in November 2000 to finance equipment. Sequiam Sports,
      Inc. also entered into a Document Services Agreement with Xerox Corporation
      on
      November 1, 1999, commencing April 1, 2000. During the 63-month term of the
      Agreement ending June 30, 2005, Xerox agreed to provide equipment and services
      in accordance with specified performance standards. Those standards include,
      among other things, a performance satisfaction guaranty by Xerox. Under the
      terms of that guaranty, Sequiam Sports, Inc. may terminate the agreement without
      incurring any early termination charges. Sequiam Sports, Inc. gave proper notice
      of such termination in March 2001. On September 3, 2002, Xerox did, contrary
      to
      the contract, assert its claim for early termination charges and for monthly
      minimum service charges on billings made after the termination date. On June
      29,
      2004, Xerox Corporation filed a lawsuit in the Circuit Court in and for Pinellas
      County, State of Florida. The amount in controversy is $1,573,669. We dispute
      these claims and believe them to be without merit.





On
      December 21, 2004, we entered into a Letter Agreement with Chapman Spira &
Carson, LLC, pursuant to which Chapman agreed to provide us with various
      consulting, investment banking and business development services.  On or
      about September 28, 2005, Chapman filed a complaint in United States District
      Court for the Southern District of New York, asserting claims for breach of
      contract and unjust enrichment.  Chapman alleges that, notwithstanding its
      purported provision of services under the Letter Agreement between it and us,
      we
      failed to properly compensate Chapman for those services.   We claim
      that none of those services were actually provided by Chapman.  Chapman is
      seeking compensatory damages of $1,019,060, costs, including attorney's fees,
      500,000 shares of common stock and a warrant to purchase 6,195,000 shares
      of stock at $0.26 per share.  We believe that Chapman's claims are without
      merit and intend to vigorously defend ourselves against these
      allegations.





No
      other
      material legal proceedings are currently pending or threatened against
      us.





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





The
      annual meting of the shareholders of the Company was held in Orlando, Florida
      on
      December 16, 2005 for the purpose of electing directors of the Company. At
      the
      meeting, Nicholas H. VandenBrekel, Mark L. Mroczkowski and James C. Stanley
      were
      elected directors of the Company with 40,511,269 votes for and no votes against
      their election.


The
        Company submitted for shareholder approval an amendment to the Company's
        Articles of Incorporation to increase the authorized common stock from
        100,000,000 shares to 200,000,000 shares. On December 5, 2005, the measure
        was
        approved by the written consent of the shareholders. The shareholders that
        executed the written consent held 32,703,891 shares of the Company's common
        stock, which equaled approximately 51% of the total outstanding shares of
        the
        Company as of December 5, 2005.




16
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            of Contents*





**PART
      II**





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





As
      of
      March 14, 2006, there were approximately 1086 holders of record of our common
      stock and 64,458,321 shares outstanding. We have not previously declared or
      paid
      any dividends on our common stock and do not anticipate declaring any dividends
      on our common stock in the foreseeable future. The following table shows the
      high and low bid prices of our common stock as quoted on the OTC Bulletin Board,
      by quarter, during each of our last two fiscal years ended December 31, 2005
      and
      2004. These quotes reflect inter-dealer prices, without retail markup, markdown
      or commissions and may not represent actual transactions. The information below
      was obtained from the OTC Bulletin Board, for the respective periods.





Market
                PricesQuarter
            
            2005
            
            2004High
            
            Low
            
            High
            
            LowFirst
                quarter
            
            $
            0.30
            
            $
            0.12
            
            $
            0.85
            
            $
            0.30Second
                quarter
            
            
            0.29
            
            
            0.06
            
            
            0.74
            
            
            0.27Third
                quarter
            
            
            0.77
            
            
            0.06
            
            
            0.54
            
            
            0.22Fourth
                quarter
            
            
            0.53
            
            
            0.23
            
            
            0.44
            
            
            0.23





The
      high
      and low bid prices for shares of our common stock on March 14, 2006, were $0.32
      and
      $0.31 ,
      respectively, based upon bids that represent prices quoted by broker-dealers
      on
      the OTC Bulletin Board. These quotations reflect inter-dealer prices, without
      retail mark-up, mark-down or commissions, and may not represent actual
      transactions. For information concerning principal shareholders, see “Security
      Ownership of Certain Beneficial Owners and Management.”





On
      May
      24, 2004, we were formally listed on the Frankfurt Stock Exchange under the
      symbol RSQ. The high and low bid prices for shares of our common stock on March
      14, 2006, were €0.27 and €0.26, respectively, based upon bids that represent
      prices quoted on the Frankfurt Stock Exchange. These quotations reflect
      inter-dealer prices, without retail mark-up, mark-down or commissions, and
      may
      not represent actual transactions.





**Dividend
      Policy**





While
      there are no restrictions on the payment of dividends, we have not declared
      or
      paid any cash or other dividends on shares of our common stock in the last
      two
      years, and we presently have no intention of paying any cash dividends on shares
      of our common stock in the foreseeable future. Our
      current policy is to retain earnings, if any, to finance the expansion of our
      business. The future payment of dividends on shares of our common stock will
      depend on the results of operations, financial condition, capital expenditure
      plans and other factors that we deem relevant and will be at the sole discretion
      of our board of directors.





**Recent
      Sales of Unregistered Securities**





All
      unregistered sales of our equity securities during fiscal 2005 were previously
      reported in our prior quarterly and current reports filed with the SEC.
      Therefore, those disclosures are not duplicated in this report.





**ITEM
                6.**
            **MANAGEMENT'S
                DISCUSSION AND ANALYSIS**





Management's
      discussion and analysis provides supplemental information, which sets forth
      the
      major factors that have affected our financial condition and results of
      operations and should be read in conjunction with the Consolidated Financial
      Statements and related notes. Management's discussion and analysis is divided
      into subsections entitled “Forward Looking Statements,” “Introduction,” “Results
      of Operations,” “Liquidity and Capital Resources,” “Critical Accounting
      Policies,” “Off-Balance Sheet Arrangements” and “Risk Factors.” Information
      therein should facilitate a better understanding of the major factors and trends
      that affect our earnings performance and financial condition, and how our
      performance during 2005 **** compares
      with prior years.





17
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            of Contents*





**Forward
      Looking Statements**





Management’s
      Discussion and Analysis contains “forward-looking” statements within the meaning
      of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
      Exchange Act of 1934, as well as historical information. Although we believe
      that the expectations reflected in these forward-looking statements are
      reasonable, we can give no assurance that the expectations reflected in these
      forward-looking statements will prove to be correct. Our actual results could
      differ materially from those anticipated in forward-looking statements as a
      result of certain factors. Forward-looking statements include those that use
      forward-looking terminology, such as the words “anticipate,” “believe,”
“estimate,” “expect,” “intend,” “may,” “project,” “plan,” “will,” “shall,”
“should,” and similar expressions, including when used in the negative. Although
      we believe that the expectations reflected in these forward-looking statements
      are reasonable and achievable, these statements involve risks and uncertainties
      and no assurance can be given that actual results will be consistent with these
      forward-looking statements.





All
      forward-looking statements attributable to us are expressly qualified in their
      entirety by these and other factors. We undertake no obligation to update or
      revise these forward-looking statements, whether to reflect events or
      circumstances after the date initially filed or published, to reflect the
      occurrence of unanticipated events or otherwise.





**Introduction**





The
      following discussion and analysis summarizes the significant factors affecting:
      (i) our consolidated results of operations for Fiscal 2005 compared to Fiscal
      2004; and (ii) financial liquidity and capital resources.  This discussion
      and analysis should be read in conjunction with our consolidated financial
      statements and notes included in this 10-KSB.





We
      are a
      biometric technology company specializing in biological identification security
      systems and web-based application services. Our business is divided into two
      operating segments: (a) Safety and Security; and (b) Information
      Management.





The
      use
      of unique physical traits to verify a person's identity is known as biometric
      identification. Biometric identification includes fingerprinting, hand geometry,
      iris scanning, retinal scanning, voice recognition, face recognition and
      signature analysis. Biometric technology has been used for decades in government
      and law enforcement applications. Until recently, these systems were too
      expensive to manufacture to make retail marketing realistic. However, due to
      the
      development of more advanced computers and software applications, we believe
      that biometric identification techniques can be adapted for commercial purposes
      on an economically feasible basis. In addition, we believe that, as biometric
      technology becomes more familiar, that its use in safety and security
      applications will grow.





There
      are
      many alternatives in the biometrics industry that include, but are not limited
      to, fingerprint recognition, facial recognition, voice recognition, palm
      recognition, iris scanning and retinal scanning. Many providers have used these
      different methods in different applications. We believe that, although the
      biometric industry is in its infancy, biometric technology is a rapidly maturing
      science. Presently, although many companies have entered the biometric detection
      and application industry, many companies have failed to create a marketable
      product.





We
      believe that fingerprint identification is more effective at authenticating
      a
      person's identity than current processes. We also believe that fingerprint
      verification is less intrusive, more widely accepted and more cost effective
      than other available forms of biometric identification, and as a result, we
      believe that the use of biometrics for access control is becoming widely
      accepted in the marketplace.





We
      derive
      or plan to derive our revenues from five sources: (i) the sale and licensing
      of
      our software products; (ii) consulting, custom software services and web
      development services; (iii) maintenance agreements in connection with the sale
      and licensing of software products; (iv) Internet access and web hosting
      services; and (v) the sale and licensing of our biometric products. Software
      license revenue will be recognized when all of the following criteria have
      been
      met: (a) there is an executed license agreement and software has been delivered
      to the customer, (b) the license fee is fixed and payable within twelve months,
      (c) collection is deemed probable, and (d) product returns are deemed reasonably
      estimable. Maintenance revenues are recognized ratably over the term of the
      maintenance contract, typically 12 to 36 months. Internet access and web-hosting
      services are recognized over the period the services are provided, typically
      month-to-month. Sales of biometrics products are recognized upon delivery and
      completion of the sale.





18
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            of Contents*





The
      following table shows the proportion of total revenues by segment in each of
      the
      last two fiscal years ended December 31, 2005.





**Period**
            
            **Safety
                and Security**
            
            **Information
                Management**Fiscal
                year ended December 31, 2004
            
            $
            99,765
            
            $
            165,729Fiscal
                year ended December 31, 2005
            
            $
            239,779
            
            $
            386,141








**Results
      of Operations**





**Fiscal
      2005 compared to Fiscal 2004.** Unless
      otherwise noted, references to 2005 represent the year ended December 31,
      2005 and references to 2004 represent the year ended December 31,
      2004.





The
      following table sets forth information regarding our financial results for
      2005
      and 2004.





2005
              Amount
            
            2004
              AmountRevenue
            
            $
            625,920
            
            $
            265,494Costs
                of services and product sales
            
            $
            904,655
            
            $
            1,173,354Selling,
                general and administrative
            
            $
            3,119,022
            
            $
            3,230,937Interest
                expense
            
            $
            1,732,444
            
            $
            1,349,836Net
                loss
            
            $
            (5,430,660
            )
            $
            (5,847,017
            )





**Revenues**





Total
      revenue increased by $360,426 or 136% to $625,920 for the year ended December
      31, 2005, from $265,494 for the year ended December 31, 2004.





One
      reason for this increase was because we completed certain web development,
      custom software development and engineering services engagements during 2005.
      Software and license fee revenues were unchanged at $-0- for both 2005 and
      2004.
      Revenues from consulting, custom software services, web development services
      and
      Internet access and web-hosting services totaled $386,141 in 2005 and $129,529
      in 2004, an increase of $256,612 or 198%. Revenues from the maintenance of
      our
      existing IRP customers were $4,300 in 2005 compared to $36,200 in 2004. During
      2004 and 2003 we re-developed IRP and IRPlicator from server based products
      into
      an ASP model for use over the Internet and for marketing purposes we renamed
      the
      products PrintIt 123! And SscanIt! 123, respectively. We began generating
      revenues from the sale of our IRP suite of software products in the second
      quarter of 2004 and recorded $64,200 in ASP service fees in 2005 compared to
      none in 2004.





The
      increase in 2005 revenue was also due to an increase in sales of biometric
      security products. Included in biometric security product sales for the first
      time in 2005 are the sales from Constellation Biometrics Corporation, which
      we
      acquired during 2005. Constellation’s 2005 sales were $154,661. Sales of
      BioVault during 2005 were $19,854 compared to $62,265 during 2004.





During
      2004 and 2003, we spent most of our time acquiring and redeveloping our
      products. Sales and marketing efforts did not commence until the third quarter
      of 2004. We believe that the high cost of the BioVault TM was an
      impediment to its sales and so we discontinued that product after selling the
      last of the inventory in the second quarter 2005. As a result, we developed
      a
      less expensive version 2.0 of the BioVault. The BioVault 2.0 is out of design
      and is now in the molding and casting process. We expect to begin selling
      BioVault 2.0 in the second quarter of 2006. In addition to our own sales efforts
      we are looking for other companies in the industry to whom we can license the
      product. Additionally we are seeking to license our PrintIt123 product line
      (formerly IRP), ScanIt123 (formerly IRPlicator) and we expect to complete a
      transaction in 2006.





19
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            of Contents*





On
      September 13, 2005, Sequiam Corporation entered into a five-year, Exclusive
      Co-Operative Development and Supply Agreement (the “ Agreement ”)
      with
      Black & Decker’s subsidiary Kwikset Corporation (“ Kwikset ”).
      The
      purpose of this agreement is to establish the business relationship between
      Kwikset and Sequiam in respect to the development, marketing and sales of
      biometric enabled security door hardware and systems.





Additionally,
      we are currently in discussions with other companies for the license of our
      other biometric technology products and we are also working with other
      resellers.





As
      a
      result of these recent developments, we expect: (a) that consulting, custom
      software services, web development and web-hosting activities will make up
      a
      smaller portion of our overall revenues; and (b) that revenues from our Safety
      and Security segment will continue to increase in during 2006 as we refocus
      our
      efforts on our biometric products.





**Operating
      Expenses**





Cost
      of
      services decreased by $386,057 (40%), from $957,741 for the year ended December
      31, 2004 to $571,684 for the year ended December 31, 2005. Actual expenditures
      to deliver the cost of services decreased $196,707 (42%) from $473,753 in 2004
      to $277,046 in 2005, largely due to staff reduction and related personnel costs.
      Depreciation and amortization included in cost of services decreased $189,350
      (39%) from $483,988 in 2004 to $294,638 in 2005 due primarily to an increase
      in
      the allocation to Cost of product sales and to Corporate.





Cost
      of
      product sales increased $117,358 (54%) from $215,613 in 2004 to $332,971 in
      2005
      due to the increase sales of product as a result of the acquisition of
      Constellation Biometrics Corporation during 2005 and due to an increase in
      depreciation and amortization allocated to Cost of product sales.





Selling,
      general and administrative expenses decreased $111,915 (3%) from $3,230,937
      in
      2004 to $3,119,022 in 2005. The decrease was caused by a decrease in Corporate
      expenses and expenses incurred by our Information Management segment consisting
      of recurring selling and overhead expenses such as salaries and benefits for
      administrative and marketing personnel, professional services (such as
      accounting fees, public relations and consulting fees) and corporate travel
      expenses. This decrease was partially offset by increases in expenses in our
      Safety and Security segment resulting from an increase in focus on this segment
      and the acquisition of Constellation Biometrics Corporation during
      2005.





Our
      total
      payroll included in Selling, General and Administrative expenses increased
      $355,963 (29%) from $1,237,878 in 2004 to $1,593,841 in 2005. This increase
      was
      due to: (a) the hiring of additional employees in our Safety and Security
      segment during 2005, (b) the addition during 2005 of employees resulting from
      the acquisition of Constellation Biometrics Corporation and one time severance
      payments made to certain employees during 2005. The increase was partially
      offset by a decrease in Information Management payroll that resulted from the
      change in the Company’s focus to the Safety and Security segment and a decrease
      in overall payroll resulting from a reduction in the number of our employees.





The
      Company currently operates without directors’ and officers’ insurance and is at
      risk for those types of losses.





**Losses
      on Impairments of Equipment Held for Sale, Intangible Assets and Capitalized
      Software; Loss on Debt Settlement and Gain on Extinguishment of
      Debt**





The
      Company recognized a loss on impairment of equipment held for sale of $40,706
      during 2004. The equipment was written down to its estimated liquidation value
      based on available information.





20
 *Table
            of Contents*





The
      Company recognized a loss on impairment of intangible assets of $260,069 in
      2005
      and $206,082 in 2004. The 2005 impairment resulted from the write-off of
      $154,469 which represented the remaining net book value of the intellectual
      property recorded as a result of the 2003 acquisition of Fingerprint Detection
      Technologies, Inc. and the write-off of $105,600 which represented the remaining
      net book value of the capitalized software development costs for the Company’s
      IRP product The 2004 impairment resulted from the write-off of $81,687 which
      represented the remaining net book value of the capitalized software development
      costs for the Company’s document management software product and the write-off
      of $124,395 which represented the remaining net book value of the intellectual
      property recorded as a result of the 2003 acquisition of Telepartners,
      Inc.





The
      Company recognized a loss on impairment of goodwill of $79,188 during 2005.
      This
      loss represented the goodwill recorded as a result of the 2005 acquisition
      of
      Constellation Biometrics Corporation.





During
      2005, the Company recognized a net gain on extinguishment of debt of $38,428.
      One component of the net gain was the write-off of accounts payable of $315,428
      that consisted primarily of liabilities assumed as a result of the 2002
      acquisition of BrekelGroup, Inc. This gain was partially offset by the fair
      value of a warrant issued during 2005, in connection with the repayment of
      long-term debt, that is exercisable into 1,500,000 shares of the Company’s
      common stock. The fair value of the warrant was determined to be
      $277,000.





**Interest
      Expense**





Interest
      expense was $1,732,444 in 2005 and $1,349,836 in 2004, an increase of $382,608
      (28%). The increase in interest expense during 2005 was due to an increase
      in
      the total outstanding debt at December 31, 2005 as compared to December 31,
      2004, the write-off of $184,641 of unamortized loan costs related to a loan
      that
      was repaid in full during 2005 and an increase of $110,680 in the non-cash
      charge that resulted from the accretion of the debt discount related to the
      fair
      value of warrants for common stock issued in connection with the various loan
      agreements and the beneficial conversion feature of convertible notes and
      mandatorily redeemable preferred stock.





**Net
      Losses**





We
      incurred net losses of $5,430,660 and $5,847,017 for the years ended December
      31, 2005 and 2004, respectively, a decrease of $416,357 (7%). The decrease
      was
      due primarily to a $629,125 **** improvement
      in revenues and cost of revenues and a $111,915 decrease in selling, general
      and
      administrative expenses, partially offset by a $335,766 increase in interest
      expense. We expect to incur additional net losses through the first quarter
      of
      2006 as we continue to get our biometrics products into production. We expect
      our cash flow to improve beginning in the second quarter of 2006 using proceeds
      from the sales of our products. The Company currently estimates monthly sales
      of
      approximately $250,000 are required to provide a positive cash flow.





**Liquidity
      and Capital Resources**





**General**





Our
      principal use of cash in our operating activities is for selling, general and
      administrative expenses.  Our principal source of liquidity has
      historically been from financing activities. As of the date of this Report,
      we believe that cash provided by our operating and financing activities should
      provide adequate resources to satisfy our working capital, liquidity and
      anticipated capital expenditure requirements for approximately the next two
      to
      three months. As a result, we now need to obtain additional financing to
      continue our operations. We have engaged investment bankers to raise additional
      capital, and we expect to secure such additional capital in a timely
      manner.





**Operating
      Activities**





Net
      cash
      used for operating activities was $1,904,540 for the year ended December 31,
      2005, as a result of the: (a) net loss during the period of $5,430,660, (b)
      non-cash expenses and net gains and losses of $3,304,714, (c) increases in
      receivables of $124,913 and inventory of $78,531 and (d) a decrease in accounts
      payable of $173,196, which were partially offset by a decrease in prepaid
      expenses of $81,041 and increases in accrued expenses of $344,783 and accrued
      shareholders salaries of $190,000.





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**Investing
      and Financing Activities**





Net
      cash
      used for investing activities was $151,819 for the year ended December 31,
      2005,
      consisting primarily of purchases of equipment of $50,129 and product
      development costs of $132,127 partially offset by cash acquired through the
      acquisition of Constellation Biometrics Corporation of $29,142.





Net
      cash
      provided by financing activities was $2,822,556 for the year ended December
      31,
      2005. Proceeds from sales of common stock and exercise of warrants accounted
      for
      $466,619, proceeds from the sales of preferred stock were $1,575,000, proceeds
      from long-term debt were $2,100,000 and proceeds from shareholder loans were
      $290,800. These amounts were partially offset by the payment of loan costs
      of
      $208,625, repayment of notes payable of $265,135, repayment of long-term debt
      of
      $1,110,000 and payment of shareholder loans of $26,103.





Current
      liabilities of $3,961,227 exceed current assets of $1,022,620 by $2,938,607.
      Of
      that amount, $2,013,440 is owed to shareholders as loans and accrued but unpaid
      salaries under employment agreements. The officers of the Company are dedicated
      to its business plan and will place no undue demands on its working capital.
      They expect payment from future cash flows or equity capital
      infusions.





Prior
      to
      our acquisition of the Brekel Group, Inc., effective July 1, 2001, the Brekel
      Group, Inc. entered into an operating lease agreement to rent approximately
      60,000 square feet of combined office and manufacturing space through June
      30,
      2011.  Because we determined to cease Brekel’s print and publishing
      operations before we acquired it, effective July 1, 2002, Brekel entered into
      a
      lease forbearance agreement for 10,000 square feet of the same space for the
      remaining term of the lease. In April 2004, we entered into a new lease
      agreement and note payable with the landlord that supercedes and replaces the
      lease forbearance agreement entered into by the Brekel Group, Inc. effective
      July 1, 2002 prior to its acquisition by us. The new lease for 24,085 square
      feet is effective July 1, 2004 for a period of seventy-two months beginning
      July
      1, 2004 and ending on June 30, 2010.





In
      April
      2004, we entered into a $1.6 million not payable agreement with EastGroup
      Properties, LP (“EastGroup”). The $1.6 million represented $893,112 of deferred
      rent expense and $706,888 of tenant improvements. Beginning August 1, 2004
      and
      continuing on the first day of each month thereafter through and including
      June
      1, 2010, we were scheduled to make payments consisting of principal and interest
      of $26,517. The note payable bears interest at six percent per annum. On May
      17,
      2005, EastGroup agreed to an additional six month deferment of our payments
      until December 1, 2005, contingent upon the payment of April and May 2005 prior
      to May 31 2005, and that all rental payments through December 2005 were kept
      current. EastGroup also agreed to extend the note payable by twelve months
      to
      represent the twelve total deferred payments from December 2004 to November
      2005.





Rental
      expense for the years ended December 31, 2005 and 2004 was $210,161 and
      $137,903, respectively. At December 31, 2005, the current portion of the note
      payable balance is $233,016 and the long-term portion is $1,292,360. The new
      minimum future rentals required under the operating lease and the maturities
      of
      the long-term note payable are as follows:





Year
            
            Rentals
            
            Maturities2006
            
            $
            206,773
            
            $
            233,0162007
            
            
            210,993
            
            
            247,3872008
            
            
            215,319
            
            
            262,6462009
            
            
            219,753
            
            
            278,8452010
            
            
            110,999
            
            
            296,044Thereafter
            
            
            -
            
            
            207,438$
            963,837
            
            $
            1,525,376





During
      the year ended December 31, 2005, we incurred a net loss of $5,430,660 and
      used
      $1,904,540 of cash in operating activities. As of December 31, 2005, we had
      an
      accumulated deficit of $17,879,518, total shareholders' deficit of $4,934,497,
      and negative working capital of $2,938,607.





22
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During
      2005 we sold shares of common stock in two separate private placements and
      closed a preferred stock transaction with seven institutional investors. As
      a
      result, during 2005 we received total proceeds of $109,297 and $1,575,000,
      respectively (described below). We also received $357,322 as a result of the
      exercise of 914,444 common stock warrants. We also received approximately $1.1
      million as a result of closing a debt transaction (described below). The
      proceeds from these transactions was primarily used for selling, general and
      administrative expenses.





