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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-KSB/A



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Amendment No. 1

(Mark One)

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

For the Fiscal Year Ended December 31, 2005



| ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
|- | ---------------------------------------------------------------

For the transition period from  to

Commission file number: 000-27131



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INVERTED PARADIGMS CORPORATION

F/K/A HORIZON HOLDING CORPORATION

(Exact name of Registrant as specified in its charter)



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|                                                               |  |                        
|-------------------------------------------------------------- |  | -----------------------
|Delaware                                                       |  | 88-0381258             
|(State or other Jurisdiction of Incorporation or Organization) |  | (IRS Employer I.D. No.)

11523 Palm Brush Trail, #341

Lakewood Ranch, FL 34202

(941) 926-6180

(Address and telephone number of principal executive offices)



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

Indicate by check
mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes ̈No

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B is not contained herein, and will not 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

Issuers revenues for its most recent fiscal
year were $33,391.

The number of shares of the registrants common stock, par value $0.001 per share, outstanding as of March 15, 2006 was
24,319,750 and there were 894 stockholders of record.

Transitional Small Business Issuer
Format: ̈Yes    x  No

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ̈YES    x  NO



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EXPLANATORY NOTE

Inverted Paradigms Corporation (the Company) is filing this Amendment No. 1 to its Annual Report on Form 10-KSB for its fiscal year ended December 31, 2005, as filed with the Securities and Exchange
Commission on March 31, 2006 (the Original December 2005 Form 10-KSB), primarily to expand Managements Discussion and Analysis or Plan of Operations, to correct an error in recording warrants and stock issued as compensation
in 2005, to correct an error in recording interest expense from beneficial conversion features of convertible notes in 2005 and 2004 and to correct the resulting effects upon total additional paid in capital and accumulated deficit.

Actual Changes in the Original December 2005 Form 10-KSB.The actual changes in the Original December 2005 Form 10-KSB included in this Amendment No. 1 are
amendments to Part II that include: (a)additional discussions in Item 6 relating to the Overview, Plan of Operations, Cash Requirements, and Results of Operations(b) amended and restated Consolidated Balance Sheet as of December 31,
2005, (c) amended and restated Consolidated Statement of Operations for the years ended December 31, 2005 and 2004, (d) amended and restated Consolidated Statement of Stockholders Equity for the years ended December
31, 2005 and 2004, (e) amended and restated Consolidated Statement of Cash Flows for the years ended December 31, 2005 and 2004, (f) additional disclosure of significant accounting policies in Note 2, (g) additional or updated
disclosures in Notes 3, 4, 8, 9 (h) additional information concerning warrants and common stock related to a promissory note, and (i) a new Note 13 discussing the restatement.

Notwithstanding that there are no changes in most of the Notes to the Consolidated Financial Statements included in this Amendment No. 1, a complete Form 10-KSB document including a complete set of the Consolidated
Financial Statements (together with all of the Notes from the Original December 2005 Form 10-KSB) has been included in this Amendment No. 1, for convenient reference.

In addition, see additional amended filings of the Company for relevant subsequent events.



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INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

FORM 10-KSB

TABLE OF CONTENTS



|         |  |          |  |                                                                                                |  |     
|-------- |  | -------- |  | ---------------------------------------------------------------------------------------------- |  | ----
|         |  |          |  |                                                                                                |  | Page
|PART I   |  |          |  | 1                                                                                             
|         |  |          | 
|         |  | Item 1.  |  | Description of Business                                                                        |  | 1   
|         |  | Item 2.  |  | Description of Property                                                                        |  | 9   
|         |  | Item 3.  |  | Legal Proceedings                                                                              |  | 9   
|         |  | Item 4.  |  | Submissions of Matters to a Vote of Security Holders                                           |  | 9   
|         |  |         
|PART II  |  |          |  | 10                                                                                            
|         |  |          | 
|         |  | Item 5.  |  | Market for Registrants Common Stock and Related Stockholder Matters                           |  | 10  
|         |  | Item 6.  |  | Managements Discussion and Analysis or Plan of Operation                                      |  | 12  
|         |  | Item 7.  |  | Financial Statements (As restated)                                                             |  | 17  
|         |  | Item 8.  |  | Changes In and Disagreements With Accountants on Accounting and Financial Disclosures          |  | 17  
|         |  | Item 8a. |  | Controls and Procedures                                                                        |  | 17  
|         |  |         
|PART III |  |          |  | 18                                                                                            
|         |  |          | 
|         |  | Item 9.  |  | Directors and Executive Officers of the Registrant                                             |  | 18  
|         |  | Item 10. |  | Executive Compensation                                                                         |  | 20  
|         |  | Item 11. |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |  | 22  
|         |  | Item 12. |  | Certain Relationships and Related Transactions                                                 |  | 23  
|         |  | Item 13. |  | Exhibits, Lists and Reports on Form 8-K                                                        |  | 23  
|         |  | Item 14. |  | Principal Accountant Fees and Services                                                         |  | 24  