On
      May
      18, 2005, we closed a debt transaction with Lee Harrison Corbin,
      Attorney-in-Fact for the Trust Under the Will of John Svenningsen, now known
      as
      Stephen A. Ross, Attorney-in-Fact for the Trust Under the Will of John
      Svenningsen, pursuant to which the Trust consolidated $1.55 million in existing
      unsecured debt owed by us to the Trust and provided $2.1 million in additional
      financing for a total of $3,650,000.





The
      $3,650,000 promissory note issued to the Trust has a term of two years. Eight
      percent (8%) interest is payable monthly in arrears commencing on November
      10,
      2005, and on the first day of each consecutive calendar month thereafter.
      Monthly amortization payments commence on May 10, 2006, at the rate of $75,000.
      The Trust’s promissory note is secured by all of our assets.





In
      connection with the loan: (a) the Trust delivered $1,000,000 of the above loan
      to Laurus Master Fund, Ltd., a Cayman Islands company in full settlement of
      an
      outstanding secured convertible term note issued to Laurus on April 27, 2004;
      and (b) we issued a warrant to Laurus exercisable into 1,500,000 shares of
      our
      common stock at an exercise price of $0.23 per share. In return for receiving
      the $1,000,000 and the warrant, Laurus, the Trust and we entered into that
      certain Assignment, Assumption and Release, dated as of May 18, 2005, pursuant
      to which, Laurus assigned all of its rights, liabilities and obligations under
      our original financing arrangement with Laurus, and all documents related
      thereto, to the Trust. In addition, Laurus released us from all liability
      whatsoever under our previous financing arrangement, and all documents related
      to that transaction, except for any terms which may survive the assignment.





In
      connection with the loan, the Trust received a warrant to purchase up to
      6,000,000 shares of our common stock at prices ranging from $0.20 per share
      to
      $0.30 per share. All stock conversion prices and exercise prices are subject
      to
      adjustment for stock splits, stock dividends or similar events. We also agreed
      to file a registration statement with the U.S. Securities and Exchange
      Commission covering the shares issuable upon the exercise of each of the
      warrants issued to the Trust and Laurus.





We
      received approximately $1.1 million in cash after payment to Laurus of
      $1,000,000 (described above). The remaining principal balance under our
      financing arrangement with Laurus after such payment was $818,182, which balance
      was converted into 5,454,547 shares of our common stock by Laurus at the reduced
      conversion rate of $0.15 per share, reduced in accordance with Section 3(a)(9)
      of the Securities Act of 1933, as amended.





On
      November 30, 2005, we closed a preferred stock transaction with seven
      institutional investors, pursuant to which the Company issued 1,575 shares
      of
      its Series A preferred stock, par value $0.001 per share with a stated per
      share
      value of $1,000 for total proceeds of $1,575,000. We also issued to the Series
      A
      purchasers warrants exercisable into an aggregate of 7,500,000 shares of our
      common stock.





The
      Series A preferred stock is non-voting and entitles the Series A purchasers
      to
      receive a 9% cumulative dividend payable semiannually. The Series A preferred
      stock is convertible into 7,500,000 of our common shares at a fixed price of
      $0.21 per share. The Series A preferred stock contains anti-dilution provisions
      under which the number of shares issuable upon conversion of the Series A
      preferred stock and the conversion price will be adjusted upon the issuance
      of
      common stock or securities convertible into or exercisable for common stock
      at
      prices lower than the then effective exercise price of the Series A preferred
      stock, the occurrence of stock splits, stock distributions, and other corporate
      events.





On
      December 9, 2008, we must redeem all of the Series A preferred stock for a
      total
      amount equal to $1,575,000, accrued but unpaid dividends and all liquidated
      damages and other amounts due in respect of the Series A preferred stock.





23
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In
      connection with the Series A transaction, the Series A purchasers received
      warrants to purchase up to an aggregate of 7,500,000 shares of our common stock
      at $0.33 per share. All stock conversion prices and exercise prices are subject
      to adjustment for stock splits, stock dividends or similar events. We also
      agreed to file a registration statement with the U.S. Securities and Exchange
      Commission covering the shares issuable upon the conversion of the Series A
      preferred stock and exercise of the warrants. We paid a commission of $181,125
      to our placement agent in connection with the Series A transaction and issued
      warrants to our placement agent exercisable into an aggregate of 2,250,000
      shares.





We
      anticipate sales from our products increasing to a level during 2006 where
      they
      are sufficient enough to sustain our operations. Until that time, we need to
      secure additional financing.





**Application
      of Critical Accounting Policies**





We
      utilize certain accounting policies and procedures to manage changes that occur
      in our business environment that may affect accounting estimates made in
      preparation of our financial statements. These estimates relate primarily to
      our
      allowance for doubtful accounts receivable and the recognition and measurement
      of potential impairment on long-lived and intangible assets. Our strategy for
      managing doubtful accounts includes stringent, centralized credit policies
      and
      collection procedures for all customer accounts. We utilize a credit risk rating
      system in order to measure the quality of individual credit transactions. We
      strive to identify potential problem receivables early, take appropriate
      collection actions, and maintain adequate reserve levels. Management reviews
      its
      long-lived and intangible assets for impairment whenever changes in
      circumstances or other events indicate potential impairment. Management has
      determined that the allowance for doubtful accounts and impairment losses are
      adequate at December 31, 2005.





**Recent
      Accounting Pronouncements**





In
      December 2004, the Financial Accounting Standards Board (FASB) revised Statement
      of Financial Accounting Standard No. 123 “Share-Based Payment” (SFAS 123R). SFAS
      123R requires Companies to measure the cost of employee services received in
      exchange for an award of equity instruments based on the grant-date fair value
      of the award. The cost will be recognized over the period during which an
      employee is required to provide service in exchange for the award (usually
      the
      vesting period). Changes in fair value during the requisite service period
      will
      be recognized as compensation cost over that period. The grant date fair value
      of employee share options and similar instruments will be estimated using
      option-pricing models adjusted for the unique characteristics of those
      instruments (unless observable market prices for the same or similar instruments
      are available). If an equity award is modified after the grant date, incremental
      compensation cost will be recognized in an amount equal to the excess of the
      fair value of the modified award over the fair value of the original award
      immediately before the modification. This statement is effective for the first
      reporting period beginning after December 15, 2005. In the opinion of
      management, the adoption of this statement will not have a significant impact
      on
      our consolidated financial statements.





**Off-Balance
      Sheet Arrangements**





We
      do not
      currently have any off-balance sheet arrangements that have or are reasonably
      likely to have a current or future effect on our financial condition, changes
      in
      financial condition, revenues or expenses, results of operations, liquidity,
      capital expenditures or capital resources that are material to our
      stockholders.





**Risk
      Factors**





*You
      should consider carefully the following risk factors before deciding whether
      to
      invest in our common stock. Our business, including our operating results and
      financial condition, could be harmed by any of these risks. Additional risks
      and
      uncertainties not currently known to us or that we currently deem to be
      immaterial also may materially and adversely affect our business. The trading
      price of our common stock could decline due to any of these risks, and you
      may
      lose all or part of your investment. In assessing these risks you should also
      refer to the other information contained in our filings with the SEC, including
      our financial statements and related notes.*





24
 *Table
            of Contents*





**RISKS
      RELATED TO OUR BUSINESS AND INDUSTRY**





***WE
      HAVE LIMITED OPERATING FUNDS, AND OUR ABILITY TO CONTINUE AS A GOING CONCERN
      IS
      DEPENDENT UPON OUR ABILITY TO OBTAIN ADDITIONAL CAPITAL TO OPERATE THE
      BUSINESS.*** **





We
      have
      incurred net losses and negative cash flows from operations since our inception.
      Our lack of sufficient financing to implement our business plan, and our
      expectation of continued operating losses for the foreseeable future raises
      doubt about our ability to continue as a going concern. Our ability to continue
      as a going concern is heavily dependant upon our ability to obtain additional
      capital to sustain operations. Although we are presently attempting to secure
      additional financing to continue our operations, there is no assurance
      additional capital will be available on acceptable terms, if at
      all.





***WE
      HAVE INCURRED OPERATING LOSSES IN THE PAST AND MAY INCUR SIGNIFICANT OPERATING
      LOSSES IN THE FUTURE.***





We
      have
      incurred net losses each year since our inception. Our business has no record
      of
      profitability and it may never become profitable. As of December 31, 2005,
      we
      had an accumulated deficit of $17,879,518 and total stockholders deficit of
      $4,934,497. Our ability to obtain profitability on a quarterly or annual basis
      in the future depends in part on the rate of growth of our target markets,
      the
      acceptance of our products and services, the competitive position of our
      products and services, our ability to develop new products and our ability
      to
      manage expenses.





***WE
      NEED TO OBTAIN ADDITIONAL FINANCING BECAUSE WE MAY NOT HAVE ADEQUATE FUNDING
      TO
      CONTINUE OPERATIONS.***





Although
      we received a $3,650,000 term note from Lee Harrison Corbin, Attorney-in-Fact
      for the Trust Under the Will of John Svenningsen, now known as Stephen A. Ross,
      Attorney-in-Fact for the Trust Under the Will of John Svenningsen, and
      $1,575,000 from the sale of the Series A preferred stock, the proceeds from
      the
      Trust and Series A transactions may not be adequate to support our operations
      while we build sales revenues from our products. As of the date of this Report,
      the proceeds from the Trust transaction have been completely exhausted and
      the
      proceeds from the Series A transaction should be sufficient to sustain our
      operations for approximately the next two to three months.





If
      we are
      unable to obtain the additional financing, our business prospects, operating
      results and financial condition may be materially and adversely affected to
      such
      an extent that we are forced to restructure, sell some of our assets or curtail
      our operations, any of which would have a detrimental effect on the value of
      our
      common stock.




***SINCE
      WE HAVE A LIMITED OPERATING HISTORY, IT MAY BE DIFFICULT FOR YOU TO ASSESS
      OUR
      BUSINESS AND FUTURE PROSPECTS.***





We
      did
      not launch our Information Management segment until 2002 or our Safety and
      Security segment until 2003, and most of our operating subsidiaries were formed
      as a result of various acquisitions with development stage companies. As a
      consequence, we have a limited operating history available to evaluate our
      business and prospects. You should consider our prospects in light of the
      following risks, expenses and uncertainties, particularly those that rely,
      in
      part, on the technology market:





·
            management
                of an expanding business in a rapidly changing
                market;





·
            attracting
                new customers and maintaining customer satisfaction;





·
            introducing
                new and enhanced services, products and alliances;
                and





·
            maintaining
                profit margins, notwithstanding price competition or rising wholesale
                prices.





To
      address these risks we must successfully:





·
            develop
                and extend relationships with manufacturers, distributors, alliance
                partners and value added resellers;





·
            implement
                an evolving and unproven business model;
                and





25
 *Table
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·
            manage
                growth, if any.





We
      have
      incurred net losses and negative cash flows from operations since our inception.
      We do not have sufficient funds to follow through on these initiatives and
      may
      find that these initiatives are more expensive than anticipated. As of December
      31, 2005, we had an accumulated deficit of $17,879,518 and for the fiscal year
      ended December 31, 2005 we incurred a net loss of $5,430,660. Increases in
      expenses would further increase our operating losses. Moreover, the timing
      of
      such expenses can contribute to fluctuations in our quarterly operating results.
      If we cannot generate sufficient funds to successfully manage these risks,
      our
      business will suffer. We cannot assure you that we will successfully address
      these risks or that our business strategy will be successful.





***WE
      ARE DEPENDENT ON OUR INFORMATION MANAGEMENT SEGMENT’S PRODUCTS AND SERVICES, AND
      THE ABSENCE OF CONTINUED MARKET ACCEPTANCE OF THESE PRODUCTS OR SERVICES COULD
      HARM OUR BUSINESS.***





We
      derive
      a substantial portion of our revenue from a limited number of our Information
      Management segment’s products and services. Although in 2006 we plan to focus
      solely on our Safety and Security segment which we believe will in 2006 and
      beyond provide increased revenues, we expect to derive a substantial portion
      of
      our revenue from our Information Management segment and related products and
      services for thefirst quarter of 2006. We are particularly dependent on our
      custom software, web development, web hosting services and consulting services.
      These services constituted a substantial portion of our total revenue in 2004
      and 2005. Continued market acceptance of these products and services is critical
      to our future success. We expect that our Information Management segment will
      begin to make up less of our total revenues as we continue to market and develop
      our biometric products.





***OUR
      BRAND MAY NOT ATTAIN SUFFICIENT RECOGNITION.***





We
      believe that establishing, maintaining and enhancing our brand is a critical
      aspect of our efforts to develop and expand our operations. The number of
      Internet service providers and software developers that offer competing
      services, many of which already have well-established brands, increases the
      importance of establishing and maintaining brand name recognition. To attract
      and retain customers, and to promote and maintain our operations in response
      to
      competitive pressures, we may find it necessary to increase substantially our
      financial commitment to creating and maintaining a strong brand loyalty among
      customers. This will require significant expenditures on advertising and
      marketing. If we incur excessive expenses in an attempt to promote and maintain
      our products and services, our business prospects, operating results and
      financial condition would be materially and adversely affected to such an extent
      that we are forced to restructure, sell some of our assets or curtail our
      operations, any of which would have a detrimental effect on the value of our
      common stock. For example, although we have expended considerable time and
      energy in developing a relationship with the National Rifle Association to
      market and advertise the BioVault TM ,
      to
      date, we have not derived significant revenue from this relationship nor can
      we
      assure that we ever will.





***FLUCTUATIONS
      IN FOREIGN CURRENCY EXCHANGE RATES COULD AFFECT OUR FINANCIAL RESULTS.***





We
      earn
      revenues, pay expenses, own assets and incur liabilities in South Africa, which
      uses the South African Rand. In 2005, we derived approximately 25% of our net
      operating revenues from operations in South Africa. Because our consolidated
      financial statements are presented in U.S. dollars, we must translate revenues,
      income and expenses as well as assets and liabilities into U.S. dollars at
      exchange rates in effect during or at the end of each reporting period.
      Therefore, increases or decreases in the value of the U.S. dollar against the
      South African Rand will affect our net revenues, operating income and the value
      of balance sheet items denominated in the South African Rand. Significant
      fluctuations in exchange rates between the U.S. dollar and foreign currencies,
      especially the South African Rand, may adversely affect our future net
      revenues.





***WE
      OPERATE A GLOBAL BUSINESS THAT EXPOSES US TO ADDITIONAL
      RISKS.*** **





We
      operate in South Africa and a part of our revenue comes from international
      sales. Operations outside of the United States may be affected by changes in
      trade protection laws, policies and measures, and other regulatory requirements
      affecting trade and investment; unexpected changes in regulatory requirements
      for biometric products; social, political, labor, or economic conditions in
      a
      specific country or region; and difficulties in staffing and managing foreign
      operations.





26
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            of Contents*





***OUR
      MANAGEMENT MAY BE UNABLE TO EFFECTIVELY INTEGRATE OUR ACQUISITIONS AND TO MANAGE
      OUR GROWTH AND WE MAY BE UNABLE TO FULLY REALIZE ANY ANTICIPATED BENEFITS OF
      THESE ACQUISITIONS.***





Our
      future results will depend in part on our success in implementing our
      acquisition strategy. This strategy is limited to effecting acquisitions of
      companies with complementary technology and supplier relationships. Our ability
      to implement this strategy will be dependent on our ability to identify,
      consummate and successfully assimilate acquisitions on economically favorable
      terms. In addition, acquisitions involve a number of special risks that could
      adversely effect our operating results, including the diversion of management’s
      attention, failure to retain key acquired personnel, risks associated with
      unanticipated events or liabilities, legal, accounting and other expenses
      associated with any acquisition, some or all of which could increase our
      operating costs, reduce our revenues and cause a material adverse effect on
      our
      business, financial condition and results of operations to such an extent that
      we are forced to restructure, sell some of our assets or curtail our operations,
      any of which would have a detrimental effect on the value of our common
      stock.





***WE
      OPERATE IN A HIGHLY COMPETITIVE MARKET AND COMPETE WITH COMPANIES THAT HAVE
      SIGNIFICANTLY LARGER OPERATIONS AND GREATER FINANCIAL RESOURCES; WE MAY NOT
      BE
      ABLE TO COMPETE EFFECTIVELY AGAINST SUCH COMPANIES, WHICH COULD RESULT IN
      ADDITIONAL LOSSES.***





We
      are
      subject to extensive competition from numerous competitors. We cannot assure
      you
      that we will be able to compete successfully or that competitive pressures
      will
      not damage our business.





Our
      competition includes:





·
            internet
                service providers and developers;
                and





·
            biometric
                companies such as 9g Products.





Many
      of
      our competitors are larger and have substantially greater financial,
      distribution and marketing resources. If we cannot compete successfully against
      such competitors, it will impair our ability to maintain our market position.





For
      example, the biometric technology industry is highly competitive and rapidly
      changing. Many companies are currently exploiting the benefits of fingerprint
      recognition technologies. As a result, competing biometric technology companies
      could develop products substantially similar or superior to the
      BioVault TM ,
      BritePrint or the BioLock. In addition, our Safety and Security segment could
      be
      adversely affected if other forms of biometric identification technologies
      (such
      as retinal, iris or face recognition) are utilized to develop superior
      products.





***WE
      RELY ON THE SERVICES OF OUR KEY PERSONNEL, AND IF WE ARE UNABLE TO RETAIN OUR
      CURRENT PERSONNEL AND HIRE ADDITIONAL PERSONNEL, OUR ABILITY TO DEVELOP AND
      SUCCESSFULLY MARKET OUR PRODUCTS AND SERVICES COULD BE HARMED.***





We
      rely
      upon the continued service and performance of a relatively small number of
      key
      technical and senior management personnel. If we lose any of our key technical
      or senior management personnel, or are unable to fill key positions, our
      business could be harmed. As a result, our future success depends on our
      retention of key employees, such as Nicholas H. VandenBrekel, our Chief
      Executive Officer, Mark L. Mroczkowski, our Chief Financial Officer, and Alan
      McGinn, our Chief Technology Officer. We rely on these individuals for the
      management of our company, development of our business strategy and management
      of our strategic relationships. Any of these employees could leave our company
      with little or no prior notice. We do not have “key person” life insurance
      policies covering any of our employees. Additionally, there is a limited number
      of qualified technical personnel with significant experience in the design,
      development, manufacture, and sale of biometric devices using fingerprint
      recognition technology, and we may face challenges hiring and retaining these
      types of employees.





27
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            of Contents*





***OUR
      ABILITY TO COMPETE WILL BE HARMED IF WE ARE UNABLE TO ADEQUATELY PROTECT OUR
      INTELLECTUAL PROPERTY.***





We
      rely
      primarily on a combination of trademark, trade secret and copyright law and
      contractual restrictions to protect our intellectual property. These afford
      only
      limited protection. Despite our efforts to protect our proprietary rights,
      unauthorized parties may attempt to obtain, copy or use information that we
      regard as proprietary, such as product design and manufacturing process
      expertise. As of December 31, 2005, we had two U.S. patent applications pending.
      Our pending patent applications and any future applications may not result
      in
      issued patents or may not be sufficiently broad to protect our proprietary
      technologies. The patent pending for BritePrint was issued in 2005. Moreover,
      policing any unauthorized use of our products is difficult and costly, and
      we
      cannot be certain that the measures we have implemented will prevent
      misappropriation or unauthorized use of our technologies, particularly in
      foreign jurisdictions where the laws may not protect our proprietary rights
      as
      fully as the laws of the United States. The enforcement of patents by others
      may
      harm our ability to conduct our business. Others may independently develop
      substantially equivalent intellectual property or otherwise gain access to
      our
      trade secrets or intellectual property. Our failure to effectively protect
      our
      intellectual property could harm our business.





***ASSERTIONS
      BY THIRD PARTIES OF INFRINGEMENT BY US OF THEIR INTELLECTUAL PROPERTY RIGHTS
      COULD RESULT IN SIGNIFICANT COSTS AND CAUSE OUR OPERATING RESULTS TO SUFFER.***





The
      software and biometric technology industries are characterized by vigorous
      protection and pursuit of intellectual property rights and positions, which
      has
      resulted in protracted and expensive litigation for many companies. Although
      we
      are not currently a party to legal action alleging our infringement of
      third-party intellectual property rights, in the future we may receive letters
      from various industry participants alleging infringement of patents, trade
      secrets or other intellectual property rights. Any lawsuits resulting from
      such
      allegations could subject us to significant liability for damages and invalidate
      our proprietary rights. These lawsuits, regardless of their success, would
      likely be time-consuming and expensive to resolve and would divert management
      time and attention. Any potential intellectual property litigation also could
      force us to do one or more of the following:





·
            stop
                selling products or using technology that contain the allegedly infringing
                intellectual property;





·
            pay
                damages to the party claiming infringement;





·
            attempt
                to obtain a license to the relevant intellectual property, which
                may not
                be available on reasonable terms or at all; and





·
            attempt
                to redesign those products that contain the allegedly infringing
                intellectual property.





In
      the
      future, the outcome of a dispute may be that we would need to develop
      non-infringing technology or enter into royalty or licensing agreements. We
      may
      also initiate claims or litigation against third parties for infringement of
      our
      proprietary rights or to establish the validity of our proprietary rights.





***WE
      MAY UNDERTAKE ACQUISITIONS TO EXPAND OUR BUSINESS THAT MAY POSE RISKS TO OUR
      BUSINESS AND DILUTE THE OWNERSHIP OF OUR EXISTING STOCKHOLDERS.***





As
      part
      of our growth and product diversification strategy, we will continue to evaluate
      opportunities to acquire other businesses, intellectual property or technologies
      that would complement our current offerings, expand the breadth of markets
      we
      can address or enhance our technical capabilities. Acquisitions that we may
      potentially make in the future entail a number of risks that could materially
      and adversely affect our business, operating and financial results, including:





·
            problems
                integrating the acquired operations, technologies or products with
                our
                existing business and products;





·
            diversion
                of management’s time and attention from our core business;





·
            need
                for financial resources above our planned investment levels;





28
 *Table
            of Contents*





·
            difficulties
                in retaining business relationships with suppliers and customers
                of the
                acquired company;





·
            risks
                associated with entering markets in which we lack prior experience;





·
            potential
                loss of key employees of the acquired company; and





·
            potential
                requirement to amortize intangible assets.





Future
      acquisitions also could cause us to incur debt or contingent liabilities or
      cause us to issue equity securities that would reduce the ownership percentages
      of existing stockholders.





***WE
      RELY ON THIRD PARTIES TO MAKE OUR PRODUCTS, LEAVING US POTENTIALLY VULNERABLE
      TO
      SUBSTANTIAL COST INCREASES AND DELAYS.***





We
      do not
      manufacture or distribute the BioVault 2.0 TM or our
      BritePrint products. If one or more of our current manufacturers were no longer
      able to manufacture our products, we would be required to negotiate arrangements
      with alternate manufacturers, which would likely include some cost or delay,
      which could be substantial. In addition, no assurance can be given that any
      alternative arrangements would be on terms as favorable as our current
      arrangements.





***IF
      OUR STRATEGIC PARTNERS DO NOT EFFECTIVELY MARKET OUR PRODUCTS, WE MAY NOT
      GENERATE SIGNIFICANT SALES OR PROFITS.***





We
      utilize third parties to assist in marketing, selling and distributing our
      products. We believe that the establishment of a network of third-party
      strategic partners, particularly abroad, with extensive and specific knowledge
      of the various applications in the software and biometric industry,
      respectively, is important for us to succeed in these sectors. We cannot assure
      you that our current or future strategic partners, such as the National Rifle
      Association, will market our products and services at sufficient levels or
      provide us with adequate support. If one or more of our partners under-performs
      or if any of our strategic relationships are terminated or otherwise disrupted,
      our operating performance, results of operations and financial condition will
      be
      adversely affected to such an extent that we are forced to restructure, sell
      some of our assets or curtail our operations, any of which would have a
      detrimental effect on the value of our common stock.