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Forward Looking Statements

We have made forward-looking statements, within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, in this Annual
Report on Form 10-KSB, including the sections entitled Managements Discussion and Analysis of Financial Condition and Results of Operations and Business that are based on our managements beliefs and assumptions
and on information currently available to our management. Forward-looking statements include the information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry
environment, potential growth opportunities and the effects of future regulation and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking
terminology such as the words believe, expect, anticipate, intend, plan, estimate or similar expressions.

Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in the forward-looking
statements. You should understand that many important factors, in addition to those discussed elsewhere in this Annual Report on Form 10-KSB, could cause our results to differ materially from those expressed in the forward-looking statements. These
factors include, without limitation, the rapidly changing industry and regulatory environment, our limited operating history, our ability to implement our growth strategy, our ability to integrate acquired companies and their assets and personnel
into our business, our fixed obligations, our dependence on new capital to fund our growth strategy, our ability to attract and retain quality personnel, our competitive environment, economic and other conditions in markets in which we operate,
increases in maintenance costs and insurance premiums and cyclical and seasonal fluctuations in our operating results. The Company, unless legally required, undertakes no obligation to update or revise any forward-looking statements, whether as a
result of new information, future events, or otherwise.

For further information about these and other risks, uncertainties and factors,
please review the disclosure included in this report under the caption Risk Factors.



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PART I

ITEM 1. DESCRIPTION OF BUSINESS

Overview

We were incorporated under the name DP Charters in Nevada on December 18, 1997. On April 18, 2002, we changed our name to Nomadic
Collaboration International, Inc. Effective May 30, 2003, LGC Acquisition Company, a Delaware corporation and wholly owned subsidiary of Nomadic Collaboration International, Inc., a Nevada corporation, merged with and into LiquidGolf
Corporation, a Delaware corporation, such that LiquidGolf Corporation was the surviving entity, and by virtue thereof, LiquidGolf corporation became a wholly owned subsidiary of Nomadic Collaboration.

As a result of a merger, the name of the Company changed to LiquidGolf Holding Corporation. On September 29, 2003, the Company completed a
re-incorporation merger into a Delaware Corporation thus changing the state of incorporation from Nevada to Delaware.

On December 22,
2003, the Company acquired certain assets from Leather Craft Technology, Inc. (Leather Craft), including the name, for a single cash payment of $45,000. In addition to the single cash payment, the Company incurred a finders fee of
$22,500 relating to the acquisition. Leather Craft sold leather bound notebooks and related products. The Company acquired Leather Craft in order to diversify its revenue streams.

On June 30, 2004, we acquired the Game Fore Golf business including the name, for common stock. The Company issued 10,000 shares of its common stock for
this acquisition. Game Fore Golf was accounted for by us as part of the leather goods product segment. Game Fore Golf distributed specialty golf bags and head covers adorned with wildlife artist works that Game Fore Golf is licensed, by the artist,
to distribute.

On August 12, 2004 a majority of our stockholders approved changing the name of the Company from LiquidGolf Holding
Corporation to Horizon Holding Corporation to reflect our business direction of diversifying its revenue streams.

In November 2004, we
decided to discontinue the operations of Leather Craft including Game Fore Golf, due to significantly fewer orders than expected for leather goods from Leather Crafts largest customer.

Since the date of the merger with LiquidGolf Corporation in May 2003, our goal has been create an online community for golfers that provided an
e-commerce marketplace for the sale of golf-related equipment and apparel, golf-related news and information and e-commerce solutions for other golf-related businesses. In February 2005, we closed our retail golf operation in Apopka, Florida to
focus on our golf web site operations, by seeking to partner with an experienced golf e-tailer. As of March 2006, we have been unable to find an experienced partner in the golf industry.

In November 2004, the board of directors decided to discontinue the operations of Leather Craft due to a lack of sales sufficient to support the
continued operation of Leather Craft.

In January 2006, in a continuing effort to build a revenue stream, we purchased the Silent
SwordTMsoftware and all trademarks, service marks, and logos. As of March 30, 2006, we have issued a total
of 10,000,000 shares of our common stock for Silent SwordTM. Under the purchase agreement, we may issue a
maximum of 20,000,000 common shares subject to certain provisions in the agreement. The stock issued is considered restricted securities as defined by the Securities Act of 1933, as amended. We anticipate this product to be available for sale in the
third quarter of 2006.

Unless otherwise indicated, references in this Annual Report to 2005 and 2004 are to Horizons fiscal years
ended December 31, 2005 and 2004, respectively.

Our principal executive offices and mailing address is 1800 2ndStreet East, Suite 735, Sarasota, Florida 34236, and our telephone number is (941) 256-0436.

Our Strategy

We are currently designing and testing
our recently acquired software, Silent SwordTM. The
software will offer a comprehensive set of security solutions. The solutions include anti-virus, anti-spyware, anti-spam, intrusion prevention, secure messaging, web filtering and vulnerability management. We will offer management tools to keep
threat-protection systems up-to-date. We anticipate this product to be available in the third quarter of 2006.



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We are continuing to explore opportunities available for our golf retailing website. We continue to seek
partners in the golf industry to sell products through our website. By partnering with other retailers, we may add revenue to the our company.

Our
Operating Segments

As of December 31, 2005, our operations consisted solely of our golf retailing website. In January 2006, we
purchased the Silent SwordTMsoftware and all trademarks, service marks, and logos. For the fiscal
year 2006, management will account for the Silent SwordTMoperations as a separate operating segment.
Therefore, results from operations will consist of our software and golf retailing segments. Below are the details relating to our business segments.

I.
Silent Sword Software

Silent Swordis a virus/mal-ware protection software. This concept was initially developed by
Chuck Wernicke, Chief Technology Officer (CTO) in February 2004. Silent Swordis not only used to rid the Windowscomputer system of virus and mal-ware but further enhances the performance and operation of the Operating
System (OS) by managing its protection in the startup boot of the OS.

Our retail version of Silent Swordwill enable us to
expand into the Original Equipment Manufacture (OEM) and Enterprise version.

Products

Silent Swordcombats all forms of mal-ware, spy-ware and other malicious viruses. Its patent pending process attacks the viruses at the
start-up level using a white list/black list process before it corrupts a computer. Silent Sworddifferentiates itself from other products in the way it addresses the viruses. The software is not concerned with the virus unless it
causes an issue. A virus needs to initiate itself in the startup boot section of the Windows OS. Silent Swordaddresses those active viruses. Other virus file infectors are dormant until they need to propagate. If they do propagate,
then they will become active in the start-up sector. Silent Swordcontrols the advancement of those viruses by controlling the startup file boot sector. Future Silent Swordversions will include an OEM version that will
allow Silent Swordto be customized to OEM specifications. The Enterprise version will enable Network Engineers to manually and automatically control the desktop programs that will be able to run and those that will not.

Marketing and Sales Summary

The primary marketing
focus will be to further raise awareness of the retail version. Utilization of websites and a concentrated focus on the personal computer repair shops will allow us to create a presence in the internet and in the marketplace. Secondly, we will
create mailers to key demographic sectors for purchase via the website. Thirdly, we will educate the distribution and channel resellers to extend the awareness and market share of the product. At this time, we plan to deliver repair retail shops of
major retailers the Silent SwordTMproduct at a reduced
fee to help reduce their repair time dramatically.

The next direction will be to use media outlets. Media will be utilized to
further promote the awareness of the product. Lastly, the modification and fluency of the website will promote usage, focus groups, knowledgebase implementation and increased traffic due to modified search indexing on the current sites. We plan to
present the software to the OEM market, which consists of companies like Dell, Gateway and HP/Compaq. Out intent is to allow OEM to customize or value-add the current retail version to give OEM pertinent information to speed up support and service
calls. The enterprise version will be marketed via Trade Shows, word-of-mouth and computer conferences. Success will ultimately be determined by the number of gross software sales, acceptance by the technical community and the adoption of the
product on the OEM and Corporate levels.

The Competition

Our flagship software product Silent Swordaddresses the virus/spy-ware/mal-ware issue in a completely new way. Most competitors are broken into Anti-Virus or Anti-Spy-ware software product. The main
premise is to maintain a blacklist of known mal-ware/spy-ware programs and scan the entire file structure to detect, clean and dispose of properly the computer infectors. While Silent Swords process is



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similar there are very consistent differences. Silent Sword handles not only the blacklist of definitions but also a white list of definitions of programs
that are allowed to run on the PC. Also, Silent Sword patent-pending process addresses the issue in the startup section of the boot. This enables Silent Sword to address only propagating viruses not just the viruses that are not active. Again, using
this method also allows Silent Sword to run faster that its competitors because scanning the startup sectors is very fast compared to scanning the entire file structure. The last point about Silent Sword and its competition involves the use of
automation in the product. Most competitors have the need for interfering manual transactions. Silent Sword can virtually run on its own without interaction of the end-user.