***WE
      HAVE BEEN SUED BY XEROX CORPORATION; IF XEROX CORPORATION IS SUCCESSFUL IN
      ITS
      LAWSUIT, IT MAY BE AWARDED $1,573,668, WHICH WOULD NEGATIVELY AND MATERIALLY
      IMPACT OUR OPERATING RESULTS.***





Sequiam
      Sports, Inc. (formerly known as Brekel Group, Inc.) entered into a note payable
      with Xerox Corporation in November 2000 to finance equipment. Sequiam Sports,
      Inc. also entered into a Document Services Agreement with Xerox Corporation
      on
      November 1, 1999, commencing April 1, 2000. During the 63-month term of the
      Agreement ending June 30, 2005, Xerox agreed to provide equipment and services
      in accordance with specified performance standards. Those standards include,
      among other things, a performance satisfaction guaranty by Xerox. Under the
      terms of that guaranty, Sequiam Sports, Inc. may terminate the agreement without
      incurring any early termination charges. Sequiam Sports, Inc. gave proper notice
      of such termination in March 2001. On September 3, 2002, Xerox did, contrary
      to
      the contract, assert its claim for early termination charges and for monthly
      minimum service charges on billings made after the termination date. On June
      29,
      2004, Xerox Corporation filed a lawsuit in the Circuit Court in and for Pinellas
      County, State of Florida. The amount in controversy is $1,573,668. Although
      we
      dispute these claims and believe them to be without merit, if Xerox Corporation
      is successful, it may be awarded $1,573,668. If we are required to pay Xerox
      Corporation $1,573,668, we may not be able to implement our business plan and
      may be forced to cease operations.





***WE
      HAVE BEEN*** ***SUED
      BY CHAPMAN SPIRA & CARSON, LLC; IF CHAPMAN SPIRA & CARSON, LLC IS
      SUCCESSFUL IN ITS LAWSUIT, IT MAY BE AWARDED $1,019,060 AND OTHER DAMAGES,
      WHICH
      WOULD NEGATIVELY AND MATERIALLY IMPACT OUR OPERATING
      RESULTS*** ***.***





29
 *Table
            of Contents*





On
      December 21, 2004, we entered into a Letter Agreement with Chapman Spira &
Carson, LLC, pursuant to which Chapman agreed to provide us with various
      consulting, investment banking and business development services.  On or
      about September 28, 2005, Chapman filed a complaint in United States District
      Court for the Southern District of New York, asserting claims for breach of
      contract and unjust enrichment.  Chapman alleges that, notwithstanding its
      purported provision of services under the Letter Agreement between it and us,
      we
      failed to properly compensate Chapman for those services. We claim that none
      of
      those services were actually provided by Chapman.  Chapman is seeking
      compensatory damages of $1,019,060, costs,
      including attorney's fees, 500,000 shares of common stock and a
      warrant to
      purchase 6,195,000 shares of stock at $0.26 per share . 
      We believe that Chapman's claims are without merit and intend to vigorously
      defend ourselves against these allegations. If we are required to pay Chapman
      $1,019,060 and the other damages described above, we may not be able to
      implement our business plan and may be forced to cease operations.





**RISKS
      RELATED TO OUR COMMON STOCK**





***IF
      AN EVENT OF DEFAULT OCCURS UNDER THE SECURED TERM NOTE ISSUED TO THE LEE
      HARRISON CORBIN, ATTORNEY-IN-FACT FOR THE TRUST UNDER THE WILL OF JOHN
      SVENNINGSEN, NOW KNOWN AS STEPHEN A. ROSS, ATTORNEY-IN-FACT FOR THE TRUST UNDER
      THE WILL OF JOHN SVENNINGSEN, IT COULD RESULT IN A SERIOUS PROBLEM FOR US AND
      CAUSE US TO CURTAIL OUR OPERATIONS OR SELL SOME OF OUR ASSETS TO REPAY THE
      NOTE.***





On
      May
      18, 2005, we issued a $3,650,000 secured term note to the Lee Harrison Corbin,
      Attorney-in-Fact for the Trust Under the Will of John Svenningsen, now known
      as
      Stephen A. Ross, Attorney-in-Fact for the Trust Under the Will of John
      Svenningsen. That note provides for the following events of
      default.





·
            failure
                to pay interest and principal payments when due;





·
            a
                breach by us of any material covenant, term or condition of the note
                or in
                any related agreement;





·
            a
                breach by us in any material respect of material representation or
                warranty made in the note or in any related
                agreement;





·
            we
                make an assignment for the benefit of our creditors, or a receiver
                or
                trustee is appointed for us;





·
            any
                money judgment or similar final process filed against us for more
                than
                $50,000, which remains unvacated, unbonded or unstayed for a period
                of 30
                days;





·
            any
                form of bankruptcy or insolvency proceeding is instituted by or against
                us, which is not vacated within 45 days;





·
            our
                common stock is suspended for five consecutive days or five days
                during
                any ten consecutive days from our principal trading market;





·
            our
                failure to timely deliver shares of our common stock when due upon
                conversion of the note;





·
            the
                occurrence and continuance of an event of default under any related
                agreement or the default under any other agreement of indebtedness
                which
                exceeds $50,000; and





·
            any
                change in the controlling ownership of
                us.





If
      we
      default on the note and the holder demands all payments due and payable, we
      will
      be required to pay 130% of the outstanding principal amount of the note and
      any
      accrued interest. The cash required to pay those amounts will most likely come
      out of our working capital. Since we rely on our working capital for our
      day-to-day operations, a default on the note could have a serious and adverse
      effect on our business, operating results and financial condition to such an
      extent that we are forced to restructure, sell some of our assets or curtail
      our
      operations, any of which would have a detrimental effect on the value of our
      common stock.


30
 *Table
              of Contents*


***IF
      AN EVENT OF DEFAULT OCCURS UNDER THE TERMS OF THE SERIES A PREFERRED STOCK,
      IT
      COULD RESULT IN A SERIOUS PROBLEM FOR US AND CAUSE US TO CURTAIL OUR OPERATIONS
      OR SELL SOME OF OUR ASSETS TO FINANCE THE REDEMPTION OF THE SERIES A PREFERRED
      STOCK.***





On
      December 9, 2005, we issued 1,575 shares of Series A preferred stock to certain
      of the selling shareholders. The Certificate of Determination of Preferences,
      Rights and Limitations of Series A 9% Convertible Preferred Stock provides
      for
      the following events of default.





·
            Our
                registration statement on Form SB-2, originally filed with the Securities
                and Exchange Commission on December 30, 2005, is not declared effective
                by
                the Securities and Exchange Commission on or prior to May 29,
                2006;





·
            the
                effectiveness of our registration statement lapses for any reason
                or if
                the holders of the Series A preferred stock cannot use our registration
                statement for more than an aggregate of 60 calendar days (which need
                not
                be consecutive days) during any 12 month
                period;





·
            we
                provide notice of our inability to comply with a conversion
                request;





·
            failure
                to comply with certain provisions of the Registration Rights
                Agreement;





·
            we
                fail for any reason to pay in full any amounts due to the holder
                of the
                Series A preferred stock within five days of the date
                due;





·
            we
                fail to have available a sufficient number of authorized and unreserved
                shares of common stock to issue to the holders of the Series A preferred
                stock upon a conversion hereunder;





·
            we
                breach any agreement or warranty and such failure or breach shall
                not, and such breach has not been cured within 30 calendar days after
                the
                date on which written notice of such breach shall have been
                given;





·
            we
                redeem more than a de minimis number of securities junior to the
                Series A
                preferred stock;





·
            any
                change in our controlling ownership;





·
            any
                form of bankruptcy or insolvency proceeding is instituted by or against
                us, which is not vacated within 60 days;





·
            our
                common stock fails to be listed or quoted for trading on the OTCBB
                for
                more than five trading days;





·
            any
                monetary judgment, writ or similar final process shall be entered
                or filed
                against us, any of out subsidiaries or any of their respective property
                or
                other assets for more than $50,000, and shall remain unvacated, unbonded
                or unstayed for a period of 45 calendar
                days.





If
      we
      default on the Series A preferred stock, we may be required to redeem all of
      the
      Series A preferred stock for a total amount equal to the sum of (i) the greater
      of (A) $2,047,500 and (B) the product of (a) the VWAP (with “VWAP” defined as
      the price determined by the OTCBB) on the trading day immediately preceding
      the
      date of default and (b) $1,575,000 divided by the then conversion price (which
      is $0.21 per share as of the date of this Report), (ii) accrued but unpaid
      dividends and (iii) all liquidated damages and other amounts due in respect
      of
      the Series A preferred stock.





The
      cash
      required to pay those amounts will most likely come out of our working capital.
      Since we rely on our working capital for our day-to-day operations, a default
      on
      the note could have a serious and adverse effect on our business, operating
      results and financial condition to such an extent that we are forced to
      restructure, sell some of our assets or curtail our operations, any of which
      would have a detrimental effect on the value of our common stock.





31
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            of Contents*





***WE
      WILL BE REQUIRED TO REDEEM ALL OF THE OUTSTANDING SERIES A PREFERRED STOCK
      ON
      DECEMBER 9, 2008, WHICH COULD RESULT IN A SERIOUS PROBLEM FOR US AND CAUSE
      US TO
      CURTAIL OUR OPERATIONS OR SELL SOME OF OUR ASSETS TO FINANCE THE REDEMPTION
      OF
      THE SERIES A PREFERRED STOCK.***





On
      December 9, 2008, we must redeem all of the outstanding Series A preferred
      stock
      for a total amount equal to $1,575,000 plus accrued but unpaid dividends and
      all
      liquidated damages and other amounts due in respect of the Series A preferred
      stock. The cash required to pay those amounts will most likely come out of
      our
      working capital. Since we rely on our working capital for our day-to-day
      operations, a default on the note could have a serious and adverse effect on
      our
      business, operating results and financial condition to such an extent that
      we
      are forced to restructure, sell some of our assets or curtail our operations,
      any of which would have a detrimental effect on the value of our common
      stock.





***THE
      LARGE NUMBER OF SHARES ELIGIBLE FOR IMMEDIATE AND FUTURE SALES MAY DEPRESS
      THE
      PRICE OF OUR STOCK.***





Our
      Articles of Incorporation authorize the issuance of 200,000,000 shares of common
      stock, $.001 par value per share, and 50,000,000 shares of preferred stock,
      $.001 par value per share. As of March 14, 2006, we had outstanding 64,458,321
      shares of common stock. Also as of March 14, 2006, we had outstanding a total
      of
      1,575 shares of Series A preferred stock which are convertible into a total
      of
      7,500,000 shares of common stock. We have reserved 15,000,000 shares of common
      stock for issuance in respect of option grants under our stock option plan.
      From
      those available shares, options have been granted for 9,423,000 shares of common
      stock, and there remain available for options under the plan 5,577,000 shares
      of
      common stock. There are 30,151,423 shares that are issuable upon exercise of
      outstanding warrants and up to 7,132,501 shares that may be issued under the
      Series A preferred stock on account of dividends or anti-dilution
      adjustments.





Our
      board
      of directors has the authority to issue additional shares of common stock and
      preferred stock up to the authorized amount stated in our Articles of
      Incorporation. Our board of directors may choose to issue some or all of such
      shares to acquire one or more businesses or other types of property, or to
      provide additional financing in the future. The issuance of any such shares
      may
      result in a reduction of the book value or market price of the outstanding
      shares of our common stock. If we do issue any such additional shares, such
      issuance also will cause a reduction in the proportionate ownership and voting
      power of all other shareholders. Further, any such issuance may result in a
      change of control of the company.





Holders
      of our securities have registration rights for 7,500,000 shares of common stock
      issuable upon conversion of outstanding Series A preferred stock, up to
      7,132,501 shares that may be issued under the Series A preferred stock on
      account of dividends or anti-dilution adjustments, and up to 17,472,222 shares
      that may be issued upon exercise of outstanding Common Stock Purchase Warrants.
      Sales of substantial amounts of our common stock in the open market could
      adversely affect the market price of our common stock.





***ADDITIONAL
      FINANCINGS MAY DILUTE THE HOLDINGS OF CURRENT STOCKHOLDERS.***





In
      order
      to provide capital for the operation of the business, we may enter into
      additional financing arrangements. These arrangements may involve the issuance
      of new shares of common stock, preferred stock that is convertible into common
      stock, debt securities that are convertible into common stock or warrants for
      the purchase of common stock. Any of these items could result in a material
      increase in the number of shares of common stock outstanding, which would in
      turn result in a dilution of the ownership interests of existing common
      stockholders. In addition, these new securities could contain provisions, such
      as priorities on distributions and voting rights, which could affect the value
      of our existing common stock.





***THERE
      ARE CURRENTLY OPTIONS AND WARRANTS OUTSTANDING TO PURCHASE UP TO 39,574,423
      SHARES OF OUR COMMON STOCK, WHICH IF EXERCISED, WOULD CAUSE A SIGNIFICANT
      DILUTION TO EXISTING STOCKHOLDERS***





32
 *Table
            of Contents*





We
      have
      issued options, warrants or similar rights to purchase up to 39,574,423 shares
      of our common stock. Of that amount, Walter H. Sullivan, III is the beneficial
      owner of warrants to purchase up to 8,784,201 shares of our common stock. If
      all
      the foregoing warrants and options were exercised as of March 14, 2006, our
      issued and outstanding shares of common stock would have increased from
      64,458,321 to 104,032,744, an increase of approximately 61%. Such exercise
      would
      cause a stockholder holding 1,000,000 shares of our common stock prior to such
      exercise to immediately drop from holding approximately 1.55% of our common
      stock to holding approximately 0.96% of our common stock. In addition, the
      value
      of our common stock as traded on the OTC Bulletin Board may experience a
      significant drop as a result of the exercise of all or a portion of the
      outstanding options and warrants.





***OUR
      COMMON STOCK IS CONSIDERED A “PENNY STOCK” AND MAY BE DIFFICULT TO SELL WHEN
      DESIRED.***





The
      SEC
      has adopted regulations which generally define “penny stock” to be an equity
      security that has a market price of less than $5.00 per share or an exercise
      price of less than $5.00 per share, subject to specific exemptions. The market
      price of our common stock has been less than $5.00 per share. This designation
      requires any broker or dealer selling these securities to disclose specified
      information concerning the transaction, obtain a written agreement from the
      purchaser and determine that the purchaser is reasonably suitable to purchase
      the securities. These rules may restrict the ability of brokers or dealers
      to
      sell our common stock and may affect the ability of stockholders to sell their
      shares. In addition, since our common stock is currently quoted on the OTC
      Bulletin Board, stockholders may find it difficult to obtain accurate quotations
      of our common stock and may experience a lack of buyers to purchase our shares
      or a lack of market makers to support the stock price.





***OUR
      PREFERRED STOCK MAY CAUSE DILUTION.***





Our
      Articles of Incorporation authorize the issuance of up to 50,000,000 shares
      of
“blank check” preferred stock with such rights and preferences as our board of
      directors, without further shareholder approval, may determine from time to
      time. Of these preferred shares, 1,575 shares are designated as Series A
      preferred stock. On March 14, 2006, we had 1,575 shares of outstanding Series
      A
      preferred stock. All Series A preferred stock ranks senior to common stock
      as to
      payment of dividends and distribution of assets. The Series A preferred stock
      is
      non-voting and entitles the Series A purchasers to receive a 9% cumulative
      dividend payable semiannually. The Series A preferred stock is convertible
      into
      7,500,000 of our common shares at a fixed price of $0.21 per share. On the
      third
      anniversary of the issuance of the Series A preferred stock, we must redeem
      all
      of the Series A preferred stock for a total amount equal to $1,575,000, accrued
      but unpaid dividends and all liquidated damages and other amounts due in respect
      of the Series A preferred stock. As of March 14, 2006, there remained 49,998,425
      shares of authorized but undesignated and unissued shares of preferred stock
      that may be sold in the future and that can, at the discretion of our board
      of
      directors, be designated as another series of preferred stock with dividend,
      liquidation, conversion, voting or other rights and preferences that are senior,
      and not available, to the holders of our common stock. Thus, issuances of new
      series of preferred stock could adversely affect the relative voting power,
      distributions and other rights of the common stock. Holders of our common stock
      could realize less than the amount of dividends and/or distributions to which
      they would otherwise be entitled.





Further,
      preferred stock could be used as a method of discouraging, delaying, or
      preventing a take-over of our company. If we issue “blank check” preferred
      stock, it could have a dilutive effect upon our common stock. This would
      decrease the chance that our shareholders would realize a premium over market
      price for their shares of common stock as a result of a takeover
      bid.





***WE
      DO NOT ANTICIPATE PAYING DIVIDENDS ON OUR COMMON STOCK IN THE FORESEEABLE FUTURE
      AND THEREFORE YOU SHOULD NOT BUY THIS STOCK IF YOU WISH TO RECEIVE CASH
      DIVIDENDS.***





We
      currently intend to retain our future earnings, if any, to support operations
      and to finance expansion and therefore do not anticipate paying any cash
      dividends on our common stock in the foreseeable future.





***THE
      PUBLIC MARKET FOR OUR COMMON STOCK HAS BEEN CHARACTERIZED BY A LOW VOLUME OF
      TRADING AND OUR STOCKHOLDERS MAY NOT BE ABLE TO RESELL THEIR SHARES AT OR ABOVE
      THE PRICE AT WHICH THEY PURCHASED THEIR SHARES, IF AT
      ALL*** ***.***





33
 *Table
            of Contents*





Historically,
      the volume of trading in our common stock has been low. A more active public
      market for our common stock may not develop or be sustained. The market price
      of
      our common stock may fluctuate significantly in response to factors, some of
      which are beyond our control. These factors include:





·
            product
                liability claims or other
                litigation;





·
            the
                announcement of new products or product enhancements by us or our
                competitors;





·
            developments
                concerning intellectual property rights and regulatory
                approvals;





·
            quarterly
                variations in our or our competitors’ results of
                operations;





·
            developments
                in our industry; and





·
            general
                market conditions and other factors, including factors unrelated
                to our
                own operating performance.





The
      stock
      market in general has recently experienced extreme price and volume
      fluctuations. In particular, market prices of securities of technology companies
      have experienced fluctuations that often have been unrelated or disproportionate
      to the operating results of these companies. Continued market fluctuations
      could
      result in extreme volatility in the price of shares of our common stock, which
      could cause a decline in the value of our shares. Price volatility may be worse
      if the trading volume of our common stock is low.





***THE
      EMPLOYMENT AGREEMENTS OF NICHOLAS H. VANDENBREKEL AND MARK L. MROCZKOWSKI
      CONTAIN SEVERANCE AGREEMENTS PROVIDING FOR UP TO $10,000,000 IN TERMINATION
      PAYMENTS TO EACH OF THEM, AND SUCH TERMINATION PAYMENTS COULD DETER ANY
      POTENTIAL ACQUISITION OR CHANGE IN CONTROL OF OUR
      COMPANY.***





Each
      of
      our employment agreements with Nicholas H. VandenBrekel and Mark L. Mroczkowski
      contains provisions for severance payments in the event a change of control
      occurs without the prior approval of the then existing Board of Directors,
      whether by proxy contest, or as the result of a tender offer made without the
      approval of the then existing Board of Directors, or by any other means. In
      the
      event of such a change in control, each officer would receive a lump sum payment
      of $5,000,000, plus $1,000,000 each year thereafter for five years, for a total
      of $10,000,000 per person. This has the effect of deterring any potential
      acquisition or change in control of our company without the prior consent of
      our
      Board of Directors.




34
 *Table
            of Contents*





**ITEM
                7.**
            **FINANCIAL
                STATEMENTS**





Sequiam
      Corporation and subsidiaries





Consolidated
      Financial Statements





*For
      the years ended December 31, 2005 and 2004*





35
 *Table
            of Contents*





Sequiam
      Corporation and Subsidiaries





Consolidated
      Financial Statements





For
      the
      years ended December 31, 2005 and 2004











**Contents**





Report
                of Independent Registered Certified Public Accounting Firm
            F-2Consolidated
                Financial Statements:Consolidated
                Balance Sheets
            F-3Consolidated
                Statements of Operations
            F-4Consolidated
                Statements of Shareholders’ Deficit
            F-5Consolidated
                Statements of Cash Flows
            F-6Notes
                to Consolidated Financial Statements
            F-7





*Table
            of Contents*





REPORT
      OF
      INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM





The
      Board
      of Directors and Shareholders


Sequiam
      Corporation





We
      have
      audited the accompanying consolidated balance sheets of Sequiam Corporation
      and
      subsidiaries as of December 31, 2005 and 2004, and the related consolidated
      statements of operations, shareholders’ deficit, and cash flows for the years
      then ended. These financial statements are the responsibility of the Company’s
      management. Our responsibility is to express an opinion on these financial
      statements based on our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test  basis,
      evidence supporting the amounts and disclosures in the financial statements.
      An
      audit also includes assessing the accounting principles used and significant
      estimates made by management, as well as evaluating the overall financial
      statement presentation. We believe that our audits provide a reasonable basis
      for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of the Company as of December
      31, 2005 and 2004, and the results of their operations and their cash flows
      for
      the years then ended in conformity with U.S. generally accepted accounting
      principles.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 1 to the financial
      statements, the Company has suffered recurring losses from operations, has
      a
      working capital deficit and its total liabilities exceed its total assets.
      This
      raises substantial doubt about the Company's ability to continue as a going
      concern. Management's plans in regard to these matters are also described in
      Note 1. The financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.





/s/
      Tedder, James, Worden & Associates, P.A.





Orlando,
      Florida


March
      31,
      2006





F-2
 *Table
            of Contents*





Sequiam
      Corporation and Subsidiaries





Consolidated
      Balance Sheets





December
                31,2005
            
            2004Assets:Current
                assetsCash
            
            $
            763,197
            
            $
            -Receivables,
                net of allowance for bad debts of $4,687 and $3,390 in 2005 and 2004,
                respectively
            
            
            180,892
            
            
            39,111Prepaid
                expenses
            
            
            -
            
            
            97,125Inventory
            
            
            78,531
            
            
            -Total
                current assets
            
            
            1,022,620
            
            
            136,236Property
                and equipment, net
            
            
            1,108,255
            
            
            1,303,757Acquired
                software, net
            
            
            -
            
            
            163,200Intellectual
                properties, net
            
            
            809,177
            
            
            644,896Product
                development costs
            
            
            174,130
            
            
            34,509Loan
                costs, net
            
            
            253,098
            
            
            224,252Receivables
            
            
            75,000
            
            
            -Deposits
                and other assets
            
            
            51,142
            
            
            8,805Total
                assets
            
            $
            3,493,422
            
            $
            2,515,655Liabilities
                and shareholders’ deficitCurrent
                liabilities:Bank
                overdraft
            
            $
            -
            
            $
            24,165Notes
                payable
            
            
            33,055
            
            
            1,692,077Accounts
                payable
            
            
            295,989
            
            
            706,966Accrued
                expenses
            
            
            528,496
            
            
            96,299Deferred
                revenue
            
            
            -
            
            
            6,000Deferred
                rents
            
            
            37,231
            
            
            26,141Current
                portion of long-term debt
            
            
            1,053,016
            
            
            840,245Loans
                from shareholders
            
            
            473,648
            
            
            348,951Accrued
                shareholders’ salaries
            
            
            1,539,792
            
            
            1,349,792Total
                current liabilities
            
            
            3,961,227
            
            
            5,090,636Long-term
                debt
            
            
            3,868,411
            
            
            2,301,793Mandatorily
                redeemable cumulative convertible preferred stock, par value $.001;
                50,000,000 shares authorized; 1,575 issued and outstanding at December
                31,
                2005
            
            
            598,281
            
            
            -Total
                liabilities
            
            
            8,427,919
            
            
            7,392,429Commitments
                and contingenciesShareholders’
                deficit:Common
                shares, par value $.001; 200,000,000 shares authorized; 64,458,321
                and
                47,965,604 shares issued and outstanding
            
            
            64,458
            
            
            47,966Additional
                paid-in capital
            
            
            12,883,563
            
            
            7,524,118Accumulated
                deficit
            
            
            (17,879,518
            )
            
            (12,448,858
            )Accumulated
                other comprehensive loss
            
            
            (3,000
            )
            
            -Total
                shareholders’ deficit
            
            
            (4,934,497
            )
            
            (4,876,774
            )Total
                liabilities and shareholders’ deficit
            
            $
            3,493,422
            
            $
            2,515,655





*See
      accompanying notes to consolidated financial statements*





F-3
 *Table
            of Contents*





Sequiam
      Corporation and Subsidiaries


Consolidated
      Statements of Operations





Years
                ended December 31,2005
            
            2004RevenuesServices
            
            $
            443,641
            
            $
            165,729Product
                sales
            
            
            182,279
            
            
            99,765Total
                revenues
            
            
            625,920
            
            
            265,494Costs
                and expenses:Cost
                of services
            
            
            571,684
            
            
            957,741Cost
                of product sales
            
            
            332,971
            
            
            215,613Selling,
                general and administrative
            
            
            3,119,022
            
            
            3,230,937Gain
                on sale of equipment
            
            
            (370
            )
            
            (146
            )Loss
                on impairment ofequipment
                held for sale
            
            
            -
            
            
            40,706Loss
                on impairment of intangible assets
            
            
            260,069
            
            
            206,082Loss
                on impairment of goodwill
            
            
            79,188
            
            
            -Loss
                on debt settlement
            
            
            -
            
            
            111,742Gain
                on extinguishment of debt
            
            
            (38,428
            )
            
            -4,324,136
            
            
            4,762,675Loss
                from operations
            
            
            (3,698,216
            )
            
            (4,497,181
            )Interest
                expense
            
            
            (1,732,444
            )
            
            (1,349,836
            )Net
                loss
            
            $
            (5,430,660
            )
            $
            (5,847,017
            )Net
                loss per common share:Basic
                and diluted
            
            $
            (0.09
            )
            $
            (0.13
            )Shares
                used in computation of net loss per common share -Basic
                and diluted weighted average shares outstanding
            
            
            57,848,617
            
            
            46,271,637




*See
      accompanying notes to consolidated financial statements*





F-4
 *Table
            of Contents*





Sequiam
      Corporation and Subsidiaries


Consolidated
      Statements of Shareholders' Deficit


Years
      Ended December 31, 2005 and 2004





Common
                SharesShares
              Outstanding
            
            Par
              Value
            
            Additional
              Paid-in
              Capital
            
            Accumulated
              Other
              Comprehensive
              Loss
            
            Accumulated
              Deficit
            
            Total
            
            Comprehensive
              LossBalance
                at December 31, 2003
            
            
            43,863,218
            
            $
            43,863
            
            $
            4,701,695
            
            $
            -
            
            
            (6,601,841
            )
            $
            (1,856,283
            )Shares
                issued to correct error
            
            
            19,047
            
            
            19
            
            
            (19
            )
            
            -
            
            
            -
            
            
            -Sale
                of common shares
            
            
            1,993,757
            
            
            1,994
            
            
            759,098
            
            
            -
            
            
            -
            
            
            761,092Stock
                options exercised
            
            
            237,500
            
            
            238
            
            
            40,137
            
            
            -
            
            
            -
            
            
            40,375Common
                shares issued for services
            
            
            1,752,082
            
            
            1,752
            
            
            568,698
            
            
            -
            
            
            -
            
            
            570,450Debt
                settlement
            
            
            100,000
            
            
            100
            
            
            50,900
            
            
            -
            
            
            -
            
            
            51,000Warrants
                issued in connection with loan agreements
            
            
            -
            
            
            -
            
            
            1,339,208
            
            
            -
            
            
            -
            
            
            1,339,208Warrants
                issued for loan costs
            
            
            -
            
            
            -
            
            
            49,333
            
            
            -
            
            
            -
            
            
            49,333Debt
                assumed with the acquisition of Telepartners
            
            
            -
            
            
            -
            
            
            15,068
            
            
            -
            
            
            -
            
            
            15,068Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (5,847,017
            )
            
            (5,847,017
            )
            $
            (5,847,017
            )Comprehensive
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            (5,847,017
            )Balance
                at December 31, 2004
            
            
            47,965,604
            
            
            47,966
            
            
            7,524,118
            
            
            -
            
            
            (12,448,858
            )
            
            (4,876,774
            )Sale
                of common shares
            
            
            537,358
            
            
            537
            
            
            108,760
            
            
            -
            
            
            -
            
            
            109,297Common
                shares issued for services
            
            
            4,293,238
            
            
            4,293
            
            
            686,329
            
            
            -
            
            
            -
            
            
            690,622Common
                shares issued for salaries
            
            
            2,373,772
            
            
            2,374
            
            
            342,162
            
            
            -
            
            
            -
            
            
            344,536Common
                share warrants exercised
            
            
            914,444
            
            
            914
            
            
            356,408
            
            
            -
            
            
            -
            
            
            357,322Acquisition
                of Constellation Biometrics Corporation
            
            
            1,635,513
            
            
            1,636
            
            
            173,364
            
            
            -
            
            
            -
            
            
            175,000Common
                shares issued for debt conversions
            
            
            6,738,392
            
            
            6,738
            
            
            991,042
            
            
            -
            
            
            -
            
            
            997,780Warrants
                issued in connection with long-term debt
            
            
            -
            
            
            -
            
            
            1,126,380
            
            
            -
            
            
            -
            
            
            1,126,380Warrants
                issued in connection with manditorily redeemable preferred
                stock
            
            
            -
            
            
            -
            
            
            1,004,625
            
            
            -
            
            
            -
            
            
            1,004,625Mandatorily
                redeemable preferred stock conversion feature
            
            
            -
            
            
            -
            
            
            570,375
            
            
            -
            
            
            -
            
            
            570,375Foreign
                currency translation adjustment
            
            
            -
            
            
            -
            
            
            -
            
            
            (3,000
            )
            
            -
            
            
            (3,000
            )
            $
            (3,000
            )Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (5,430,660
            )
            
            (5,430,660
            )
            
            (5,430,660
            )Total
                comprehensive loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            (5,433,660
            )Balance
                at December 31, 2005
            
            
            64,458,321
            
            $
            64,458
            
            $
            12,883,563
            
            $
            (3,000
            )
            $
            (17,879,518
            )
            $
            (4,934,497
            )




*See
      accompanying notes to consolidated financial statements*





F-5
 *Table
            of Contents*





Sequiam
      Corporation and Subsidiaries


Consolidated
      Statements of Cash Flows





Years
                ended December 31,Cash
                flows from operating activities:
            
            2005
            
            2004Net
                loss
            
            $
            (5,430,660
            )
            $
            (5,847,017
            )Adjustments
                to reconcile net loss to net cash used for operating
                activities:Depreciation
                and amortization
            
            
            541,269
            
            
            560,649Accretion
                of debt discount
            
            
            625,970
            
            
            627,326Accretion
                of beneficial conversion feature
            
            
            570,375
            
            
            458,339Stock
                options granted to non-employees
            
            
            -
            
            
            122,338Amortization
                of loan costs
            
            
            231,483
            
            
            71,331(Gain)
                on sale of equipment
            
            
            (370
            )
            
            (146
            )Loss
                on impairment of equipment held for sale
            
            
            -
            
            
            40,706Loss
                on impairment of intangible assets
            
            
            260,069
            
            
            206,082Loss
                on impairment of goodwill
            
            
            79,188
            
            
            -Loss
                on debt settlement
            
            
            -
            
            
            56,250(Gain)
                on extinguishment of debt
            
            
            (38,428
            )
            
            -Issuance
                of common stock in exchange for services and salaries
            
            
            1,035,158
            
            
            570,450Stock
                issued in debt settlement
            
            
            -
            
            
            51,000Increase
                in receivables
            
            
            (124,913
            )
            
            (32,454
            )Increase
                in allowance for bad debts
            
            
            1,297
            
            
            390(Increase)
                decrease in prepaid expenses, deposits and other assets
            
            
            81,041
            
            
            (62,075
            )(Increase)
                in inventory
            
            
            (78,531
            )
            
            -(Decrease)
                increase in bank overdraft
            
            
            (24,165
            )
            
            24,165(Decrease)
                increase in accounts payable
            
            
            (173,196
            )
            
            133,106Increase
                in other accrued expenses
            
            
            344,783
            
            
            64,998(Decrease)
                increase in deferred revenue
            
            
            (6,000
            )
            
            6,000Increase
                in deferred rents
            
            
            11,090
            
            
            26,141Increase
                in accrued shareholders salaries
            
            
            190,000
            
            
            135,000Net
                cash used for operating activities
            
            
            (1,904,540
            )
            
            (2,787,421
            )Cash
                flows from investing activities:Equipment
                purchases
            
            
            (50,129
            )
            
            (25,042
            )Proceeds
                from sale of equipment
            
            
            1,295
            
            
            -Payment
                for acquisition of WMW Communications
            
            
            -
            
            
            (70,529
            )Cash
                acquired through acquisition of Constellation Biometrics
            
            
            29,142
            
            
            -Product
                development costs capitalized
            
            
            (132,127
            )
            
            (34,509
            )Net
                cash used for investing activities
            
            
            (151,819
            )
            
            (130,080
            )Cash
                flows from financing activities:Proceeds
                from sales of common stock and exercise of warrants
            
            
            466,619
            
            
            801,467Proceeds
                from sales of mandatorily redeemable preferred stock
            
            
            1,575,000
            
            
            -Proceeds
                from notes payable
            
            
            -
            
            
            1,325,000Repayment
                of notes payable
            
            
            (265,135
            )
            
            (501,810
            )Proceeds
                from long-term debt
            
            
            2,100,000
            
            
            2,000,000Repayment
                of long-term debt
            
            
            (1,110,000
            )
            
            (266,007
            )Loan
                costs paid
            
            
            (208,625
            )
            
            (246,250
            )Proceeds
                from shareholder loans
            
            
            290,800
            
            
            -Payments
                on shareholder loans
            
            
            (26,103
            )
            
            (346,349
            )Net
                cash provided by financing activities
            
            
            2,822,556
            
            
            2,766,051Effect
                of exchange rate changes on cash
            
            
            (3,000
            )
            
            -Net
                increase (decrease) in cash
            
            
            763,197
            
            
            (151,450
            )Cash,
                beginning of period
            
            
            -
            
            
            151,450Cash,
                end of period
            
            $
            763,197
            
            $
            -




*See
      accompanying notes to consolidated financial statements*





F-6
 *Table
            of Contents*





Sequiam
      Corporation and Subsidiaries


Notes
      to
      Consolidated Financial Statements





For
      the
      years ended December 31, 2005 and 2004





**1.**
            **Summary
                of Business and Significant Accounting
                Policies**





Description
      of Business and Acquisition





Sequiam
      Corporation (“Sequiam” or the “Company”) through its wholly owned subsidiaries,
      primarily develops, markets, and supports a portfolio of biometric fingerprint
      unlocking devices that enable users to gain access using their personal
      identity. The Company also develops, markets and supports Internet and print
      enterprise-wide software products that enable users to acquire, manage,
      personalize, and present information. In addition, the Company provides
      application service provider hosting of internet-enabled solutions, internet
      service provider services including internet access and hosting, consulting,
      application integration, custom web development and software development
      services.





The
      Company's operations are divided into two distinct operating segments: Safety
      and Security and Information Management. The Safety and Security segment
      includes the Company’s biometric technology products. The Information Management
      segment includes all non-biometric technology products.




On
      June
      7, 2005, Sequiam acquired 100% of Constellation Biometrics Corporation
      (“Constellation”), a Florida corporation, effective May 31, 2005, pursuant to a
      stock purchase agreement. Constellation is the parent company of a wholly owned
      subsidiary, Biometric Security (PTY) LTD (“Biometric Security”), a South African
      company, engaged in the development, marketing and sale of biometric technology
      products. The purchase method of accounting was used to account for the
      acquisition. Constellation was formed in December 2004 by certain principal
      equity holders of Sequiam for the specific purpose of acquiring, for the benefit
      of Sequiam, all of the assets of Biometric Security. Constellation acquired
      the
      assets of Biometric Security in February 2005. Sequiam acquired Constellation
      for the technology it owns and its listing of existing products. Sequiam issued
      1,635,513 shares of Sequiam common stock in exchange for all of the issued
      and
      outstanding shares of Constellation. The number of shares of Sequiam common
      stock issued was determined by dividing the purchase price of $175,000 by
      $0.107, the closing sale price of Sequiam common stock on May 31, 2005.
      Sequiam’s results of operations for the year ended December 31, 2005 include
      seven months of operations for Constellation.





The
      following table summarizes the estimated carrying values of the assets acquired
      and liabilities assumed at the date of acquisition.





Current
                assets
            
            $
            338,560Property
                and equipment
            
            
            11,463Goodwill
            
            
            79,188Intellectual
                property
            
            
            546,250Total
                assets acquired
            
            
            975,461Current
                liabilities
            
            
            160,461Long-term
                debt
            
            
            640,000Total
                liabilities assumed
            
            
            800,461Net
                assets acquired
            
            $
            175,000





During
      the year ended December 31, 2005, Sequiam wrote-off $79,188 of goodwill related
      to the acquisition of Constellation. This amount is included as Loss on
      impairment of goodwill in the accompanying consolidated statements of
      operations.




The
      following unaudited pro forma condensed consolidated statement of operations
      for
      the year ended December 31, 2005 assumes the acquisition of Constellation
      occurred as of January 1, 2005:




Revenues
            
            $
            761,150Net
                loss
            
            
            (5,512,785
            )Basic
                and diluted net loss per common share
            
            $
            (0.09
            )




A
      pro
      forma condensed consolidated statement of operations for the year ended December
      31, 2004 has not been presented since Constellation was formed in December
      2004
      and had no activity during 2004.




**Principles
      of Consolidation**





The
      consolidated financial statements include the accounts of Sequiam Corporation
      and its subsidiaries. All intercompany transactions and accounts have been
      eliminated.





F-7
 *Table
            of Contents*





**Allowance
      for Doubtful Accounts**





The
      Company records an allowance for doubtful accounts based on specifically
      identified amounts that it believes to be uncollectible. The Company also
      records additional allowance based on certain percentages of its aged
      receivables, which are determined based on historical experience and our
      assessment of the general financial conditions affecting our customer base.
      If
      the Company’s actual collections experience changes, revisions to its allowance
      may be required. The Company has a limited number of customers with individually
      large amounts due at any given balance sheet date. Any unanticipated change
      in
      one of those customer's credit worthiness or other matters affecting the
      collectibility of amounts due from such customers, could have a material affect
      on the Company’s results of operations in the period in which such changes or
      events occur. After all attempts to collect a receivable have failed, the
      receivable is written off against the allowance.





**Inventory**





Inventory
      consists of raw materials and is stated at the lower of cost or market. The
      Company uses the first-in, first-out cost method of determining cost for its
      inventory. The Company evaluates its inventory balances at the end of each
      quarter to ensure that they are carried at the lower of cost or
      market.





**Property
      and Equipment**





Property
      and equipment are recorded at cost. Depreciation is computed using the
      straight-line method over the estimated useful lives of the related assets,
      ranging from three to five years. Expenditures for maintenance and repairs
      are
      charged to expense as incurred. Leasehold improvements are recorded at cost.
      Depreciation on leasehold improvements is computed using the straight-line
      method over the original term of the lease.





**Intangible
      Assets**





Intangible
      assets determined to have a finite useful life are amortized over their
      respectful estimated useful lives and reviewed for impairment annually. Any
      recognized intangible asset determined to have an indefinite useful life will
      not be amortized, but instead will be tested for impairment
      annually.





Intangible
      assets are stated at cost and consist of acquired software and intellectual
      properties and are being amortized over their estimated useful lives of five
      years.





**Intellectual
      Properties**





In
      connection with the acquisitions of other companies, including the acquisition
      during 2005 of Constellation Biometrics Corporation, the Company acquired
      intellectual properties including patents, trademarks, technical drawings,
      proprietary software and other knowledge based assets that were assigned values
      representing the excess of the purchase price over the fair value of the
      tangible assets acquired. The acquired intellectual properties are being
      amortized over their estimated useful lives of five years. Amortization expense
      was $227,499 and $231,423 for the years ended December 31, 2005 and 2004,
      respectively. The unamortized balance of $124,400 of the intellectual property
      related to a 2003 acquisition was written off as an impairment loss during
      2004.
      The unamortized balance of $154,469 related to a 2003 acquisition was writtenoff
      as an impairment loss during 2005.





**Mandatorily
      Redeemable Cumulative Convertible Preferred Stock**





The
      Company adopted the classification provisions of SFAS No. 150, Accounting for
      Certain Liabilities with Characteristics of both Liabilities and Equity, as
      of
      July 1, 2003. Those provisions require the Company to include the mandatorily
      redeemable cumulative convertible preferred stock as a liability in its balance
      sheet and to include the dividends on the preferred stock as a component of
      interest expense in its statement of operations. Accordingly, total preferred
      stock dividends was reported as interest expense in the statement of operations
      for the year ended December 31, 2005.





F-8
 *Table
            of Contents*





**Product
      Development Costs**





The
      Company capitalizes product development costs when the projects under
      development reach technological feasibility. Capitalization ends when the
      product is available for general release to our customers, at which time the
      amortization of the capitalized cost begins. Product development costs are
      amortized using the straight-line method over the estimated useful life of
      the
      product.





During
      2005, the Company elected to cease all development efforts related to two of
      its
      Information Management segment products. All costs related to the development
      of
      these products have been expensed.





**Revenue
      Recognition**





We
      derive
      or plan to derive our revenues from five sources: (i) the sale and licensing
      of
      our biometric and software products; (ii) user fees for online Application
      Service Provider (“ASP”) services; (iii) consulting, custom software and web
      development services; (iv) maintenance agreements in connection with the sale
      and licensing of software products; and (v) Internet access and web hosting
      services. Biometric and Software license revenue will be recognized when all
      of
      the following criteria have been met: (a) there is an executed license agreement
      and the technology or the software has been delivered to the customer, (b)
      the
      license fee is fixed and payable within twelve months, (c) collection is deemed
      probable, and (d) product returns are deemed reasonably estimable. Revenues
      from
      ASP services will be recognized as the transactions are processed by the system.
      Maintenance revenues are recognized ratably over the term of the maintenance
      contract, typically 12 months. Custom software development and web development
      services are typically performed over a period ranging from a few days to a
      few
      weeks and revenue is recognized upon completion of the project. Consulting
      service revenues are recognized when services are performed. Internet access
      and
      web-hosting services are recognized over the period the services are provided,
      typically month-to-month. Cash received from the customers in advance of amounts
      earned will be deferred and recorded as a liability.





**Accounting
      for Stock Compensation Plan**





The
      Company has elected to account for stock-based compensation plans under an
      intrinsic value method that requires compensation expense to be recorded only
      if, on the grant date, the current market price of the Company’s common stock
      exceeds the exercise price the employee must pay for the stock. The Company’s
      policy is to grant stock options at the fair market value of the underlying
      stock at the date of grant.





No
      compensation cost has been recognized for the employee stock option plans.
      The
      following table illustrates the effect on net loss and loss per share if the
      fair value based method had been applied to all outstanding awards for the
      years
      ended December 31:





2005
            
            2004Net
                loss, as reported
            
            $
            (5,430,660
            )
            $
            (5,847,017
            )Add:
                stock-based employee compensation expense included in reported net
                loss
                net of related tax effects
            
            
            -
            
            
            -Deduct:
                total stock-based employee compensation expense determined under
                the fair
                value method for all awards, net of related tax effects
            
            
            -
            
            $
            (360,150
            )Pro
                forma net loss
            
            $
            (5,430,660
            )
            $
            (6,207,167
            )Basic
                and diluted loss per common share, as reported
            
            $
            (.09
            )
            $
            (.13
            )Basic
                and diluted loss per common share, pro forma
            
            $
            (.09
            )
            $
            (.13
            )





**Income
      Taxes**





Income
      taxes are provided for the tax effects of transactions reported in the financial
      statements and consist of taxes currently due plus deferred taxes resulting
      from
      temporary differences. Such temporary differences result from differences in
      the
      carrying value of assets and liabilities for tax and financial reporting
      purposes. The deferred tax assets and liabilities represent the future tax
      consequences of those differences, which will either be taxable or deductible
      when the assets and liabilities are recovered or settled. Valuation allowances
      are established when necessary to reduce deferred tax assets to the amount
      more
      likely than not expected to be realized.





F-9
 *Table
            of Contents*





**Net
      Loss Per Common Share**





Basic
      income (loss) per common share is computed by dividing net income (loss)
      available to common shareholders by the weighted average common shares
      outstanding for the period. Diluted income (loss) per common share is computed
      giving effect to all potentially dilutive common shares. Potentially dilutive
      common shares may consist of incremental shares issuable upon the exercise
      of
      stock options, adjusted for the assumed repurchase of the Company’s common
      stock, at the average market price, from the exercise proceeds and also may
      include incremental shares issuable in connection with convertible securities.
      In periods in which a net loss has been incurred, all potentially dilutive
      common shares are considered anti-dilutive and thus are excluded from the
      calculation. As of December 31, 2005 and 2004, the Company had respectively,
      47,074,423 and 30,338,867 potentially dilutive common shares as a result of
      warrants and options granted and convertible preferred stock
      issued.





**Comprehensive
      Loss**





Comprehensive
      loss includes net loss adjusted for gains and losses from foreign currency
      translation adjustments.





**Foreign
      Currency Translation**





Assets
      and liabilities of the Company’s foreign subsidiary are translated into U.S.
      dollars at the applicable rate of exchange in effect at the end of the fiscal
      year. Revenue and expense accounts are translated at the average rate of
      exchange during the period and equity accounts are translated at the rate in
      effect when the transactions giving rise to the balances took place. Gains
      and
      losses resulting from translation are included in “Accumulated Other
      Comprehensive Loss.” Foreign currency transaction gains and losses are
      included in income.





**Fair
      Value of Financial Instruments**





Fair
      value estimates discussed herein are based upon certain market assumptions
      and
      pertinent information available to management as of December 31, 2005 and 2004.
      The respective carrying value of certain on-balance-sheet financial instruments
      approximated their fair values. These financial instruments include cash,
      receivables, accounts payable, accrued expenses and loans from shareholders.
      The
      fair value of our long-term debt and notes payable is estimated based on the
      current rates offered to us for debt of similar terms, credit risk and
      maturities. Under this method the fair value of long-term debt was not
      significantly different from the stated value at December 31, 2005 and
      2004.





**Use
      of Estimates**





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities at the date of the financial statements and the reported amounts
      of
      revenues and expenses during the reporting period. Actual results could differ
      from those estimates.





**Management’s
      Plans**





As
      of
      December 31, 2005, the Company has a working capital deficit and has incurred
      significant losses from operations since its inception. Senior management
      together with other shareholders of the Company, owning approximately 74% of
      the
      outstanding shares of common stock of the Company as of December 31, 2005,
      has
      represented its positive intent and ability to fund the operations, including
      debt service payments, of Sequiam Corporation and Subsidiaries on an as needed
      basis through January 1, 2007. Furthermore, management expects a $3.1 million
      private placement of its series B preferred stock offering to close during
      April
      2006. Management also expects that sales from four of its new biometric products
      that will begin to ship to customers in late April and May will allow the
      company to sustain its operations throughout 2006 and beyond.





F-10
 *Table
            of Contents*





The
      Company’s lack of sufficient financing to implement the Company’s business plan,
      and the Company’s expectation of continued operating losses for the foreseeable
      future raises doubt about the Company’s ability to continue as a going concern.
      The Company’s ability to continue as a going concern is heavily dependant upon
      the Company’s ability to obtain additional capital to sustain operations.
      Although the Company is presently attempting to secure additional financing
      to
      continue the Company’s operations, there is no assurance additional capital will
      be available on acceptable terms, if at all.