The markets for our products are intensely competitive and are subject to rapid changes in technology. We also expect competition to increase in the
near-term. We believe that the principal competitive factors affecting the markets for our products include, but are not limited to:



| |  |  | performance,
| | - |  | ------------



| |  |  | quality,
| | - |  | --------



| |  |  | breadth of product group,
| | - |  | -------------------------



| |  |  | integration of products,
| | - |  | ------------------------



| |  |  | introduction of new products,
| | - |  | -----------------------------



| |  |  | brand name recognition,
| | - |  | -----------------------



| |  |  | price,
| | - |  | ------



| |  |  | market presence,
| | - |  | ----------------



| |  |  | functionality,
| | - |  | --------------



| |  |  | innovation,
| | - |  | -----------



| |  |  | customer support,
| | - |  | -----------------



| |  |  | frequency of upgrades and updates,
| | - |  | ----------------------------------



| |  |  | reduction of production costs,
| | - |  | ------------------------------



| |  |  | manageability of products, and
| | - |  | ------------------------------



| |  |  | reputation.
| | - |  | -----------

We believe that we compete favorably against
our competitors in performance, innovation and price. However, some of our competitors have longer operating histories, greater brand recognition, stronger relationships with strategic channel partners, larger technical staffs, established
relationships with hardware vendors and/or greater financial, technical and marketing resources. These factors may provide our competitors with an advantage in penetrating markets with their network security and management products.

Our principal competitors in the anti-virus market are McAfee, Symantec Corp., Computer Associates International Inc. and Microsoft Corp., which expects
to have its consumer security solution that may offer system and network protection products as enhancements to their operating systems, generally available in June 2006. In addition to competition from large technology companies such as McAfee, EMC
Corp., Hewlett-Packard Co., IBM, Novell Inc. and Microsoft Corp., we also face competition from smaller companies and shareware authors that may develop competing products.

Proprietary Technology

Our success depends significantly upon proprietary software technology. We
rely on a combination of patents pending, trademarks, trade secrets and copyrights to establish and protect proprietary rights to our software. However, these protections may be inadequate or competitors may independently develop technologies or
products that are substantially equivalent or superior to our products. Laws in some foreign countries either do not protect these rights at all or offer only limited protection for these rights. The steps taken by us to protect our proprietary
software technology may be inadequate to deter misuse or theft of this technology.



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II. Online Golf Retail

Our website was being redeveloped and was not operating from March 1, 2005 to April 14, 2005. We also operated a single retail location in Apopka, Florida. The retail location was closed in February 2005. Our website
is currently operating as an affiliate site and has not yet begun offering products directly. We currently have a limited amount of products on our website.

Through our website, www.liquidgolf.com, we successfully built an online community of over 90,000 registered members. We were able to build this base providing members with additional opportunities to participate in
the world of golf.

Golfers are an appealing demographic group, in terms of income and purchasing power, to target as a business
opportunity. Our business has only reached a small portion of the golf industry. Our business strategy for this segment is to partner with an experienced golf retailer that has golf specific e-commerce experience while utilizing our base of
customers.

Products and Services

We
offer a limited number of products through our website. Most golf retailers are currently able to offer a wider selection of products than we offer.



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Competition

We are subject to extensive competition from numerous competitors. Many of our competitors have substantially greater financial, distribution and marketing resources. In addition, many of our competitors may be able to secure products from
vendors on more favorable terms, fulfill customer orders more efficiently and adopt more aggressive pricing or inventory availability.

We
believe golfers make their purchase decisions based on price, the feel of equipment, word-of-mouth and magazines or other advertisements. We believe that our ability to compete depends upon many factors, including:



| |  |  | the market acceptance of our online store and services;
| | - |  | -------------------------------------------------------



| |  |  | the success of our sales and marketing efforts;
| | - |  | -----------------------------------------------



| |  |  | the performance and reliability of our services;
| | - |  | ------------------------------------------------



| |  |  | the price of our products; and
| | - |  | ------------------------------



| |  |  | the effectiveness of our customer service and support efforts.
| | - |  | --------------------------------------------------------------

Our main competitors for the sale of golf equipment and related merchandise are:

Golf Pro Shops. Traditionally golf pro
shops lose money on a yearly basis due to the fact that they cannot offer the price, selection or availability of merchandise we can offer. Many PGA professionals that own and staff the pro shops do not have the merchandising experience to manage
inventory in a manner that will always provide consumers with a wide variety of the latest in golf equipment, apparel and services.