**Recent
      Accounting Pronouncements**





In
      December 2004, the Financial Accounting Standards Board (FASB) revised Statement
      of Financial Accounting Standard No. 123 “Share-Based Payment” (SFAS 123R). SFAS
      123R requires Companies to measure the cost of employee services received in
      exchange for an award of equity instruments based on the grant-date fair value
      of the award. The cost will be recognized over the period during which an
      employee is required to provide service in exchange for the award (usually
      the
      vesting period). The grant date fair value of employee share options and similar
      instruments will be estimated using option-pricing models adjusted for the
      unique characteristics of those instruments (unless observable market prices
      for
      the same or similar instruments are available). If an equity award is modified
      after the grant date, incremental compensation cost will be recognized in an
      amount equal to the excess of the fair value of the modified award over the
      fair
      value of the original award immediately before the modification This statement
      is effective for the first reporting period beginning after December 15, 2005.
      In the opinion of management, the adoption of this statement will not have
      a
      significant impact on the Company's consolidated financial
      statements.





**2.**
            **Property
                and Equipment**





Property
      and equipment consist of the following at December 31:





2005
            
            2004Leasehold
                improvements
            
            $
            1,465,270
            
            $
            1,465,270Office
                furniture and fixtures
            
            
            492,006
            
            
            451,984Computer
                equipment
            
            
            150,749
            
            
            150,749Purchased
                software
            
            
            213,845
            
            
            192,2122,321,870
            
            
            2,260,215Less
                accumulated depreciation
            
            
            1,213,615
            
            
            956,458$
            1,108,255
            
            $
            1,303,757





Depreciation
      expense totaled $256,170 and $234,798 during 2005 and 2004, respectively. An
      impairment loss of $40,706 was recognized in 2004 on this equipment held for
      sale. The equipment was written down to its estimated liquidation value based
      upon information obtained from dealers.





**3.**
            **Intangible
                Assets**





Intangible
      assets consist of the following as of December 31, 2005:





Amortized
                Intangible Assets
            
            Weighted-average
                Amortizationperiod
            
            Gross
                CarryingAmount
            
            AccumulatedAmortization
                & Impairment Allowance
            
            Net
                CarryingAmountIntellectual
                properties
            
            
            5
            
            $
            1,246,250
            
            $
            437,073
            
            $
            809,177





Intangible
      assets consist of the following as of December 31, 2004:





Amortized
                Intangible Assets
            
            Weighted-average
                Amortizationperiod
            
            Gross
                CarryingAmount
            
            AccumulatedAmortization
            
            Net
                CarryingAmountAcquired
                software
            
            
            5
            
            
            288,000
            
            
            124,800
            
            
            163,200Intellectual
                properties
            
            
            5
            
            
            1,112,718
            
            
            467,822
            
            
            644,896$
            1,400,718
            
            $
            592,622
            
            $
            808,096





F-11
 *Table
            of Contents*





Amortization
      expense related to software development costs was $27,228 for the year ended
      December 31, 2004. The unamortized balance of $81,682 was written-off as an
      impairment loss during 2004.





In
      connection with the acquisition of Access Orlando, the Company acquired Internet
      Remote Print software that was assigned a value of $288,000, representing the
      excess of the purchase price over the fair value of the tangible assets
      acquired. The acquired software was being amortized over its estimated useful
      life of five years. Amortization expense was $57,600 and $67,200 for the years
      ended December 31, 2005 and 2004, respectively. The unamortized balance of
      $105,600 was written off as an impairment loss during 2005.





Amortization
      expense totaled $285,099 and $325,851 during 2005 and 2004,
      respectively.





The
      estimated future amortization expense for each of the five succeeding years
      is
      as follows:





Year
                ending
              December
                31,2006
            
            $
            249,2502007
            
            
            249,2502008
            
            
            155,9062009
            
            
            109,2502010
            
            
            45,521$
            809,177





**4.**
            **Notes
                Payable and Long-Term Debt**





On
      March
      5, 2003 Sequiam issued to La Jolla Cove Investors, Inc. (“LJCI”), an 8%
      Convertible Debenture in the principal amount of $300,000 and a warrant to
      purchase 2,000,000 shares of our common stock at $1.50 per share (the “Initial
      Financing”). Sequiam received a total of $150,000 of the principal amount of the
      debenture, representing the balance due at December 31, 2003.





In
      connection with the debenture and the warrant, Sequiam was required to register
      the resale of common stock to be issued to LJCI upon conversion of the debenture
      and exercise of the warrant. To meet this obligation, Sequiam filed a
      registration statement on April 27, 2003, an amended registration statement
      on
      May 7, 2003, and a second amended registration statement on June 23, 2003,
      all
      of which were withdrawn on September 5, 2003, prior to being declared effective.





Effective
      as of January 29, 2004, the Company entered into an Agreement of Accord and
      Satisfaction with LJCI pursuant to which LJCI agreed to accept $200,000 plus
      100,000 shares of restricted common stock in accord and satisfaction of the
      debenture and warrant and other documents related to the Initial Financing.
      As a
      result, all of our obligations under the Initial Financing, including the
      obligation to file a new registration statement, have been
      terminated.





Pursuant
      to the accord and satisfaction, Sequiam issued 100,000 shares of restricted
      common stock to LJCI, which, had a fair market value of $51,000, based on a
      closing trading price of $0.51 per share on January 29, 2004. In addition,
      the
      Company delivered to LJCI a promissory note in the principal amount of $200,000
      with interest in the amount of 8% per year, plus principal, due in six
      installments of $34,017 per month beginning February 1, 2004. The Company has
      paid the note in full.





Under
      the
      new agreement, LJCI has “piggy-back” registration rights, meaning Sequiam is
      obligated to include the resale of the 100,000 shares of restricted common
      stock
      by LJCI in any registered offering of securities the Company may make during
      any
      time that LJCI still holds such 100,000 shares. Unless the Company makes a
      registered offering, it has no obligation to register the resale of the 100,000
      shares of restricted common stock.





F-12
 *Table
            of Contents*





On
      May
      13, 2003, Sequiam entered into a loan agreement with Lee Harrison Corbin,
      Attorney-in-Fact For the Trust Under the Will of John Svenningsen, for a
      principal loan amount of $400,000 under a promissory note bearing interest
      at
      five percent (5%). In connection with this loan, Sequiam Corporation issued
      two
      warrants to the holder to purchase 625,000 shares of its common stock at an
      exercise price of $0.01 per share and 350,000 shares of its common stock at
      $1.00 per share. The Warrants for 625,000 shares were exercised on September
      25,
      2003 and the warrants for 350,000 remain outstanding and expire in May 2008.
      The
      fair value of the attached warrants exceeded the value of the proceeds received
      from the Note and has been recorded as a debt discount of $400,000. The payment
      schedule was originally tied to that of the LJCI Convertible Debenture described
      above. However, on January 30, 2004 the Company amended the loan agreement
      such
      that all principal and interest became due on January 30, 2005. The debt
      discount was originally amortized over the original estimated life of the
      Note of 36 months. Beginning in January 2004, the remaining unamortized debt
      discount was amortized over twelve months. The principal and interest were
      settled as part of the May 18, 2005 debt transaction discussed
      below.





On
      December 18, 2003, Sequiam entered into a loan agreement with Lee Harrison
      Corbin, Attorney-in-Fact For the Trust Under the Will of John Svenningsen,
      for a
      principal loan amount of $100,000 under a promissory note bearing interest
      at
      five percent (5%). In connection with this loan, Sequiam Corporation issued
      one
      warrant to the holder to purchase 200,000 shares of its common stock at an
      exercise price of $0.25 per share. The principal and accrued interest were
      paid
      in full during 2004.





On
      December 18, 2003, Sequiam entered into a loan agreement with Lee Harrison
      Corbin, for a principal loan amount of $50,000 under a promissory note bearing
      interest at five percent (5%). In connection with this loan, Sequiam Corporation
      issued one warrant to the holder to purchase 100,000 shares of its common stock
      at an exercise price of $0.25 per share. The principal and accrued interest
      were
      paid in full during 2004.





On
      December 26, 2003, Sequiam entered into a debenture agreement (“Debenture”) with
      Eagle Financial, LLC, for a principal loan amount of $150,000 under a debenture
      bearing interest at ten percent (10%). The principal and accrued interest were
      paid in full during 2004. The Debenture also provided for an unconditional
      equity provision whereby the Corporation issued seventy five thousand (75,000)
      restricted shares to the Holder as an incentive to lend. The fair value of
      the
      shares was recorded as a debt discount of $30,000.





On
      or
      about October 3, 2002, General Electric Capital Corporation (“GE”) filed a
      lawsuit against Brekel Group, Inc. (“Brekel”), who the Company acquired during
      2002, in the Circuit Court of the 9 th Judicial
      Circuit in and for Orange County, located in Orlando, Florida. GE claimed that
      Brekel owed a deficiency balance in the amount of $93,833 for three digital
      copiers rented under a lease agreement. Brekel had returned possession of the
      copiers to GE, but Brekel disputed the claim for damages. On January 30, 2004
      Brekel entered into a settlement agreement with GE by agreeing to pay $70,000
      in
      36 monthly installments of $1,945 without interest. The balance of the note
      as
      of December 31, 2005 is $33,055.





On
      February 1, 2004 Brekel entered into a settlement agreement with Precision
      Partners, LTD for disputed rents on a facility formerly occupied by Brekel
      by
      agreeing to pay $80,000 in 24 monthly installments of $3,510 including interest
      at 5%. The principal and accrued interest were paid in full during
      2005.





On
      January 30, 2004, the Company entered into a loan agreement with Lee Harrison
      Corbin, Attorney-in-Fact For the Trust Under the Will of John Svenningsen,
      for a
      principal loan amount of $400,000 under a promissory note bearing interest
      at
      five percent (5%). In connection with this loan, the Company issued one warrant
      to the holder to purchase 800,000 shares of its common stock at an exercise
      price of $0.225 per share. The Warrant was exercised on January 30, 2004. The
      principal and interest became due on January 30, 2005. The principal and
      interest were settled as part of the May 18, 2005 debt transaction discussed
      below.





On
      September 7, 2004, the Company entered into an unsecured loan agreement with
      Eagle Funding, LLC, for a principal loan amount of $200,000 under a promissory
      note bearing interest at eight percent (8%). The principal became due on March
      7, 2005 and the interest was due monthly. Eagle extended the term of their
      loan
      to November 7, 2005. In connection with this loan, the Company issued one
      warrant to the holder to purchase 400,000 shares of its common stock at an
      exercise price of $0.66 per share. The principal and accrued interest were
      paid
      in full during 2005.





F-13
 *Table
            of Contents*





On
      September 30, 2004, the Company entered into an unsecured loan agreement with
      Lee Harrison Corbin, Attorney-in-Fact For the Trust Under the Will of John
      Svenningsen, for a principal loan amount of $500,000 under a promissory note
      bearing interest at five percent (5%). In connection with this loan, the Company
      issued one warrant to the holder to purchase 1,300,000 shares of its common
      stock at an exercise price of $0.66 per share. The principal and interest became
      due on March 30, 2005. The principal and interest were settled as part of the
      May 18, 2005 debt transaction discussed below.





On
      September 30, 2004, the Company entered into an unsecured loan agreement with
      Lee Harrison Corbin for a principal loan amount of $75,000 under a promissory
      note bearing interest at five percent (5%). In connection with this loan, the
      Company issued one warrant to the holder to purchase 195,000 shares of its
      common stock at an exercise price of $0.66 per share. The principal and interest
      became due on March 30, 2005. On May 18, 2005 the principal of $75,000 and
      accrued interest of $2,363 were converted into 552,593 common shares of Sequiam
      Corporation at $0.14 per share. The agreement incuded piggyback registration
      rights for all shares and warrants owned by Mr. Corbin.





On
      November 19, 2004, the Company entered into an unsecured loan agreement with
      Walter H. Sullivan III, for a principal loan amount of $100,000 under a
      promissory note bearing interest at five percent (5%). In connection with this
      loan, the Company issued one warrant to the holder to purchase 260,000 shares
      of
      its common stock at an exercise price of $0.66 per share. The principal and
      interest became due on February 19, 2005. On May 11, 2005 the principal of
      $100,000 and accrued interest of $2,375 were converted into 731,252 common
      shares of Sequiam Corporation at $0.14 per share.




On
      December 16, 2004, the Company entered into an unsecured loan agreement with
      Lee
      Harrison Corbin, Attorney-in-Fact For the Trust Under the Will of John
      Svenningsen, for a principal loan amount of $50,000 under a promissory note
      bearing interest at five percent (5%). In connection with this loan, the Company
      issued one warrant to the holder to purchase 150,000 shares of its common stock
      at an exercise price of $0.33 per share. The principal and interest became
      due
      on January 31, 2005. The principal and interest were settled as part of the
      May
      18, 2005 debt transaction discussed below.





On
      May
      18, 2005, Sequiam Corporation (the “Company”) closed a debt transaction with Lee
      Harrison Corbin, Attorney in-Fact for the Trust Under the Will of John
      Svenningsen, now known as Stephen A. Ross, Attorney in-fact for the Trust Under
      the Will of John Svenningsen, (the “Trust”) pursuant to which the Trust
      consolidated $1.35 million in existing unsecured debt owed by the Company to
      the
      Trust and provided $2.1 million in additional financing (the “Additional
      Financing”) for a total of $3,450,000 (the “Loan”). The Company also issued to
      the Trust a warrant exercisable into 6,000,000 shares of the Company’s common
      stock (the “Trust  Warrant”).
      Subsequently, after the Company’s acquisition of Constellation, it consolidated
      into this loan a $200,000 loan from the Trust to Constellation, bringing the
      total Loan to $3,650,000.





In
      connection with the Loan: (a) the Trust delivered $1,000,000 of the Additional
      Financing to Laurus Master Fund, Ltd., a Cayman Islands company (“ Laurus ”);
      and
      (b) the Company (i) reduced the conversion price of that certain secured
      convertible term note, dated as of April 27, 2004, made by the Company in favor
      of Laurus to $0.15 per share pursuant to Rule 3(a)(9) of the Securities Act
      of
      1933, as amended (the “Securities Act”) (the “Laurus Note”), and (ii) issued a
      warrant to Laurus exercisable into 1,500,000 shares of the Company’s common
      stock at an exercise price of $0.23 per share (the “Laurus Warrant”) (the
“Payoff Consideration”). In return for receiving the Payoff Consideration,
      Laurus, the Trust and the Borrower entered into that certain Assignment,
      Assumption and Release, dated as of May 18, 2005, pursuant to which, Laurus
      assigned (the “Assignment”) all of its rights, liabilities and obligations under
      the Laurus Note, and all documents related thereto (collectively with the Laurus
      Note, the “Laurus Loan Documents”), to the Trust. In addition, Laurus released
      the Company from all liability whatsoever under the Laurus Loan Documents,
      except for any terms therein which may survive the assignment.





In
      the
      2005 consolidated statements of operations, the fair value of the Laurus Warrant
      of $277,000 has been netted against the write-off of accounts payable of
      $315,428 to arrive at a net gain on extinguishment of debt of
      $38,428.





The
      $3,650,000 promissory note issued to the Trust (the “Trust Note”) has a term of
      two years. Eight percent (8%) interest is payable monthly in arrears commencing
      on November 10, 2005, and on the first day of each consecutive calendar month
      thereafter. Monthly amortization payments shall commence on May 10, 2006, at
      the
      rate of $75,000. The trust Note is collateralized by all of the Company’s
      assets and contains certain non-financial covenants.





In
      connection with the Loan, the Trust received the Trust Warrant to purchase
      up to
      6,000,000 shares of the Company’s common stock at prices ranging from $0.20 per
      share to $0.30 per share. All stock conversion prices and exercise prices are
      subject to adjustment for stock splits, stock dividends or similar events.
      The
      Company also agreed to file a registration statement with the U.S. Securities
      and Exchange Commission covering the shares issuable upon the exercise of the
      Trust Warrant and the Laurus Warrant.





F-14
 *Table
            of Contents*





As
      of
      December 31, 2005, the Trust holds 2,028,388 common shares of the Company,
      or
      3.1% of the total outstanding common shares. As of December 31, 2005, on a
      fully
      diluted basis, the Trust holds 10,028,388 common shares of the Company, or
      9.0%
      of the total fully diluted common shares.




Of
      the
      Loan amount, the Company received approximately $1.1 million in cash after
      payment to Laurus of $1,000,000 toward reduction of the Laurus Note (described
      above). The remaining principal balance of the Laurus Note after such payment
      was $818,182, which balance was converted into 5,454,547 shares of common stock
      by Laurus at the reduced conversion rate of $0.15 per share.





In
      the
      Company’s opinion, the issuance and sale of the Trust Warrant and the Laurus
      Warrant described above was exempt from registration under the Securities Act
      in
      reliance upon Section 4(2) of the Securities Act. The Trust and Laurus are
      accredited investors. The securities are not subject to resale except pursuant
      to registration under the Securities Act or pursuant to an available exemption
      from registration under the Securities Act. The Trust and Laurus had an
      opportunity to ask management questions about the Company and had adequate
      access to information about the Company. No sales of securities involved the
      use
      of an underwriter and no commissions were paid in connection with the issuance
      or sale of any securities.





The
      principal documents involved in the transaction are a Securities Purchase
      Agreement, an Amended and Restated Master Security Agreement, an Amended,
      Restated and Consolidated Senior Secured Term Note, a Common Stock Purchase
      Warrant issued to the Trust, a Common Stock Purchase Warrant issued to Laurus,
      a
      Registration Rights Agreement, an Amended and Restated Stock Pledge Agreement,
      an Amended and Restated Grant of Security Interest in Patents and Trademarks
      for
      the Company and certain of its subsidiaries, a Subsidiary Guaranty, a
      Subordination Agreement from Mark Mroczkowski and Nick VandenBrekel to the
      Trust, a Subordination Agreement from Eagle Funding, LLC to the Trust, and
      an
      Assignment, Assumption and Release, each of which is dated as of May 18,
      2005.





In
      April
      2004, the company entered into a $1.6 million note payable agreement with
      EastGroup Properties, LP (‘EastGroup”). The $1.6 million represented $893,112 of
      deferred rent expense and $706,888 of tenant improvements. Beginning August
      1,
      2004 and continuing on the first day of each month thereafter through and
      including June 1, 2010, the Company was scheduled to make payments consisting
      of
      principal and interest of $26,517. The note payable bears interest at six
      percent per annum. On May 17, 2005, EastGroup agreed to an additional six month
      deferment of the Company’s payments until December 1, 2005, contingent upon the
      payment of April and May 2005 prior to May 31, 2005, and that all rental
      payments through December 2005 were kept current. EastGroup also agreed to
      extend the note payable by twelve months to represent the twelve total deferred
      payments from December 2004 to November 2005.





On
      February 28, 2005 as part of the acquisition of Biometric Security (PTY) LTD,
      Constellation Biometrics Corporation entered into a note payable with Aregee
      Investments No. 105 for $440,000 payable in quarterly payments of $55,000
      without interest. The note matures on April 1, 2007 and is
      collateralized by all the assets of Biometric Security (PTY)
      LTD.





F-15
 *Table
            of Contents*





The
      preceding information is summarized as follows at December 31,
      2005:





**Included
                in Notes payable:**
            
            **Face**
              **Amount**
            
            **Debt**
              **Discount**
            
            **Carrying**
              **Amount**Note
                payable - GE
            
            
            33,055
            
            
            -
            
            
            33,055**Included
                in Long-term debt:**EastGroup
                Properties, LP
            
            
            1,525,376
            
            
            -
            
            
            1,525,376Svenningsen
                Trust
            
            
            3,650,000
            
            
            (583,949
            )
            
            3,066,051Aregee
                Investments No. 105
            
            
            330,000
            
            
            -
            
            
            330,000Total
            
            
            5,505,376
            
            
            (583,949
            )
            
            4,921,427Less
                Current Portion
            
            
            (1,053,016
            )
            
            -
            
            
            (1,053,016
            )4,452,360
            
            
            (583,949
            )
            
            3,868,411




The
      preceding information is summarized as follows at December 31,
      2004:





**Included
                in Notes payable:**
            
            **Face**
              **Amount**
            
            **Debt**
              **Discount**
            
            **Carrying**
              **Amount**Notes
                payable - Precision
            
            $
            47,634
            
            
            
            
            $
            47,634Note
                payable - GE
            
            
            50,556
            
            
            
            
            
            50,556Promissory
                note - Lee Harrison Corbin-Trustee for John Svenningsen
            
            
            400,000
            
            
            -
            
            
            400,000Promissory
                note - Lee Harrison Corbin-Trustee for John Svenningsen
            
            
            400,000
            
            
            -
            
            
            400,000Promissory
                note - Eagle Funding, LLC
            
            
            200,000
            
            
            (24,018
            )
            
            175,982Promissory
                note - Lee Harrison Corbin-Trustee for John Svenningsen
            
            
            500,000
            
            
            (71,342
            )
            
            428,658Promissory
                note - Lee Harrison Corbin
            
            
            75,000
            
            
            (10,701
            )
            
            64,299Promissory
                note - Walter Sullivan
            
            
            100,000
            
            
            (15,272
            )
            
            84,728Promissory
                note - Lee Harrison Corbin-Trustee for John Svenningsen
            
            
            50,000
            
            
            (9,780
            )
            
            40,220$
            1,823,190
            
            $
            (131,113
            )
            $
            1,692,077**Included
                in Long-term debt:**EastGroup
                Properties, LP
            
            
            1,525,376
            
            
            -
            
            
            1,525,376Laurus
                Master Fund, Ltd.
            
            
            1,818,182
            
            
            (201,520
            )
            
            1,616,662Total
            
            
            3,343,558
            
            
            (201,520
            )
            
            3,142,038Less
                Current Portion
            
            
            (840,245
            )
            
            -
            
            
            (840,245
            )2,503,313
            
            
            (201,520
            )
            
            2,301,793





F-16
 *Table
            of Contents*





The
      maturities of long-term debt as of December 31, 2005 are as
      follows:





2006
            
            $
            1,053,0162007
            
            
            3,407,3872008
            
            
            262,6462009
            
            
            278,8452010
            
            
            296,044Thereafter
            
            
            207,438$
            5,505,376





**5.**
            **Loans
                From Shareholders**





On
      February 1, 2002, Mark Mroczkowski, the Chief Financial Officer and a
      shareholder of the Company, loaned the Company $50,000.  On February 15,
      2005 his wife Cynthia Mroczkowski loaned the Company $50,000. Interest is
      payable at 6%.  As of December 31, 2005 and 2004, the balance due under
      these loans was $100,000 and $50,000, respectively, payable on demand together
      with accrued interest of $8,500 and $2,750, respectively.




Nicholas
      VandenBrekel, the President and Chief Executive Officer and majority shareholder
      of the Company, has advanced money to the Company under demand notes.  At
      December 31, 2005 and 2004, the Company owed $361,648 and $271,650 on these
      notes, plus accrued interest of $31,370 and $24,106, respectively.  The
      notes bear interest at 2% per annum and are due on demand.





Alan
      McGinn, the Chief Technology Officer and a shareholder of the Company, has
      advanced money to the Company. At December 31, 2005 and 2004, the Company owed
      $12,000 without interest or specific repayment terms.





A
      shareholder not employed by the Company advanced $75,000 to the Company on
      March
      1, 2002. The terms of the demand note included interest payable at 6% and a
      right to convert the note to common stock at $1.00 per share. At December 31,
      2004 the outstanding principal balance was $15,301. The note was repaid in
      full
      during 2005.





**6.**
            **Mandatorily
                Redeemable Cumulative Convertible Preferred
                Stock**





On
      November 30, 2005, the Company closed a preferred stock transaction with seven
      institutional investors, collectively the purchasers (“Purchasers”) pursuant to
      which the Company issued 1,575 shares of its Series A preferred stock, par
      value
      $0.001 per share (the “Preferred Stock”) with a stated per share value of $1,000
      for total proceeds of $1,575,000 (the “Offering”). The Company also issued to
      the Purchasers a warrant exercisable into 7,500,000 shares of the Company’s
      common stock (the “Warrants”).





The
      Preferred Stock is non-voting and entitles the Purchasers to receive a 9%
      cumulative dividend payable semiannually. The Preferred Stock is convertible
      into 7,500,000 shares of the Company’s common stock at a fixed price of $0.21
      per share.