Sporting Goods Retailers. We compete with large sporting goods retailers such as The Sports Authority, Dicks Sporting Goods and the Sports Chalet. Although some of these companies have websites, their online product offering
mirrors the limited selection of their retail stores.

Discount Golf Shops. We compete directly with discount golf retailers such as
Nevada Bobs and Edwin Watts. We believe that the discount golf sector accounts for a majority of yearly golf equipment sales. In addition, our online prices are generally cheaper than those offered at these discount stores which do not include the
significant potential savings which non-Florida based customers experience since there presently is no sales tax on the sale of goods over the Internet. As a result, such savings can be as high as an additional 8.5% in some states. In addition, we
generally do not charge customers for shipping and handling.

Online Golf Retailers. Internet retailers can be classified into two
categories. The first includes pure Internet golf e-tailers. The majority of these golf e-tailers are only focused on the consumer market. In addition, many of these e-tailers do not have direct supply relationships with the manufacturers and are
forced to source goods from other retailers and pro-shops, which has reduced their margins and forced many of our competitors to either sell or close down their e-commerce operations. The second group of Internet e-tailers includes the multi sport
e-tailers. Similar to brick and mortar sporting goods retailers, these companies do not offer the selection of merchandise since they have to cater to the interests of other sports enthusiasts that visit their site. We are able to offer superior
customer service as our customer service center is staffed with PGA professionals who can assist customers making buying decisions as well as offer our customers custom clubs.

Employees

As of December 31, 2005, we had 2 full time executive management personnel. After the
purchase of Silent SwordTMin January 2006, we hired 4 additional executive management and administration
personnel. As of March 30, 2006, our 6 management personnel consists of our Chief Executive Officer, Chief Financial Officer, Chief Technology Officer, Chief Quality Officer, web developer and an administrative assistant. None of the employees are
covered by a collective bargaining agreement and our management considers relations with our employees to be good.



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RISK FACTORS

Risks Specific to Our Company

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 our business.

We have incurred net losses and negative cash flows from operations
in all of the quarters 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 substantial doubt about our ability to continue as a
going concern. Our independent registered certified public accounting firm has issued its report, which includes an explanatory paragraph for going concern uncertainty on our financial statements as of December 31, 2005. Our ability to continue
as a going concern is heavily dependant upon our ability to obtain additional capital to sustain operations. Currently, we have no commitments to obtain additional capital, and there can be no assurance additional capital will be available on
acceptable terms, if at all.

We will need additional financing, the availability of which is uncertain, to fund our business and to implement our
business plan.

We will require additional financing in order to carry out our business plan. Such financing may take the form of the
issuance of common or preferred stock or debt securities, or may involve bank financing. There can be no assurance that we will obtain such additional capital on a timely basis, on favorable terms, or at all. If we are unable to generate the
required amount of additional capital, our ability to meet our financial obligations and to implement our business plan may be adversely effected.

We
will need additional capital, the availability of which is uncertain, to fund our business and complete the implementation of our business plan.

We will require additional financing in order to carry out our business plan. Such financing may take the form of the issuance of common or preferred stock or debt securities, or may involve bank financing. There can be no assurance that we
will obtain such additional capital on a timely basis, on favorable terms, or at all. If we are unable to generate the required amount of additional capital, our ability to meet our financial obligations and to implement our business plan may be
adversely effected.

We may dilute existing stockholders by issuing more of our common stock

It is likely that in order to obtain additional funds as needed, we will have to sell additional securities including, but not limited to, its common
stock, the effect of which may result in a substantial dilution of the present equity interests of our shareholders.

We rely heavily on our
intellectual property rights which offer only limited protection against potential infringers.

We rely on a combination of pending
patents, copyright and trademark laws, trade secrets, confidentiality procedures and contractual provisions to protect our proprietary rights. Despite such efforts to protect our proprietary rights, unauthorized parties from time to time have copied
aspects of our software products or have obtained and used information that we regard as proprietary. Policing unauthorized use of our software products could be time-consuming and costly. Furthermore, our means of protecting our proprietary rights
may not be adequate, and our competitors may independently develop similar technology.

Intellectual property litigation in the network and system
security market is common and can be expensive.