On
      November 30, 2008, the Company shall redeem all of the then outstanding
      Preferred Stock, for an amount in cash equal to the sum of (1) 100% of the
      aggregate stated value then outstanding, (2) accrued but unpaid dividends and
      (3) all liquidated damages and other amounts due in respect of the Preferred
      Stock.





In
      connection with the Offering, the Purchasers received Warrants to purchase
      up to
      an aggregate of 7,500,000 shares of the Company’s common stock at $0.33 per
      share. All stock conversion prices and exercise prices are subject to adjustment
      for stock splits, stock dividends or similar events. The Company also agreed
      to
      file a registration statement with the U.S. Securities and Exchange Commission
      covering the shares issuable upon the conversion of the Preferred Stock and
      exercise of the Warrant.





F-17
 *Table
            of Contents*





In
      the
      Company’s opinion, the issuance and sale of the Preferred Stock and the Warrants
      were exempt from registration under the Securities Act in reliance upon Section
      4(2) of the Securities Act. The Purchasers are accredited investors. The
      securities are not subject to resale except pursuant to registration under
      the
      Securities Act or pursuant to an available exemption from registration under
      the
      Securities Act. The Purchasers had an opportunity to ask management questions
      about the Company and had adequate access to information about the Company.
      No
      sales of securities involved the use of an underwriter and no commissions were
      paid in connection with the issuance or sale of any securities.





The
      principal documents involved in the transaction were a Securities Purchase
      Agreement, a certificate of Determination of Preferences, Rights and Limitations
      of Series A Convertible Preferred Stock, a Registration Rights Agreement, a
      Common Stock Purchase Warrant, and an Escrow Deposit Agreement, each of which
      is
      dated as of November 30, 2005.





As
      a
      result of the issuance of the Warrant, a preferred stock discount of $1,004,625
      was recorded and will be amortized over the life of the preferred stock, which
      is three years. Also, as a result of the Preferred Stock transaction, a
      preferred stock conversion feature of $570,375 and loan costs of $260,326 were
      recorded.





The
      preceding information is summarized as follows at December 31,
      2005:





**Face**
              **Amount**
            
            **Debt**
              **Discount**
            
            **Carrying**
              **Amount**Mandatorily
                redeemable cumulative convertible preferred stock
            
            $
            1,575,000
            
            
            (976,719
            )
            $
            598,281





**7.**
            **Income
                Taxes**





The
      Company has estimated net operating loss carryforwards (“NOLs”) for federal
      income tax purposes of approximately $24,322,000 at December 31, 2005. These
      net
      operating losses can be carried forward and applied against future taxable
      income, if any, and expire in the years 2020 through 2025. However, as a result
      of certain acquisitions, the use of these NOLs may be limited under the
      provisions of section 382 of the Internal Revenue Code. Treasury Regulation
      1.1502-21 regarding separate return limitation years may further limit these
      NOLs.





The
      following is a reconciliation of income taxes at the federal statutory rate
      of
      34% to the provision for income taxes as reported in the accompanying
      consolidated statements of operations. The temporary differences between net
      income and taxable income result primarily from the accrual of officers’
salaries of $1,539,792 and $1,349,792, as of December 31, 2005 and 2004,
      respectively, that are expensed in the financial statements, but are not
      deductible for tax purposes until paid:





Years
                ended December 31,2005
            
            2004Income
                tax benefit computed at the federal statutory rate
            
            $
            (1,846,500
            )
            $
            (1,988,100
            )Deferred
                tax asset, NOL acquired from Brekel
            
            
            -
            
            
            630,800Adjustment
                of NOLs
            
            
            (696,800
            )
            
            -State
                income tax benefit, net of federal benefit
            
            
            (196,800
            )
            
            (144,800
            )Other
            
            
            3,200
            
            
            -Increase
                in valuation allowance
            
            
            2,736,900
            
            
            1,502,100Income
                tax expense (benefit)
            
            $
            -
            
            $
            -





The
      components of the deferred income tax asset are as follows at December 31,





Deferred
                tax assets:
            
            2005
            
            2004Accrued
                salaries
            
            $
            614,500
            
            $
            603,100Other
            
            
            1,000
            
            
            -Net
                operating loss carryforward
            
            
            9,152,200
            
            
            6,427,700Valuation
                allowance
            
            
            (9,767,700
            )
            
            (7,030,800
            )Net
                deferred tax assets
            
            $
            -
            
            $
            -





F-18
 *Table
            of Contents*





Valuation
      allowances are provided against deferred tax assets if, based on the weight
      of
      available evidence, it is more likely than not that some or all of the deferred
      tax assets will not be realized. The Company has evaluated the realizability
      of
      the deferred tax assets on its balance sheets and has established a valuation
      allowance in the amount of $9,767,700 and $7,030,800 against its net deferred
      tax assets at December 31, 2005 and 2004, respectively. The valuation allowance
      increased $2,736,900 and $1,502,100 during the years ended December 31, 2005
      and
      2004, respectively.





**8.**
            **Lease
                Agreements**





Prior
      to
      the Company’s acquisition of the Brekel Group, Inc., effective July 1, 2001, the
      Brekel Group, Inc. entered into an operating lease agreement to rent
      approximately 60,000 square feet of combined office and manufacturing space
      through June 30, 2011.  Because the Company determined to cease Brekel’s
      print and publishing operations before it was acquired, effective July 1, 2002,
      Brekel entered into a lease forbearance agreement for 10,000 square feet of
      the
      same space for the remaining term of the lease. In April 2004, the Company
      entered into a new lease agreement with the landlord that supercedes and
      replaces the lease forbearance agreement entered into by the Brekel Group,
      Inc.
      effective July 1, 2002 prior to its acquisition by the Company. The new lease
      for 24,085 square feet is for a period of seventy-two months beginning July
      1,
      2004 and ending on June 30, 2010.





During
      the year ended December 31, 2005, the Company entered into an operating lease
      agreement to rent office space through October 31, 2008 for approximately $1,100
      per month. This space is used by the Company’s office located in South
      Africa.





Rental
      expense for the years ended December 31, 2005 and 2004 was $213,147 and
      $186,021, respectively. The new minimum future rentals required under the
      operating lease are as follows:





Year
            
            Rentals2006
            
            $
            220,3072007
            
            
            224,5272008
            
            
            226,5982009
            
            
            219,7532010
            
            
            110,999$
            1,002,184





**9.**
            **Shareholders’
                Deficit**





During
      the year ended December 31, 2005, the Company issued 4,293,238 and 2,373,772
      common shares for business advisory and marketing services and payroll valued
      at
      $690,622 and $344,536, respectively based on the Company’s quoted market price
      on the date of the related agreements.





During
      the year ended December 31, 2005, the Company sold an aggregate of 537,358
      shares of its common stock to two investors at an average price of $0.20 per
      share for net proceeds of $109,297.





During
      2005, Laurus exercised warrants to purchase 914,444 shares of the Company’s
      common stock at prices ranging from $0.33 to $0.50 per share.





**10.**
            **Employee
                Stock Incentive Plan**





On
      September 23, 2003 Sequiam executed the Sequiam Corporation 2003 Employee Stock
      Incentive Plan and the Sequiam Corporation 2003 Non-Employee Directors And
      Consultants Stock Plan. This Stock Incentive Plan is intended to allow
      designated officers, directors (including non-employee directors), employees
      and
      certain non-employees, including any independent contractor or consultant
      providing services to the Company and its Subsidiaries to receive certain
      options (the “Stock Options”) to purchase Sequiam common stock, par value $0.001
      per share, and to receive grants of the Common Stock subject to certain
      restrictions (the “Awards”). **** The
      maximum number of shares of the Common Stock that may be issued pursuant to
      these plans shall be 14,000,000 and 1,000,000, respectively at December 31,
      2005.





F-19
 *Table
            of Contents*





The
      Company may grant Stock Options in such amounts, at such times, and to the
      Employees nominated by the management of the Company in its discretion. Stock
      Options granted under this Plan shall constitute “incentive stock options”
within the meaning of Section 422 of the Internal Revenue Code of 1986 as
      amended.





The
      purchase price (the “Exercise Price”) of shares of the Common Stock subject to
      each Stock Option shall be the Fair Market Value of the Common Stock on the
      date
      the Stock Option is granted; provided, however, for designated non-statutory
      stock options, the Board of Directors may determine an Exercise Price at, above
      or below Fair Market Value. For an Employee holding greater than 10 percent
      of
      the total voting power of all stock of the Company, either common or preferred,
      the Exercise Price of an incentive stock option shall be at least 110 percent
      of
      the Fair Market Value of the Common Stock on the date of the grant of the
      option.





The
      Stock
      Option term will begin on the date of grant of the Stock Option and shall be
      10
      years or such shorter period as is determined by the Company.





On
      April
      1, 2004 and July 26, 2004 the Company granted options for 2,000,000 and 300,000
      shares to two employees at exercise prices of $0.70 and $0.33, the fair market
      value of the stock on those dates, respectively. These options were canceled
      during 2005.





2005
            
            2004Number
              of
                Shares
            
            Weighted
              Average
              Exercise
                Price
            
            Number
              of
                Shares
            
            Weighted
              Average
              Exercise
                PriceOutstanding
                beginning of year
            
            
            11,723,000
            
            $
            0.278
            
            
            9,660,500
            
            $
            0.186Granted
            
            
            -0-
            
            
            -0-
            
            
            2,300,000
            
            $
            0.652Exercised
            
            
            -0-
            
            
            -0-
            
            
            (237,500
            )
            $
            0.170Canceled
            
            
            (2,300,000
            )
            $
            0.652
            
            
            -0-
            
            
            -0-Outstanding
                end of year
            
            
            9,423,000
            
            $
            0.186
            
            
            11,723,000
            
            $
            0.278Exercisable
                at December 31
            
            
            9,423,000
            
            $
            0.186
            
            
            9,423,000
            
            $
            0.186Available
                for grant at December 31
            
            
            5,577,000
            
            
            
            
            
            3,277,000





The
      following table summarizes the stock options outstanding and exercisable at
      December 31, 2005:





Outstanding
            
            ExercisableExercise
                Price
            
            Number
                ofOptions
            
            Weighted-
                Average RemainingContractual
                Life
            
            Weighted-
                AverageExercise
                Price
            
            Number
                ofOptions
            
            Weighted-
                AverageExercise
                Price$0.186
            
            
            9,423,000
            
            
            8
                Years
            
            
            $0.186
            
            
            9,423,000
            
            
            $0.186





The
      fair
      value of options granted during 2004 was calculated utilizing the following
      weighted-average assumptions: no dividend yield; expected volatility of 200.0%;
      risk-free interest rate of 3.91%; and expected lives of 10 years. The fair
      value
      of each option is estimated on the date of grant using the Black-Scholes
      option-pricing model. As of December 31, 2005 and 2004, no stock options had
      been granted under the Sequiam Corporation 2003 Non-Employee Directors and
      Consultants Stock Plan.





F-20
 *Table
            of Contents*





**11.**
            **Commitments
                and Contingencies**





On
      October 1, 2002, the Company’s Chief Executive Officer (“CEO”) and Chief
      Financial Officer (“CFO”) entered into amended and restated employment
      agreements with Sequiam Corporation and its Subsidiaries. The amended agreements
      replace separate agreements with Sequiam, Inc. and Brekel Group, Inc. The
      agreements have an initial term of two years with automatic one-year renewals.
      The agreements provide for compensation in the form of minimum annual salary
      of
      $195,000 and $185,000 respectively, and allow for bonuses in cash, stock or
      stock options and participation in Company benefit plans. Full-time employment
      is a requirement of the contract. In the event that a change in control of
      the
      Company occurs without the prior approval of the then existing Board of
      Directors, these contracts will be deemed terminated and compensation of $5
      million each is payable at termination, and $1 million annually for five years
      subsequent to termination will be due and payable to the CEO and CFO. For the
      years ended December 31, 2005 and 2004, Sequiam accrued and did not pay the
      minimum annual salaries payable to the CEO and CFO.





On
      November 1, 2002, the Company’s Chief Technology Officer (“CTO”) entered into an
      employment agreement with Sequiam Software. The agreement has an initial term
      of
      two years with automatic one-year renewals. The agreement provides for
      compensation in the form of minimum annual salary of $75,000 and allows for
      bonuses in cash, stock or stock options and participation in Company benefit
      plans. Full-time employment is a requirement of the contract.




On
      March
      1, 2005, the President of two of the Company's subsidiaries entered into
      employment agreements with Sequiam Biometrics, Inc. and Constellation Biometrics
      Corp. The agreements have an initial term of two years. The agreements provide
      for compensation in the form of minimum annual salary of $36,000 and $60,000,
      respectively and allow for bonuses in cash, stock or stock options and
      participation in Company benefit plans. Full-time employment is a requirement
      of
      the contracts.




Brekel
      entered into a note payable with Xerox Corporation in November 2000 to finance
      equipment. Brekel also entered into a Document Services Agreement (“Agreement”)
      with Xerox Corporation (“Xerox”) on November 1, 1999 commencing April 1, 2000.
      During the 63-month term of the Agreement ending June 30, 2005, Xerox agreed
      to
      provide equipment and services in accordance with specified performance
      standards. Those standards include, among other things, a performance
      satisfaction guaranty by Xerox. Under the terms of that guaranty, Brekel may
      terminate the agreement without incurring any early termination charges. Brekel
      gave proper notice of such termination in March 2001. On September 3, 2002
      Xerox
      did, contrary to the contract, assert its claim for early termination charges
      and for monthly minimum service charges on billings made after the termination
      date. Xerox had taken no action since its September 3, 2002 demand letter until
      June 29, 2004, when Xerox Corporation filed a lawsuit in the Circuit Court
      in
      and for Pinellas County State of Florida. The claim amount in controversy is
      approximately $1,574,000. The Company disputes these claims and believes them
      to
      be without merit. Because this matter is in very preliminary stages, management
      is unable to determine the likelihood of an unfavorable outcome and,
      accordingly, has not accrued any amount for potential losses in connection
      with
      this lawsuit.





On
      December 21, 2004, the Company entered into a Letter Agreement with Chapman
      Spira & Carson, LLC (“Chapman”), pursuant to which Chapman agreed to provide
      various consulting, investment banking and business development services for
      the
      Company.  On or about September 28, 2005, Chapman filed a complaint in
      United States District Court for the Southern District of New York, asserting
      claims for breach of contract and unjust enrichment.  Chapman alleges that,
      notwithstanding its purported provision of services under the Letter Agreement
      between it and the Company, the Company failed to properly compensate Chapman
      for those services.   The Company claims that none of those services
      were actually provided by Chapman.  Chapman is seeking compensatory damages
      of $1,019,060, costs,
      including attorney's fees, 500,000 shares of common stock and a
      warrant to
      purchase 6,195,000 shares of stock at $0.26 per share . 
      The Company believes that Chapman's claims are without merit and intends to
      vigorously defend itself against these allegations.





The
      Company currently operates without directors’ and officers’ insurance and is at
      risk for those types of losses.





F-21
 *Table
            of Contents*





**12.**
            **Supplemental
                Cash Flow Information**





Year
                ended December 31,2005
            
            2004Supplemental
                cash flow information:Cash
                paid for interest
            
            $
            107,159
            
            $
            124,358Non-cash
                investing and financing activities:Accounts
                payable converted to notes payable
            
            
            -
            
            $
            150,000Leasehold
                improvements financed
            
            
            -
            
            $
            338,501Refinance
                notes payable
            
            $
            1,350,000
            
            
            -Notes
                payable and long-term debt converted to common stock
            
            $
            997,780
            
            
            -Discount
                on debt
            
            $
            849,380
            
            $
            1,216,868Discount
                on mandatorily redeemable preferred stock
            
            $
            1,004,625
            
            
            -Loan
                costs unpaid at end of year
            
            $
            51,704
            
            
            -Loan
                costs paid with warrants
            
            
            -
            
            $
            49,333Common
                shares issued for acquisition of Telepartners, Inc. assets and liabilities
                assumed
            
            
            -
            
            $
            15,068Common
                shares issued for acquisition of Constellation Biometrics
                Corporation
            
            $
            175,000
            
            
            -





**13.**
            **Operating
                Segments**





Pursuant
      to FAS 131, the Company defines an operating segment as:





·
            A
                business activity from which the Company may earn revenue and incur
                expenses;




· Whose
        operating results are regularly reviewed by the chief operating decision
        maker
        to make decisions about resources to be allocated to the segment and assess
        its
        performance; and


·
            For
                which discrete financial information is available.





Sequiam
      has two operating segments, which are defined as each business line that it
      operates. This however, excludes corporate headquarters, which does not generate
      revenue.





Our
      operating segments are defined as follows:





The
      Information Management segment provides interactive web-based technologies,
      as
      well as ASP, ISP and other customer web development and software development
      services.





The
      Safety and Security segment provides fingerprint biometric access control
      systems technology and fingerprint identification technology.





F-22
 *Table
            of Contents*





The
      table
      below presents certain financial information by business segment for the year
      ended December 31, 2005.





Information
                Management
            
            Safety
                and Security
            
            Segments
                Total
            
            Corporate
            
            Consolidated
                TotalRevenue
                from external customers (2)
            
            $
            386,141
            
            $
            239,779
            
            
            625,920
            
            $
            -
            
            
            625,920Interest
                expense
            
            
            114
            
            
            -
            
            
            114
            
            
            (1,732,558
            )
            
            (1,732,444
            )Depreciation
                and amortization
            
            
            294,638
            
            
            246,631
            
            
            541,269
            
            
            -
            
            
            541,269Segment
                loss
            
            
            (678,561
            )
            
            (1,344,164
            )
            
            (2,022,725
            )
            
            (3,407,935
            )
            
            (5,430,660
            )Segment
                assets (1) (2)
            
            
            421,072
            
            
            1,340,394
            
            
            1,761,466
            
            
            1,731,956
            
            
            3,493,422




The
      table
      below presents certain financial information by business segment for the year
      ended December 31, 2004.




Information
                Management
            
            Safety
                and Security
            
            Segments
                Total
            
            Corporate
            
            Consolidated
                TotalRevenue
                from external customers
            
            $
            165,729
            
            $
            99,765
            
            $
            265,494
            
            $
            -
            
            $
            265,494Interest
                expense
            
            
            (61,154
            )
            
            -
            
            
            (61,154
            )
            
            (1,288,682
            )
            
            (1,349,836
            )Depreciation
                and amortization
            
            
            353,241
            
            
            207,408
            
            
            560,649
            
            
            71,331
            
            
            631,980Segment
                loss
            
            
            (2,486,939
            )
            
            (409,682
            )
            
            (2,896,621
            )
            
            (2,950,396
            )
            
            (5,847,017
            )Segment
                assets (1)
            
            
            1,403,164
            
            
            469,470
            
            
            1,872,634
            
            
            643,021
            
            
            2,515,655





(1)  Segment
      assets have been adjusted for intercompany accounts to reflect actual assets
      for
      each segment.





(2)  Revenue
      of $154,661 and assets of $109,711 were attributable to Biometric Security
      (Pty)
      Ltd., a subsidiary of Constellation Biometrics Corporation, whose operations
      are
      located in South Africa. Constellation Biometrics Corporation is a subsidiary
      of
      the Company.





F-23
 *Table
            of Contents*





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





None.





**ITEM
                8A**
            **CONTROLS
                AND PROCEDURES**





**Evaluation
      of Disclosure Controls and Procedures**





The
      Company maintains disclosure controls and procedures (as defined by Rule
      15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”)) that are designed to ensure that information required to be disclosed in
      the periodic reports filed by the Company with the Securities and Exchange
      Commission (the “SEC”) is recorded, processed, summarized and reported within
      the time periods specified in the rules and forms of the SEC and that such
      information is accumulated and communicated to the Company's management. Based
      on their most recent evaluation, which was completed during the period covered
      by this report, the Company's Chief Executive Officer and Chief Financial
      Officer concluded that: (a) the Company’s disclosure controls and procedures are
      effective, to give reasonable assurance that the information required to be
      disclosed by the Company in reports that it files under the Exchange Act is
      recorded, processed, summarized and reported within the time periods specified
      in the SEC’s rules and forms and (b) the Company’s disclosure controls and
      procedures are also effective to ensure that information required to be
      disclosed in the reports that the company files or submits under the Exchange
      Act is accumulated and communicated to the Company’s management, including the
      Company’s Chief Executive Officer and Chief Financial Officer, to allow timely
      decisions regarding required disclosure.





**Changes
      in Internal Control Over Financial Reporting**





In
      addition, management, including the Company's Chief Executive Officer and Chief
      Financial Officer, reviewed the Company's internal control over financial
      reporting (as defined by Rule 15(d)-15(f) of the Exchange Act), and there have
      been no changes in the Company's internal control or in other factors that
      could
      significantly affect the Company's internal control over financial reporting
      during the period covered by this report.





**ITEM
                8B**
            **OTHER
                INFORMATION**





None.





**PART
      III**





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





The
      following table shows the positions held by our current board of directors
      and
      executive officers. Our directors serve for a three-year term that expires
      at
      every third regular annual meeting of our shareholders, and until such
      directors’ successors are elected and qualified.





**Name**
            
            **Age**
            
            **Position**Nicholas
                H. VandenBrekel
            
            41
            
            Chairman,
                President and CEO; DirectorMark
                L. Mroczkowski
            
            52
            
            Senior
                Vice President and CFO; DirectorJames
                C. Stanley
            
            67
            
            DirectorAlan
                McGinn
            
            45
            
            Vice
                President and CTOKevin
                Henderson
            
            36
            
            President
                of Sequiam Biometrics, Inc. and Constellation Biometrics
                Corporation





36
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**Nicholas
      H. VandenBrekel.** Mr.
      VandenBrekel is our founder and has served as our President, Chief Executive
      Officer and Chairman of the Board since our inception in 2001. Mr. VandenBrekel
      served as a consultant from 1997 to 1999. Mr. VandenBrekel has an extensive
      background in both military service as well as entrepreneurial venues. He is
      a
      native of the Netherlands and a permanent resident of the United States. Mr.
      VandenBrekel has been the President and Chief Executive Officer of Brekel Group,
      Inc. for the last two years and was the President of Sequiam, Inc. In the course
      of his assignments, Mr. VandenBrekel has been responsible for all aspects of,
      business development, teaching and operations, including strategic planning,
      product and service development, marketing, and sales and staff development.
      Mr.
      VandenBrekel **** speaks
      several languages and has been a public speaker for many years. Mr. VandenBrekel
      continuously displays a strong ability to merge both North American business
      culture with that of Europe and the Far East. Mr. VandenBrekel has a degree
      in
      communications from the OPS Academy Royal Netherlands Navy and is a licensed
      Helicopter Aviator. Mr. VandenBrekel also holds degrees and diplomas in
      electronics and the martial arts. Mr. VandenBrekel received the 2001 businessman
      of the year award from the National Republican Congressional Committee’s
      Business Advisory Council.




**Mark
      L. Mroczkowski.** Mr.
      Mroczkowski **** has
      served as our Senior Vice President, Chief Financial Officer and as one of
      our
      directors since our inception in 2001 and as Chief Financial Officer for Brekel
      Group, Inc. since June 2000. Mr. Mroczkowski **** has an
      extensive business background. Mr. Mroczkowski was the Chief Financial Officer
      of GeoStar Corporation from 1994 until 2000. From 1975 until 1994, Mr.
      Mroczkowski practiced public accounting with several large accounting firms
      and
      ultimately formed his own successful firm. Mr. Mroczkowski holds a B.S. degree
      in Accounting from Florida State University, he is a Certified Public Accountant
      licensed in Florida and a licensed commercial pilot. Mr. Mroczkowski **** has
      a
      strong background in finance and financial management from his twenty-five
      years
      of practice. Mr. Mroczkowski **** managed
      private placements, debt financing and Initial Public Offering preparations
      for
      a number of firms. Mr. Mroczkowski has also managed audit, tax and consulting
      engagements for a variety of organizations.