As more and more software patents are granted worldwide, as the number of products and
competitors in our industry segments grows and as the functionality of products in different industry segments overlap, we expect that software product developers will be increasingly subject to infringement claims. Infringement or misappropriation
claims may be asserted against us, and any such assertions could harm our business. Additionally, certain patent holders have become more aggressive in threatening litigation in attempts to obtain fees for licensing the right to use patents. Any
such claims or threats, whether with or without merit, could be time-consuming to defend, result in costly litigation and diversion of resources, or could cause product shipment delays or require us to enter into royalty or licensing agreements. In
addition, such royalty or license agreements, if required, may not be available on acceptable terms, if at all, which would likely harm our business.



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Our management may be unable to effectively integrate our software purchase and to manage our growth and we may be
unable to fully realize any anticipated benefits.

In the event our software is successful, we could experience rapid growth in
revenues, personnel, complexity of administration and in other areas. There can be no assurance that we will be able to manage the significant strains that future growth may place on our administrative infrastructure, systems, and controls. If we
are unable to manage future growth effectively, our business, operating results and financial condition may be materially adversely affected.

If we are
unable to hire and retain key personnel, then we may not be able to implement our business plan.

We are dependent on our ability to
hire and retain highly skilled and qualified personnel. We face competition for qualified personnel from numerous industry sources, and there can be no assurance that we will be able to attract and retain qualified personnel on acceptable terms. We
do not have key man insurance on any of our employees. The loss of service of any of our key personnel could have a material adverse effect on our operations or financial condition.

We face product development risks associated with rapid technological changes in our market.

Any
change to our customers operating systems could require us to modify our products and could cause us to delay product releases. In addition, any decline in the market acceptance of these operating systems we support may require us to ensure
that all of our products and services are compatible with other operating systems to meet the demands of our customers. If potential customers do not want to use the Microsoft operating systems we support, we will need to develop more products that
run on other operating systems adopted by our customers. If we cannot successfully develop these products in response to customer demands, our business could be adversely impacted. The development of new products in response to these risks would
require us to commit a substantial investment of resources, and we might not be able to develop or introduce new products on a timely or cost-effective basis, or at all, which could lead potential customers to choose alternative products.

Risks Specific to Our Industry

General economic conditions may affect consumer and business purchases.

We will become increasingly
subject to the risks arising from adverse changes in domestic and global economic and political conditions. If economic growth in the United States and other countries economies is slowed, many customers may delay or reduce technology
purchases. This could result in reductions in sales of our products, longer sales cycles, slower adoption of new technologies and increased price competition.

We are subject to intense competition in the system and network protection markets, and we expect to face increased competition in the future.

The software industry has limited barriers to entry, and the availability of desktop computers with continually expanding performance at progressively lower prices contributes to the ease of market entry. The markets
in which we compete are characterized by vigorous competition, both by entry of competitors with innovative technologies and by consolidation of companies with complementary products and technologies.

In addition, some of our competitors have greater financial, technical, sales and marketing and other resources. Furthermore, a reduction in the number
and availability of compatible third-party applications may adversely affect the sale of our products. Because of these and other factors, competitive conditions in the industry are likely to intensify in the future. Increased competition could
result in continued price reductions, reduced net revenues and profit margins and loss of market share, any of which would likely harm our business.



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Government Regulations and Legal Uncertainties Could Burden Our Business

The adoption or modification of laws or regulations applicable to software and the Internet could harm our business. New laws may be imposed relating to
intellectual property, privacy, libel and taxation apply to the software industry. New laws and regulations and interpretations of existing laws and regulations could subject us and/or our customers to potential liability, which could have an
adverse effect on our business, operating results and financial condition. The adoption of any future laws or regulations might decrease the growth of the Internet, decrease demand for our products and services, impose taxes or other costly
technical requirements or otherwise increase the cost of doing business or in some other manner have a significant adverse effect on us or our customers, which, in turn, could have a significant adverse effect on our business and operating results.
In addition, applying existing laws governing issues such as property ownership, copyrights and other intellectual property issues, taxation, libel, obscenity and personal privacy to the Internet is uncertain. The vast majorities of these laws were
adopted prior to the advent of the Internet and related technologies and, as a result, do not contemplate or address the unique issues of the Internet and related technologies. Changes to these laws intended to address these issues, including some
recently proposed changes, could create uncertainty in the marketplace which could reduce demand for our services or increase the cost of doing business as a result of costs of litigation or increased service delivery costs, or could in some other
manner have a significant adverse effect on our business and operating results. As our services are available over the Internet in multiple states and foreign countries, and as we facilitate sales by our customers to end users located in these
states and foreign countries, these jurisdictions may claim that we are required to qualify to do business as a foreign corporation in each of these states or foreign countries. Any new legislation or regulation, or the application of laws or
regulations from jurisdictions whose laws may not currently apply to our business, could have a significant adverse effect on our business and operating results.

Risks Related to Our Securities

Our common stock is subject to the penny stock rules of the sec and the trading
market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a penny stock, for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or
with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:



| |  |  | that a broker or dealer approve a persons account for transactions in penny stocks; and
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In order to approve a persons account for transactions in penny stocks, the broker or dealer must:
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | obtain financial information and investment experience objectives of the person; and
| | - |  | ------------------------------------------------------------------------------------



| |  |  | make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be
capable of evaluating the risks of transactions in penny stocks.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The broker or dealer must also deliver, prior to any
transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:



| |  |  | sets forth the basis on which the broker or dealer made the suitability determination; and
| | - |  | ------------------------------------------------------------------------------------------



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##### Table of Contents

| |  |  | that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
| | - |  | ----------------------------------------------------------------------------------------------------------

Generally, brokers may be less willing to execute transactions in securities subject to the penny stock rules. This may make it more
difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.

Disclosure also has to be
made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights
and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in
penny stocks.

Our share price may be highly volatile.

The market prices of equity securities of small companies have experienced extreme price volatility in recent years not necessarily related to the individual performance of specific companies. Factors such as
announcements by us, or our competitors concerning products, technology, governmental regulatory actions, other events affecting healthcare companies generally and general market conditions may have a significant impact on the market price of our
shares and could cause it to fluctuate substantially.

ITEM 2. DESCRIPTION OF PROPERTY

All of our operations, including our retail sales, are based in our
facility located at 1800 2ndStreet East, Suite 735, Sarasota, Florida 34236. Our rent for this location is
approximately $4,100 per month and our three year lease expires on February 28, 2009. Our personal property consists of computer equipment acquired subsequent to December 31, 2005.

ITEM 3. LEGAL PROCEEDINGS

We are not a party to any pending legal proceeding or litigation. In addition,
none of our property is the subject of a pending legal proceeding. We are not aware of any legal proceedings against the company or our property contemplated by any governmental authority.

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

No matters were submitted to a vote of
security holders during the last quarter of the fiscal year ended December 31, 2005.



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##### Table of Contents

PART II

ITEM 5. MARKET FOR REGISTRANTS COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Our common stock is
traded on the OTC Bulletin Board under the symbol HRZH.OB. The following table presents the range of high and low quotations reported on the OTC Bulletin Board during the past two years. The market quotations reflect inter-dealer prices,
without retail mark-up, markdown or commissions and may not necessarily represent actual transactions. We have a total of 894 stockholders of record as of March 15, 2006.



|                 |  |          |      |         |   |     
|---------------- |  | -------- | ---- | ------- | - | ----
|                 |  | High ($) |      | Low ($)
|Fiscal Year 2005 |  |          |      |         |   |     
|Fourth Quarter   |  | $        | 0.20 |         | $ | 0.10
|Third Quarter    |  | $        | 0.18 |         | $ | 0.10
|Second Quarter   |  | $        | 0.25 |         | $ | 0.06
|First Quarter    |  | $        | 0.95 |         | $ | 0.25
|                 |  |         
|Fiscal Year 2004 |  |          |      |         |   |     
|Fourth Quarter   |  | $        | 1.00 |         | $ | 0.35
|Third Quarter    |  | $        | 1.45 |         | $ | 0.75
|Second Quarter   |  | $        | 3.25 |         | $ | 1.05
|First Quarter    |  | $        | 3.10 |         | $ | 1.05

Dividends and Dividend Policy

We have never declared or paid cash dividends on our common stock and do not anticipate paying any cash dividends on our common stock in the foreseeable future. We currently intend to retain future earnings, if any,
to finance the expansion of our business and for general corporate purposes. We cannot assure you that we will pay dividends in the future. Our future dividend policy is within the discretion of our Board of Directors and will depend upon various
factors, including our results of operations, financial condition, capital requirements and investment opportunities.

Recent Sales of Unregistered
Securities

On March 9, 2006, we sold in a private placement, a secured promissory note in the amount of $250,000 to a stockholder.
Interest accrues on the outstanding principal balance from and after March 6, 2006 at a rate of 11 percent per annum. At maturity, October 31, 2006, in addition to the payment of principal and accrued interest, we will deliver as additional
incentive for making the loan, 75,000 shares of our common stock. The stock is considered restricted securities as defined by the Securities Act of 1933, as amended.