**James
      C. Stanley.** Mr.
      Stanley served as President of Sequiam Biometrics, Inc. from April 21, 2003
      until April 21, 2005 and has served as a one of our directors since May 21,
      2003. Since 2001, Mr. Stanley also serves as the Vice President of Finance
      for
      Quasar Group, Inc. Prior to joining the Quasar Group, Inc., Mr. Stanley worked
      with J.C. Stanley and Associates from 1997 to 2001. Mr. Stanley has held many
      important management positions as well as owned and operated his own businesses.
      Among his accomplishments is the formation of an investment advisory firm that
      was sold to Bache & Company. He also owned an advertising agency in New
      York, whose clients included Citicorp, Penske Racing, Hilton International,
      Holland American Lines and Banco Popular. Mr. Stanley built, owned and operated
      Hilton Ski Resort in Breckenridge, Colorado. Currently, Mr. Stanley is the
      founder of Concord Communications, Inc. which is a joint venture with AT &
T. Mr. Stanley serves on numerous boards, including Vice Chairman of the
      International Center for Religion and Diplomacy, Washington, DC. Mr. Stanley
      is
      a well-versed and sought after consultant on business development, mergers
      and
      acquisitions. During the last five years, Mr. Stanley has served as a Director
      and a principal in the Quasar Group, Inc., and prior to our acquisition of
      Smart
      Biometrics, Inc, Mr. Stanley served as Chairman of that company. Mr.
      Stanley has a BA and an MBA from the University of Virginia.





**Alan
      McGinn.** Mr.
      McGinn has served as our Chief Technology Officer since March 1, 2003.
      Previously, Mr. McGinn had been President of W.M.W. Communications, Inc., d/b/a
      Access Orlando since 1995. During that time, he also served as a consultant
      to
      SMART Biometrics. From 1984 to 1995, Mr. McGinn was a Senior Design Engineer
      at
      Lockheed Martin. While at Lockheed Martin, Mr. McGinn designed the night vision
      system for the Apache Helicopter. Mr. McGinn’s other significant designs
      included: Microcontroller-based servo control system; Laser tracker controller
      with a 1553 bus interface; Microcontroller based control panel for helicopter
      navigation; CCD camera with real time image processing; and Fiber Optic
      communications link and tracker interface. Mr. McGinn has a B.S. Degree in
      Electrical Engineering from the University of Tennessee and an M.S. Degree
      in
      Electrical Engineering from the University of Central Florida.





37
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**Kevin
      Henderson** .
      Mr.
      Henderson is the former President of Bioidentix, Inc. and has accepted the
      position of Vice President for Sequiam Corporation and President of Sequiam
      Biometrics, Inc. and Constellation Biometrics, Inc. effective March 1, 2005.
      Mr.
      Henderson will handle business development and product development. Previously,
      Mr. Henderson has developed numerous biometric, smart card and software products
      and operated a large IT firm in Houston, Texas. Kevin has also held positions
      as
      US territorial representative for Inmos Semiconductor, CTO of the PAR Worldwide
      Group and appeared as guest host on the syndicated radio show 'CPU' for NBC
      radio.





**Committees
      of the Board**





We
      do not
      currently have any formal board committees.





**Family
      Relationships**





There
      are
      no family relationships among our executive officers and directors.





**Legal
      Proceedings**





During
      the past five years, none of our executive officers, directors, promoters or
      control persons have been involved in a legal proceeding material to an
      evaluation of the ability or integrity of such person.





**Section
      16(A) Beneficial Ownership Reporting Compliance**




Not
      applicable.





**Code
      of Ethics for Chief Executive Officer and Senior Financial
      Officers**





We
      have
      adopted a Code of Ethics applicable to our Chief Executive Officer, Chief
      Financial Officer, Controller and other finance organization employees. A copy
      of the Code of Ethics will be provided to you, free of charge, upon your written
      request to the Company sent to the attention of Mark L. Mroczkowski, Sequiam
      Corporation, 300 Sunport Lane, Orlando, Florida 32809.  If we make any
      substantive amendments to the Code of Ethics, or grant any waiver, including
      any
      implicit waiver, from a provision of the Code of Ethics, we will disclose the
      nature of such amendment or wavier in a report on Form 8-K.





**ITEM
                10.**
            **EXECUTIVE
                COMPENSATION**





The
      following Summary Compensation Table sets forth, for the years indicated, all
      cash compensation paid, distributed or accrued for services, including salary
      and bonus amounts, rendered in all capacities by our chief executive officer
      and
      all other executive officers who received or are entitled to receive
      remuneration in excess of $100,000 during the stated periods.





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**SUMMARY
                COMPENSATION TABLE****ANNUAL
                COMPENSATION**
            
            **LONG-TERM
                COMPENSATION****AWARDS****Name
                &**
              **Principal**
              **Position**
            
            **Year**
            
            **Salary**
            
            **Other**
              **Annual**
              **Compensation**
              **(2)**
            
            
            
            **Securities**
              **Underlying**
              **Options/SARs**
              **(3)**
            
            **All**
              **Other**
              **Compensation**NicholasVandenBrekel,
            
            
            2005
            
            $
            195,000
            
            $
            14,400President,
                CEO,
            
            
            2004
            
            $
            194,375
            
            $
            14,400Chairman
                (1)
            
            
            2003
            
            $
            185,000
            
            $
            14,400
            
            
            
            
            
            5,000,000Mark
                Mroczkowski,Corporate
                Secretary,
            
            
            2005
            
            $
            185,000
            
            $
            12,000Senior
                Vice
            
            
            2004
            
            $
            184,375
            
            $
            12,000President,
                Treasurer
            
            
            2003
            
            $
            175,000
            
            $
            12,000
            
            
            
            
            
            4,000,000and
                CFO (1)





Footnotes:





(1)  None
      of the annual salary amounts shown were paid in 2003 and remained accrued at
      December 31, 2003. In 2004 $125,000 was paid and $69,375 was accrued to Nicholas
      VandenBrekel and $118,750 was paid and $65,625 was accrued to Mark Mroczkowski.
      In 2005 $96,667 was paid and $98,333 was accrued to Nicholas VandenBrekel and
      $95,833 was paid and $89,167 was accrued to Mark Mroczkowski.





(2)  Compensation
      shown in this column was earned by accruing the automobile allowances provided
      in the employment agreements.





(3)  Shares
      shown in this column represent options granted under the Sequiam Corporation
      2003 Employee Stock Incentive Plan.





**Long
      Term Incentive Plan Awards**





No
      long-term incentive plan awards have been made by the Company to
      date.





**Defined
      Benefit or Actuarial Plan Disclosure**





We
      do not
      provide retirement benefits for the directors or officers.





**Compensation
      of Directors**





None
      of
      our directors received compensation for their service as directors during the
      fiscal year ended December 31, 2005.





**Employment
      Contracts and Change-In-Control Arrangements**





On
      October 1, 2002, Mr. VandenBrekel and Mr. Mroczkowski entered into amended
      and
      restated employment agreements with us and our subsidiaries. The amended
      agreements replace separate agreements with Sequiam, Inc. and Brekel Group,
      Inc.
      The agreements have an initial term of two years with automatic one-year
      renewals. The agreements provide for compensation in the form of minimum annual
      salary of $185,000 and $175,000, respectively, and allow for bonuses in cash,
      stock or stock options and participation in our benefit plans. No bonuses have
      been paid and no criteria for determining bonuses has been established by our
      directors. We do not intend to pay bonuses for the calendar year 2005. Full
      time
      employment is a requirement of the contract. In the event that a change in
      control of any related company occurs without the prior approval of our then
      existing Board of Directors, then these contracts will be deemed terminated
      and
      we will owe termination compensation to each employee consisting of a $5 million
      lump sum cash payment plus five annual payments of $1 million, each. Each of
      Mr.
      VandenBrekel and Mr. Mroczkowski may terminate their respective employment
      agreement without cause upon 30-day advance written notice.





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Mr.
      Alan
      McGinn was hired as our CTO, pursuant to an employment agreement dated as of
      December 1, 2002. Mr. McGinn did not begin to earn compensation until March
      1,
      2003. Pursuant to our agreement with Mr. McGinn, he will earn a base salary
      of
      $75,000, and we are obligated to adopt a qualified stock option plan for our
      senior executive officers that will include the following stock options to
      Mr.
      McGinn: 500,000 shares of our common stock, to be vested one-third (1/3) at
      the
      end of twelve (12) months, and one-third (1/3) at the end of each subsequent
      twelve-month period. Each option will expire five (5) years after we adopt
      the
      plan. The option price per share will equal the average closing trading price
      per share for the ten (10) day trading period immediately preceding the granting
      of the options. If we do not adopt a qualified stock option plan by June 30,
      2003, the employee may elect to participate in a plan adopted after June 30,
      2003, or, receive a cash compensation payment intended to similarly compensate
      Mr. McGinn as if the stock option plan had been adopted. Mr. McGinn may
      terminate his employment agreement without cause upon 30-day advance written
      notice.





**Compensation
      Committee**





We
      currently do not have a compensation committee of the Board of Directors. The
      Board of Directors as a whole determines executive compensation. Currently,
      we
      do not have any independent directors who can evaluate the reasonableness of
      executive compensation without regard to his or her own compensation paid by
      our
      company.





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





The
      table
      below sets forth, as of March 14, 2006, certain information with respect to
      the
      beneficial ownership of our common stock by each person whom we know to be
      beneficial owner of more than 5% of any class or series of our capital stock,
      each of the directors and executive officers individually, and all directors
      and
      executive officers as a group. Except as otherwise set forth below, the address
      of each of the persons listed below is 300 Sunport Lane, Orlando, Florida 32809.





**Common
                Stock Beneficially Owned (1)****Name**
            
            **Number
                of Shares of Common Stock**
            
            **Percentage
                of Class Beneficially Owned**Nicholas
                H. VandenBrekel
            
            
            23,472,523(2)
            
            
            36.42%Mark
                L. Mroczkowski
            
            
            9,104,523(3)
            
            
            14.12%Officers
                and Directors as a group (three persons)
            
            
            33,120,517
            
            
            51.38%Walter
                H. Sullivan, III4
                Embarcabero Center Suite 1570San
                Francisco, California 94111
            
            
            12,431,202(4)
            
            
            19.29%Lee
                Harrison Corbin, Attorney-in-Fact for the Trust Under the Will of
                John
                Svenningsen, now known as Stephen A. Ross, Attorney-in-Fact for the
                Trust
                Under the Will of John Svenningsen33
                Whitney AvenueLower
                LevelNew
                Haven, CT 06510
            
            
            10,028,388(5)
            
            
            15.56%




(1)
            For
                purposes of calculating the percentage beneficially owned, the number
                of
                shares of Common Stock deemed outstanding includes (i) 64,458,321
                shares
                outstanding at March 14, 2006, and (ii) shares issuable by the Company
                pursuant to options and warrants held by the respective persons which
                may
                be exercised within 60 days following March 14, 2006. The shares
                issuable
                pursuant to options and warrants are considered to be outstanding
                and
                beneficially owned by the person holding such options or warrants
                for the
                purpose of computing the percentage ownership of such person but
                are not
                treated as outstanding for the purpose of computing the percentage
                ownership of any other person.





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(2)
            Includes
                5,000,000 shares that may be acquired upon exercise of stock
                options.





(3)
            Includes:
                (a) 4,000,000 shares that may be acquired upon exercise of stock
                options;
                and (b) 294,118 shares owned by Mr. Mroczkowski’s former wife, of which he
                disclaims beneficial ownership.





(4)
            Includes
                8,784,201 shares of common stock which may be issued upon exercise
                of
                outstanding warrants and 3,647,001 that are held of record.





(5)
            Includes:
                (a) 2,028,388 shares of common stock that are held of record and
                (b)
                8,000,000 shares that may be acquired upon the exercise of outstanding
                common stock purchase warrants. Although 6,000,000 shares may be
                acquired
                upon the exercise of a common stock purchase warrant, such warrant
                contains a provision which restricts the Trust from beneficially
                owning in
                excess of 4.99% of our outstanding shares of common stock provided
                that
                the Trust can waive this restriction on 75 days notice to the Company.
                See
                “Principal and Selling Shareholders” and “Description of Securities.”





**Equity
      Compensation Plan Information**





The
      following table provides information regarding the status of our existing equity
      compensation plans at December 31, 2005.





Plan
                category
            Number
                of securities to be issued upon exercise of outstanding options,
                warrants
                and rights
            Weighted-average
                exercise price of outstanding options, warrants and rights
            Number
                of securities remaining available for future issuance under equity
                compensation plans (excluding securities reflected in the second
                column)Equity
                compensation plans approved by security holders (1)
            9,423,000
            $0.186
            5,577,000Equity
                compensation plans not approved by security holders
            0
            0
            0Total
            9,423,000
            $0.186
            5,577,000





Footnotes :





(1) On
      September 23, 2003, we adopted the Sequiam Corporation 2003 Employee Stock
      Incentive Plan and the Sequiam Corporation 2003 Non-Employee Directors and
      Consultants Stock Plan, both of which have been approved by the stockholders.
      The Stock Incentive Plan is intended to allow designated officers, directors
      (including non-employee directors), employees and certain non-employees,
      including any independent contractor or consultant providing services to our
      companies to receive certain options to purchase our common stock and to receive
      grants of our common stock, subject to certain restrictions. **** The
      maximum number of shares of our common stock that may be issued pursuant to
      these plans shall be 14,000,000 and 1,000,000, respectively.





We
      may
      grant stock options in such amounts, at such times, and to the employees
      nominated by our management and as they may determine in their discretion.
      Stock
      options granted under this plan may qualify as “incentive stock options” within
      the meaning of Section 422 of the Internal Revenue Code of 1986.





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The
      exercise prices of the stock options are the fair market value of the common
      stock on the date the stock option is granted; provided , however ,
      for
      designated non-statutory stock options, we may determine an exercise price
      at,
      above or below fair market value. If an employee holds greater than ten percent
      of the total voting power of either our common stock or preferred stock, then
      we
      may set the exercise price for any incentive stock options granted to such
      person to at least 110 percent of the fair market value of the common stock
      on
      the date of the grant of the option. Stock options have a term of 10 years
      or
      such shorter period as we may determine.





**ITEM
                12.**
            **CERTAIN
                RELATIONSHIPS AND RELATED
                TRANSACTIONS**





**Indebtedness**





On
      February 1, 2002, and again in February 2005, Mark L. Mroczkowski, our Chief
      Financial Officer and a shareholder, loaned Sequiam Software, Inc.
      $50,000.  Interest is payable at 6%.  As of December 31, 2005, the
      balance due under this loan was $100,000 payable on demand together with accrued
      interest of $8,500.





Nicholas
      H. VandenBrekel, our President, Chief Executive Officer and majority
      shareholder, has advanced money to us and Sequiam Software, Inc. under demand
      notes.  As of December 31, 2005, we owed $361,648 on these notes, plus
      accrued interest of $31,370.  The notes bear interest at 2% per annum and
      are due on demand.





On
      May
      18, 2005, we closed a debt transaction with Lee Harrison Corbin,
      Attorney-in-Fact for the Trust Under the Will of John Svenningsen, now known
      as
      Stephen A. Ross, Attorney-in-Fact for the Trust Under the Will of John
      Svenningsen, pursuant to which the Trust consolidated $1.55 million in existing
      unsecured debt owed by us to the Trust and provided $2.1 million in additional
      financing for a total of $3,650,000 (as consolidated with the $200,000
      promissory note described below). The Trust is one of our principal shareholders
      (See Item 11).





The
      $3,650,000 promissory note issued to the Trust has a term of two years. Eight
      percent (8%) interest shall be payable monthly in arrears commencing on November
      10, 2005, and on the first day of each consecutive calendar month thereafter.
      Monthly amortization payments shall commence on May 10, 2006, at the rate of
      $75,000. The Trust’s promissory note is secured by all of our
      assets.





In
      connection with the loan: (a) the Trust delivered $1,000,000 of the above loan
      to Laurus Master Fund, Ltd., a Cayman Islands company in full settlement of
      an
      outstanding secured convertible term note; and (b) we issued a warrant to Laurus
      exercisable into 1,500,000 shares of our common stock at an exercise price
      of
      $0.23 per share. In return for receiving the $1,000,000 and the warrant, Laurus,
      the Trust and we entered into that certain Assignment, Assumption and Release,
      dated as of May 18, 2005, pursuant to which, Laurus assigned all of its rights,
      liabilities and obligations under our original financing arrangement with
      Laurus, and all documents related thereto, to the Trust. In addition, Laurus
      released us from all liability whatsoever under our previous financing
      arrangement, and all documents related to that transaction, except for any
      terms
      which may survive the assignment.





In
      connection with the loan, the Trust received a warrant to purchase up to
      6,000,000 shares of our common stock at prices ranging from $0.20 per share
      to
      $0.30 per share. All stock conversion prices and exercise prices are subject
      to
      adjustment for stock splits, stock dividends or similar events. We also agreed
      to file a registration statement with the U.S. Securities and Exchange
      Commission covering the shares issuable upon the exercise of each of the
      warrants issued to the Trust and Laurus.





Concurrently
      with the Constellation acquisition (described below), we assumed an outstanding
      promissory note made by Constellation in favor of the Lee Harrison Corbin,
      Attorney-in-Fact for the Trust under the Will of John Svenningsen, now known
      as
      Stephen A. Ross, Attorney-in-Fact for the Trust Under the Will of John
      Svenningsen in the principal amount of $200,000 and dated March 23, 2005, a
      majority of the proceeds of which had been loaned to us by Constellation. The
      $200,000 Note was consolidated with the $3,450,000 promissory note made by
      us in
      favor of the Trust on May 18, 2005, and will be subject to the same terms and
      conditions as the $3,450,000 Note, including without limitation, the security
      provisions of the $3,450,000 Note inclusive of the Master Security Agreement
      dated May 18, 2005, the Stock Pledge Agreement dated May 18, 2005, a Subsidiary
      Guaranty to be executed by Constellation, and any and all other documents
      executed in connection with the $3,450,000 refinancing described
      above.





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In
      accordance with the terms of the $200,000 Note, we also issued to the Trust
      a
      common stock purchase warrant for 600,000 shares of our common stock at an
      exercise price of $0.14 per share, which warrant has a term commencing as of
      March 24, 2005 and expiring on March 24, 2010.





**Acquisitions**





On
      June
      7, 2005, we acquired Constellation Biometrics Corporation, effective May 31,
      2005, pursuant to a stock purchase agreement dated May 31, 2005 by and among
      us,
      Constellation and the shareholders of Constellation. Constellation is the parent
      company for a wholly owned subsidiary: Biometrics Security (PTY) LTD. (a/k/a
      Secure Biometrics or Biometrics.co.za), a South African Company engaged in
      the
      development, marketing and sale of biometric technology products. As a result,
      Constellation's results of operations may be negatively affected by events
      which
      may occur in South Africa, including wars, political upheaval, terrorism,
      general economic conditions and changes in applicable law, changes in currency
      exchange rates may also affect the results of Constellation's operations. We
      acquired Constellation for its intellectual property and products presently
      in
      the marketplace including: BioWeb, BioTools, BioTag, BioRegister, BioAccess
      Server and Bio Access Door Controller. We also acquired them for their technical
      expertise, existing revenues and for their customer base in South Africa that
      includes: Ford Motor Company, ActivCard, Receiver of Revenue - South Africa,
      Shell Oil, Hewlett Packard, Rhodes University, Stellnbosh University and others.
      We believe that Constellation will increase our existing revenue and customer
      base in the current and subsequent years.





By
      way of
      background information leading up to the Constellation acquisition,
      Constellation was formed in December 2004 by certain of our principal equity
      holders for the specific purpose of acquiring, for our benefit, all of the
      assets of Biometric Security (PTY) LTD. (a/k/a Secure Biometrics or
      Biometrics.co.za), a South African company, engaged in the development,
      marketing and sale of biometric technology products. Biometric Security is
      now a
      wholly-owned subsidiary of Constellation as a result of the asset acquisition
      which was effected in February 2005. The purchase price for the assets of
      Biometric Security was effectively $585,000, paid by Constellation as follows:
      (a) $100,000 cash, (b) promissory note made by Constellation to Biometric
      Security in the principal amount of $440,000, and (c) 250,000 shares of Sequiam
      common stock valued at $45,000 or $0.18 per share, the closing sale price of
      our
      common stock on the date of closing the Biometric asset acquisition.





We
      viewed
      the purchase of assets from Biometric Security as a necessary and strategic
      acquisition. However, due to cash constraints, we did not have the ability
      to
      acquire Biometric Security at that time. It was therefore determined by our
      management to be in our best interests that they and certain other of our
      beneficial owners form and fund Constellation for the purpose of executing
      the
      Biometric asset acquisition. At such time as we had obtained additional funding
      or refinanced our existing loan with Laurus Master Fund, we would purchase
      Constellation from our shareholders and management at a purchase price that
      was
      the equivalent value of the cash and Sequiam common stock they advanced to
      or
      for the benefit of Constellation. The shareholders of Constellation were
      Nicholas VandenBrekel and Mark Mroczkowski (each of whom is an officer, director
      and a principal shareholder of us); and Walter H. Sullivan III, Lee Harrison
      Corbin, and Lee Harrison Corbin, Attorney-in-Fact for the Trust under the Will
      of John Svenningsen, now known as Stephen A. Ross, Attorney-in-Fact for the
      Trust Under the Will of John Svenningsen (each of whom is a beneficial owner
      of
      our common stock).





43
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**Certain
      Equity Holdings**





On
      April
      1, 2002, we acquired Sequiam Software, Inc. (formerly known as Sequiam, Inc.).
      This transaction was accounted for as a recapitalization of Sequiam Corporation
      and the results of operations and cash flows presented in our financial
      statements prior to the acquisition are those of Sequiam, Inc. The following
      table shows the number of shares received by our directors and executive
      officers as a result of this transaction.





**Name**
            **Common
                Stock**
              **Before
                Closing**
            **Percent
                of**
              **Class**
            **Common
                Stock**
              **After
                Closing**
            **Percent
                of**
              **Class**Nicholas
                H. VandenBrekel
            0
            0%
            15,000,000(1)
            61.90%Mark
                Mroczkowski
            0
            0%
            5,500,000(2)
            22.70%James
                Rooney
            0
            0%
            500,000
            2.06%Brekel
                Group, Inc.
            0
            0%
            1,000,000
            4.13%





Footnotes :





(1)  At
      the time of the transaction, Nicholas H. VandenBrekel served as an officer
      and
      director of Brekel Group, Inc., and therefore 15,000,000 shares includes
      1,000,000 shares issued to Brekel Group, Inc. The 1,000,000 shares held by
      Brekel Group, Inc. were returned to treasury and cancelled upon our acquisition
      of Brekel Group, Inc. in July 2002.





(2)  At
      the time of the transaction, Mark Mroczkowski served as an officer and director
      of Brekel Group, Inc., and therefore 5,5000,000 shares includes 1,000,000 shares
      issued to Brekel Group, Inc. The 1,000,000 shares held by Brekel Group, Inc.
      were returned to treasury and cancelled upon our acquisition of Brekel Group,
      Inc. in July 2002.





In
      July
      2002, we acquired Sequiam Sports, Inc. (formerly known as Brekel Group, Inc.)
      in
      a tax-free exchange of stock. The following table shows the number of shares
      received by our directors and executive officers as a result of this
      transaction.





**Name**
            **Common
                Stock**
              **Before
                Closing**
            **Percent
                of**
              **Class(1)**
            **Common
                Stock**
              **After
                Closing**
            **Percent
                of**
              **Class(2)**Nicholas
                H. VandenBrekel
            15,000,000(3)
            61.90%
            18,500,000
            76.37%Mark
                Mroczkowski
            5,500,000(4)
            22.70%
            4,957,000
            20.46%James
                W. Rooney
            500,000
            2.06%
            526,666
            2.17%Brekel
                Group, Inc.
            1,000,000
            4.13%
            0
            0%





Footnotes :





(1)  Based
      upon 24,223,000 shares issued and outstanding prior to closing.





(2)  Based
      upon 24,224,172 shares issued and outstanding after closing.





(3)  At
      the time of the transaction, Nicholas H. VandenBrekel served as an officer
      and
      director of Brekel Group, Inc., and therefore 15,000,000 shares includes
      1,000,000 shares issued to Brekel Group, Inc. The 1,000,000 shares held by
      Brekel Group, Inc. were returned to treasury and cancelled upon our acquisition
      of Brekel Group, Inc. in July 2002.





(4)  At
      the time of the transaction, Mark Mroczkowski served as an officer and director
      of Brekel Group, Inc., and therefore 5,500,000 shares includes 1,000,000 shares
      issued to Brekel Group, Inc. The 1,000,000 shares held by Brekel Group, Inc.
      were returned to treasury and cancelled upon our acquisition of Brekel Group,
      Inc. in July 2002.





44
 *Table
            of Contents*





**ITEM
                13.**
            **EXHIBITS**





Exhibit
              No.
            
            Description
                of Exhibit2.1
            
            Agreement
                and Plan of Merger.12.2
            
            Stock
                Exchange Agreement and Plan of Reorganization.22.3
            
            Asset
                Purchase Agreement.32.4
            
            Agreement
                and plan of acquisition between Fingerprint Detection Technologies,
                Inc.,
                a Florida corporation, UTEK Corporation, a Delaware corporation,
                and
                Sequiam Corporation, Inc., a California corporation.42.5
            
            Asset
                Purchase Agreement with Smart Biometrics, Inc.52.6
            
            Asset
                Purchase Agreement with Telepartners, Inc.62.7
            
            Stock
                Exchange Agreement and Plan of Reorganization among Sequiam Corporation
                and the Shareholders of Brekel Group, Inc., dated June 17,200272.8
            
            Asset
                Purchase Agreement by and between Constellation Biometrics Corporation
                and
                Biometric Security (PTY), LTD, dated effective as of February 28,
                2005.272.9
            
            Stock
                Purchase Agreement, dated as of and effective May 31, 2005, by and
                among
                Sequiam Corporation, Constellation Biometrics, Inc., and the shareholders
                of Constellation Biometrics, Inc.273.1
            
            Articles
                of Incorporation (Charter Document).83.2
            
            Certificate
                of Amendment to Articles of Incorporation of Wedge Net Experts, Inc.,
                dated April 29, 2002.93.3
            
            Certificate
                of Amendment to Articles of Incorporation of Sequiam Corporation,
                dated
                January 6, 2003.313.4
            
            Certificate
                of Amendment to Articles of Incorporation of Sequiam Corporation,
                dated
                December 8, 2005.313.5
            
            Bylaws.83.6
            
            Amendment
                to our Bylaws, dated July 18, 2002.104.1
            
            Registration
                Rights Agreement, dated April 27, 2004, by and between Sequiam Corporation
                and Laurus Master Fund, Ltd.134.2
            
            Securities
                Purchase Agreement, dated May 18, 2005, between Sequiam Corporation
                and
                Lee Harrison Corbin, Attorney in-Fact for the Trust Under the Will
                of John
                Svenningsen.264.3
            
            Registration
                Rights Agreement, dated May 18, 2005, by and between Sequiam Corporation
                and Lee Harrison Corbin, Attorney in-Fact for the Trust Under the
                Will of
                John Svenningsen.264.4
            
            Common
                Stock Purchase Warrant, dated May 18, 2005, issued by Sequiam Corporation,
                in favor of Laurus Master Fund, Ltd.264.5
            
            Common
                Stock Purchase Warrant, dated May 18, 2005, issued by Sequiam Corporation,
                in favor of Lee Harrison Corbin, Attorney in-Fact for the Trust Under
                the
                Will of John Svenningsen.264.6
            
            Amended
                and Restated Common Stock Purchase Warrant dated May 20, 2005, issued
                by
                Sequiam Corporation, in favor of Lee Harrison Corbin, Attorney in-Fact
                for
                the Trust Under the Will of John Svenningsen.264.7
            
            Amended
                and Restated Common Stock Purchase Warrant dated May 20, 2005, issued
                by
                Sequiam Corporation, in favor of Lee Harrison Corbin.264.8
            
            Stock
                Purchase Agreement, dated as of and effective May 31, 2005, by and
                among
                Sequiam Corporation, Constellation Biometrics, Inc., and the shareholders
                of Constellation Biometrics, Inc.274.9
            
            Common
                Stock Purchase Warrant, issued by Sequiam Corporation, in favor of
                Lee
                Harrison Corbin, Attorney-in-Fact for the Trust under the Will of
                John
                Svenningsen274.10
            
            Securities
                Purchase Agreement dated November 30, 2005, between Sequiam Corporation
                and the Purchasers.284.11
            
            Certificate
                of Determination of Preferences Rights and Limitations of Series
                A 9%
                Convertible Preferred Stock, dated November 30, 2005.284.12
            
            Registration
                Rights Agreement, dated November 30, 2005, by and between Sequiam
                Corporation and the Purchasers.284.13
            
            Common
                Stock Purchase Warrant dated November 30, 2005.284.14
            
            Certificate
                of Determination of Preferences Rights and Limitations of Series
                A 9%
                Convertible Preferred Stock, dated December 9, 2005.2910.1
            
            Demand
                Promissory Note made by Sequiam, Inc. (a/k/a Sequiam Software, Inc.)
                payable to Nicholas H. VandenBrekel, dated June 30, 2002, in the
                principal
                amount of $301,000.1510.2
            
            Demand
                Promissory Note made by Sequiam Software, Inc. payable to Brekel
                Group,
                Inc. (a/k/a Sequiam Communications, Inc.), dated June 30, 2002, in
                the
                principal amount of $396,158.15





45
 *Table
            of Contents*




10.3
            
            Employment
                Agreement with Nicholas Van den Brekel.910.4
            
            Employment
                Agreement with Mark Mroczkowski.910.5
            
            Amended
                and Restated Employment Agreement with Nicolas Van den Brekel.1410.6
            
            Amended
                and Restated Employment Agreement with Mark Mroczkowski.1410.7
            
            Employment
                Agreement with Alan McGinn.1410.8
            
            Put
                and Call Agreement, dated April 16, 2003.1610.9
            
            Agreement
                with World Olympians Association1710.10
            
            Agreement
                of Accord and Satisfaction, dated January 29, 20041810.11
            
            Promissory
                Note, dated January 29, 2004, made by Sequiam Corporation in favor
                of La
                Jolla Cove Investors, Inc.1810.12
            
            Continuing
                Personal Guaranty, dated January 29, 20041810.13
            
            Asset
                Purchase Agreement dated June 1, 2003, between Sequiam Software,
                Inc. and
                Great Barrier Reef, Inc.1910.14
            
            Subscriber
                Acquisition Agreement dated December 11, 2003, between Sequiam Software,
                Inc. and Internet Junction Corporation.1910.15
            
            Letter
                Agreement dated December 5, 2003, between Sequiam Corporation and
                The
                Eversull Group, Inc.1910.16
            
            Letter
                Agreement dated December 3, 2003, between Sequiam Corporation and
                The
                Research Works, Inc.1910.17
            
            License
                Agreement for Use of Co-location Space, dated November 2003, between
                Sequiam Software, Inc. and FDS Telecommunications, L.P.1910.18
            
            Exclusive
                Patent License Agreement, between Fingerprint Detection Technologies,
                Inc.
                and Westinghouse Savannah River Company LLC.1910.19
            
            Memorandum
                of Agreement, dated August 27, 2003, between Sequiam Biometrics,
                Inc. and
                T&N Enterprises2310.20
            
            2003
                Employee Stock Incentive Plan2010.21
            
            2003
                Non-Employee Directors and Consultants Stock Plan2010.22
            
            Securities
                Purchase Agreement, dated April 27, 2004, between Sequiam Corporation
                and
                Laurus Master Fund, Ltd.1810.23
            
            Secured
                Convertible Term Note, dated April 27, 2004, made by Sequiam Corporation
                in favor of Laurus Master Fund, Ltd.1310.24
            
            Master
                Security Agreement, dated April 27, 2004, by and among Sequiam
                Corporation, Sequiam Software, Inc., Sequiam Biometrics, Inc., Sequiam
                Education, Inc., Sequiam Sports, Inc, Fingerprint Detection Technologies,
                Inc., and Laurus Master Fund, Ltd.1310.25
            
            Registration
                Rights Agreement, dated April 27, 2004, by and between Sequiam Corporation
                and Laurus Master Fund, Ltd.1310.26
            
            Common
                Stock Purchase Warrant, dated April 27, 2004, issued by Sequiam
                Corporation, in favor of Laurus Master Fund, Ltd.1310.27
            
            Subsidiary
                Guaranty, dated April 27, 2004, by and among Sequiam Software, Inc.,
                Sequiam Biometrics, Inc., Sequiam Education, Inc., Sequiam Sports,
                Inc.,
                and Fingerprint Detection Technologies, Inc.1310.28
            
            Grant
                of Security Interest in Patents and Trademarks, dated April 27, 2004,
                by
                and between Sequiam Corporation and the Purchaser1310.39
            
            Grant
                of Security Interest in Patents and Trademarks, dated April 27, 2004,
                by
                and between Sequiam Software, Inc. and Laurus Master Fund,
                Ltd.1310.30
            
            Grant
                of Security Interest in Patents and Trademarks, dated April 27, 2004,
                by
                and between Sequiam Sports, Inc. and Laurus Master Fund, Ltd.1310.31
            
            Grant
                of Security Interest in Patents and Trademarks, dated April 27, 2004,
                by
                and between Sequiam Biometrics, Inc. and Laurus Master Fund,
                Ltd.1310.32
            
            Stock
                Pledge Agreement, dated April 27, 2004 by and among Sequiam Corporation,
                Sequiam Software, Inc., Sequiam Biometrics, Inc., Sequiam Education,
                Inc.,
                Sequiam Sports, Inc, Fingerprint Detection Technologies, Inc., and
                Laurus
                Master Fund, Ltd.1310.33
            
            Incremental
                Funding Side Letter, dated April 27, 2004, by and between Sequiam
                Corporation and Laurus Master Fund, Ltd.1310.34
            
            Subordination
                Agreement, dated April 27, 2004, by and among Mark Mroczkowsi, Nick
                VandenBrekel and Laurus Master Fund, Ltd.13





46
 *Table
            of Contents*




10.35
            
            Funds
                Escrow Agreement, dated April 27, 2004, by and by and among Sequiam
                Corporation, Laurus Master Fund, Ltd. and Dechert LLP.1310.36
            
            License
                Agreement between Sequiam Biometrics, Inc. and Security Marketing
                Group,
                LLC2110.37
            
            Lease
                Agreement by and between Sequiam Sports, Inc. and EastGroup Properties,
                L.P.2310.38
            
            Promissory
                Note, dated as of July 1, 2004, made by Sequiam Corporation in favor
                of
                EastGroup Properties, L.P.2310.39
            
            Developer’s
                License Agreement, dated as of July 15, 2004, by and between Sequiam
                Corporation and Blackboard, Inc.2310.40
            
            Agreement,
                dated as of August 19, 2004, by and between Sequiam Corporation and
                the
                National Rifle Association of America.2310.41
            
            Promissory
                Note, dated as of September 7, 2004, made by Sequiam Corporation
                in favor
                of Eagle Funding, LLC2310.42
            
            Promissory
                Note, dated as of September 30, 2004, made by Sequiam Corporation
                in favor
                of Lee Harrison Corbin2310.43
            
            Promissory
                Note, dated as of September 30, 2004, made by Sequiam Corporation
                in favor
                of Lee Harrison Corbin,Attorney-in-Fact
                For the Trust Under the Will of John Svenningsen2310.44
            
            Employment
                Agreement with David Dobkin2310.45
            
            Employment
                Agreement with Marianne Morrison2310.46
            
            Amendment
                and Waiver to Securities Purchase Agreement, dated as of October
                27, 2004,
                by and between Sequiam Corporation and Laurus Master Fund,
                Ltd.2310.47
            
            Promissory
                Note, dated as of November 19, 2004, made by Sequiam Corporation
                in favor
                of Walter H. Sullivan, III.2410.48
            
            Non-Exclusive
                Reseller Agreement with IKON Office Solutions, Inc. (Portions of
                this
                Agreement have been omitted pursuant to a request for confidential
                treatment)2510.49
            
            Amended,
                Restated and Consolidated Senior Secured Term Note, dated May 18,
                2005,
                made by Sequiam Corporation in favor of Lee Harrison Corbin, Attorney
                in-Fact for the Trust Under the Will of John Svenningsen.2610.50
            
            Amended
                and Restated Master Security Agreement, dated May 18, 2005, by and
                among
                Sequiam Corporation, Sequiam Software, Inc., Sequiam Biometrics,
                Inc.,
                Sequiam Education, Inc., Sequiam Sports, Inc, Fingerprint Detection
                Technologies, Inc., and Laurus Master Fund, Ltd.2610.51
            
            Amended
                and Restated Subsidiary Guaranty, dated May 18, 2005, by and among
                Sequiam
                Software, Inc., Sequiam Biometrics, Inc., Sequiam Education, Inc.,
                Sequiam
                Sports, Inc., and Fingerprint Detection Technologies, Inc.2610.52
            
            Amended
                and Restated Grant of Security Interest in Patents and Trademarks,
                dated
                May 18, 2005, by and between Sequiam Corporation and Lee Harrison
                Corbin,
                Attorney in-Fact for the Trust Under the Will of John Svenningsen.2610.53
            
            Amended
                and Restated Grant of Security Interest in Patents and Trademarks,
                dated
                May 18, 2005, by and between Sequiam Software, Inc. and Lee Harrison
                Corbin, Attorney in-Fact for the Trust Under the Will of John
                Svenningsen.2610.54
            
            Amended
                and Restated Grant of Security Interest in Patents and Trademarks,
                dated
                May 18, 2005, by and between Sequiam Sports, Inc. and Lee Harrison
                Corbin,
                Attorney in-Fact for the Trust Under the Will of John
                Svenningsen2610.55
            
            Amended
                and Restated Grant of Security Interest in Patents and Trademarks,
                dated
                May 18, 2005, by and between Sequiam Biometrics, Inc and Lee Harrison
                Corbin, Attorney in-Fact for the Trust Under the Will of John
                Svenningsen.2610.56
            
            Amended
                and Restated Stock Pledge Agreement, dated May 18, 2005 by and among
                Sequiam Corporation, Sequiam Software, Inc., Sequiam Biometrics,
                Inc.,
                Sequiam Education, Inc., Sequiam Sports, Inc, Fingerprint Detection
                Technologies, Inc., and Lee Harrison Corbin, Attorney in-Fact for
                the
                Trust Under the Will of John Svenningsen.2610.57
            
            Subordination
                Agreement, dated May 18, 2005, by and among Mark Mioczkowsi, Nick
                VandenBrekel and Lee Harrison Corbin, Attorney in-Fact for the Trust
                Under
                the Will of John Svenningsen.2610.58
            
            Subordination
                Agreement, dated May 18, 2005, by and between Eagle Funding, LLC
                and Lee
                Harrison Corbin, Attorney in-Fact for the Trust Under the Will of
                John
                Svenningsen.2610.59
            
            Assignment,
                Assumption and Release, dated as of May 18, 2005, by and among Assignment,
                Assumption and Release, Sequiam Corporation and Laurus Master Fund,
                Ltd.26





47
 *Table
            of Contents*




10.60
            
            Debt
                Conversion Agreement, dated May 20, 2005, by and between Sequiam
                Corporation and Lee Harrison Corbin.2610.61
            
            Debt
                Conversion Agreement, dated May 20, 2005, by and between Sequiam
                Corporation and Walter H. Sullivan.2610.62
            
            Promissory
                Note dated March 7, 2005 from Sequiam Corporation in favor of Eagle
                Funding, LLC (renewal note).2610.63
            
            Letter
                agreement dated May 17, 2005 from EastGroup Properties.2610.64
            
            Promissory
                Note in the principal amount of $200,000, made on March 23, 2005
                by
                Constellation Biometrics Corporation in favor of Lee Harrison Corbin,
                Attorney-in-Fact for the Trust under the Will of John Svenningsen
                (and
                assumed by Sequiam Corporation under that certain Stock Purchase
                Agreement
                dated as of and effective May 31, 2005 and referenced above).2710.65
            
            Asset
                Purchase Agreement by and between Constellation Biometrics Corporation
                and
                Biometric Security (PTY), LTD, dated effective as of February 28,
                2005.2710.66
            
            Promissory
                Note dated February 28, 2005, in the principal amount of $440,000,
                made by
                Constellation Biometrics Corporation in favor of Biometric Security
                (PTY)
                LTD.2710.67
            
            Escrow
                Deposit Agreement, dated November 30, 2005, by and between Sequiam
                Corporation and vFinance Investments, Inc.2810.68
            
            Exclusive
                Co-Operative Development and Supply Agreement between Sequiam Biometrics,
                Inc., a wholly owned subsidiary of Sequiam Corporation, and Kwikset
                Corporation effective September 13, 2005 (Portions of this Agreement
                have
                been omitted pursuant to a request for confidential treatment)3010.69
            
            Employment
              Agreement with Kevin Henderson*10.70
            
            Employment
              Agreement with Kevin Henderson*21.1
            
            Subsidiaries.*31.1
            
            Certification
                Of Chief Executive Officer Pursuant To 15d-14.*31.2
            
            Certification
                Of Chief Financial Officer Pursuant To 15d-14.*32.1
            
            Certification
                Of Chief Executive Officer Pursuant To 18 U.S.C. §1350, As Adopted
                Pursuant To Section 906 Of The Sarbanes-Oxley Act Of
                2002.*32.2
            
            Certification
                Of Chief Financial Officer Pursuant To 18 U.S.C. §1350, As Adopted
                Pursuant To Section 906 Of The Sarbanes-Oxley Act Of
                2002.*


___________________________________





*  Filed
      herewith





1
            Incorporated
                by reference from our Current Report on Form 8-K, filed with the
                Securities and Exchange Commission on April 16,
                2002.





2
            Incorporated
                by reference from our Current Report on Form 8-K, filed with the
                Securities and Exchange Commission on August 6,
                2002.





3
            Incorporated
                by reference from our Current Report on Form 8-K, filed with the
                Securities and Exchange Commission on May 23,
                2003.





4
            Incorporated
                by reference from our Quarterly Report on Form 10-QSB, filed with
                the
                Securities and Exchange Commission on November 19,
                2003.





5
            Incorporated
                by reference to our Form 8-K filed with the Securities and Exchange
                Commission on May 23, 2003.





6
            Incorporated
                by reference from our Quarterly Report on Form 10-QSB/A, filed with
                the
                Securities and Exchange Commission on October 3,
                2003.





7
            Incorporated
                by reference from our Form 8-K filed with the Securities and Exchange
                Commission on August 6, 2002.





8
            Incorporated
                by reference from our Registration Statement on Form SB-2, filed
                with the
                Securities and Exchange Commission on September 13,
                2000.





9
            Incorporated
                by reference from our Quarterly Report on Form 10-QSB, filed with
                the
                Securities and Exchange Commission on May 20,
                2002.





48
 *Table
            of Contents*





10
            Incorporated
                by reference from our Quarterly Report on Form 10-QSB, filed with
                the
                Securities and Exchange Commission on August 14,
                2002.





12
            Incorporated
                by reference from our Current Report on Form 8-K, filed with the
                Securities and Exchange Commission on April 17,
                2003.





13
            Incorporated
                by reference from our Current Report on Form 8-K, filed with the
                Securities and Exchange Commission on May 6,
                2004.





14
            Incorporated
                by reference from our Annual Report on Form 10-KSB, filed with the
                Securities and Exchange Commission on March 28,
                2003.





15
            Incorporated
                by reference from our Quarterly Report on Form 10-QSB/A filed with
                the
                Securities and Exchange Commission on February 20,
                2003.





16
            Incorporated
                by reference from our Amended Annual Report on Form 10-KSB/A, filed
                with
                the Securities and Exchange Commission on April 18,
                2003.





17
            Incorporated
                by reference from our Amended Annual Report on Form 10-KSB/A, filed
                with
                the Securities and Exchange Commission on June 13,
                2003.





18
            Incorporated
                by reference from our Current Report on Form 8-K, filed with the
                Securities and Exchange Commission on February 6,
                2004.





19
            Incorporated
                by reference from our Annual Report on Form 10-KSB, filed with the
                Securities and Exchange Commission on April 14,
                2004.





20
            Incorporated
                by reference from our Form S-8 filed with the SEC on September 30,
                2003.





21
            Incorporated
                by reference from our Quarterly Report on Form 10-QSB filed with
                the
                Securities and Exchange Commission on May 17,
                2004.





22
            Incorporated
                by reference from our Current Report on Form 8-K, filed with the
                Securities and Exchange Commission on November 3,
                2004.





23
            Incorporated
                by reference from our Form SB-2/A filed with the SEC on November
                5,
                2004.





24
            Incorporated
                by reference from our Form SB-2/A filed with the SEC on December
                12,
                2004.





25
            Incorporated
                by reference from our Quarterly Report on 10-QSB, filed with the
                Securities and Exchange Commission on May 23, 2005 and our Quarterly
                Report on 10-QSB/A, filed with the Securities and Exchange Commission
                on
                February 2, 2006.





26
            Incorporated
                by reference from our Current Report on Form 8-K, filed with the
                Securities and Exchange Commission on May 24,
                2005.





27
            Incorporated
                by reference from our Current Report on Form 8-K, filed with the
                Securities and Exchange Commission on June 10,
                2005.





28
            Incorporated
                by reference from our Current Report on Form 8-K, filed with the
                Securities and Exchange Commission on December 2,
                2005.





29
            Incorporated
                by reference from our Current Report on Form 8-K/A, filed with the
                Securities and Exchange Commission on December 19,
                2005.





30
            Incorporated
                by reference from our Quarterly Report on 10-QSB/A, filed with the
                Securities and Exchange Commission on January 20,
                2006.





31
            Incorporated
                by reference from our Registration Statement on Form SB-2, filed
                with the
                Securities and Exchange Commission on December 30,
                2005.





49
 *Table
            of Contents*





**ITEM
                14.**
            **PRINCIPAL
                ACCOUNTANT FEES AND
                SERVICES**





**Audit
      Fees**





We
      were
      billed $64,963 for the fiscal year ended December 31, 2005, and $96,665 for
      the
      fiscal year ended December 31, 2004, for professional services rendered by
      the
      principal accountant for the audit of our annual financial statements, the
      review of our quarterly financial statements, and other services performed
      in
      connection with our statutory and regulatory filings. These services also
      included updating the audits for our registration statements.





**Audit
      Related Fees**





We
      were
      billed $-0- for the fiscal year ended December 31, 2005, and $-0- for the fiscal
      year ended December 31, 2004, for assurance and related services rendered by
      the
      principal accountant related to the audit or review of our financial statements,
      not included in the foregoing paragraph.





**Tax
      Fees**





We
      were
      billed $-0- for the fiscal year ended December 31, 2005, and $-0- for the fiscal
      year ended December 31, 2004, for professional services rendered by the
      principal accountant for tax compliance, tax advice and tax
      planning.





**All
      Other Fees**





There
      were no other products or services rendered by our principal accountant during
      the last two fiscal years that were not included in paragraphs (a), (b) or
      (c)
      above.





The
      appointment of Tedder, James, Worden & Associates, P.A. was approved by the
      Board of Directors as the principal auditors for the Company. The members of
      the
      Company’s Board of Directors, currently serve as the audit committee until the
      Company is able to recruit independent directors with the appropriate financial
      experience and/or background to serve on such committee and who are truly
      independent from internal and external influences, as well as independent under
      NASDAQ or AMEX rules. When independent directors with the appropriate financial
      background join the Board of Directors, the Board of Directors plans to
      establish a formal audit committee, which will then adopt an appropriate charter
      and pre-approval policies and procedures in connection with services to be
      rendered by the independent auditors.





50
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            of Contents*





SIGNATURES





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





SEQUIAM
                CORPORATIONDate:  April
                14, 2006By:
                /s/ Nicholas H. VandenBrekelNicholas
                H. VandenBrekel, Chairman, President andChief
                Executive Officer





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





Date:  April
                14, 2006By:
                /s/ Nicholas H. VandenBrekelNicholas
                H. VandenBrekel, Chairman, President andChief
                Executive OfficerBy:
                /s/ Mark MroczkowskiMark
                L. Mroczkowski, Chief Financial Officer(Principal
                Financial Officer), Corporate Secretary,Senior
                Vice President and Treasurer




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