On December 6, 2005, we sold in a private placement, a secured promissory note in the amount of $50,000 to a stockholder. Interest accrues on the outstanding principal balance from December 6, 2005 at a rate
of 8 percent per annum. The note holder has the sole option of converting the principal represented by this note into our common stock at a strike price equal to a 50 percent discount to the average closing bid price of the stock for the ten days
immediately prior to the conversion. The note holder may convert all or any part of the principal represented by this note. The maturity date for the promissory note is December 5, 2006.

On November 15, 2005, we sold in a private placement, a secured promissory note in the amount of $200,000 to a stockholder. Interest accrues on the
outstanding principal balance from and after November 15, 2005 at a rate of 11 percent per annum. At maturity, April 18, 2006, in addition to the payment of principal and accrued interest, we will deliver as additional incentive for making the
loan, 50,000 shares of our common stock. Any stock issued pursuant to this promissory note will be restricted securities as defined by the Securities Act of 1933, as amended.

On July 7, 2005, we sold in a private placement, a secured promissory note in the amount of $5,000 to a stockholder. Interest accrued on the
outstanding principal balance from July 7, 2005 at a rate of 8 percent per annum. The note holder had the sole option of converting the principal represented by this



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##### Table of Contents

note into our common stock at a strike price equal to a 50 percent discount to the average closing bid price of the stock for the ten days immediately prior
to the conversion. The note holder could convert all or any part of the principal and accrued interest represented by this note. On December 6, 2005, we issued 57,076 shares of our common stock to satisfy the promissory note conversion
agreement.

On July 7, 2005, we sold in a private placement, a secured promissory note in the amount of $10,000 to a stockholder.
Interest accrued on the outstanding principal balance from July 7, 2005 at a rate of 8 percent per annum. The note holder has the sole option of converting the principal represented by this note into our common stock at a strike price equal to
a 50 percent discount to the average closing bid price of the stock for the ten days immediately prior to the conversion. The note holder may convert all or any part of the principal and accrued interest represented by this note. On
November 28, 2005 we issued 129,595 shares of our common stock to satisfy the promissory note conversion agreement.

On
February 16, 2004, we sold in a private placement, a secured promissory note in the amount of $600,000 to a stockholder. Interest accrued on the outstanding principal balance from and after February 16, 2004 at a rate of 18 percent per
annum. The note holder had the sole option of converting the principal represented by this note into our common stock at a strike price equal to a 40 percent discount to the average closing bid price of the stock for the twenty days immediately
prior to the conversion. The note holder may convert all or any part of the principal represented by this note. As part of the same transaction, the note holder acquired a warrant, issued by the us, to purchase 50,000 shares of our common stock at
$1.25 per share. On June 14, 2004, the Company entered into a promissory note conversion agreement (the Agreement) with this stockholder. The agreement called for the holder of the note to exercise the option to convert the principal sum
of $600,000 into shares of the Companys common stock at the lesser of $1.25 per share or a 40% discount to the average closing bid price for the thirty days after the signing of the agreement. In addition, per the agreement, the Company paid
the accrued interest on the note in cash. On August 4, 2004 the Company issued 714,285 shares of common stock to satisfy the promissory note conversion agreement.

On August 14, 2004 we offered $1,500,000 in $0.30 units. Each unit consists of one share of common stock and a warrant to purchase three shares of our common stock at a purchase price of $0.75 per share. As of
March 15, 2006 we had sold $371,185 in units to 12 accredited investors. Each of the investors had access to and was provided with relevant information concerning the company. The securities were exempt from registration pursuant to Rule 506 of
Regulation D and Section 4(2) of the Securities Act of 1933, as amended.



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##### Table of Contents

Equity Compensation Plan Information

The following table summarizes certain information regarding our equity compensation plans as of December 31, 2005. The underlying compensation plan has been previously approved by a vote of the shareholders.



|                                                       |  |                                                                                         |  |                                                                          |      |                                                                                              |        
|------------------------------------------------------ |  | --------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------ | ---- | -------------------------------------------------------------------------------------------- | -------
|Plan category                                          |  | Number of securitiesto be issued uponexercise ofoutstanding options,warrants and rights |  | Weighted-averageexercise price ofoutstanding options,warrants and rights |      | Number of securities remaining available for future issuance under equity compensation plans
|Equity compensation plans approved by shareholders     |  | 1,500,000                                                                               |  | $                                                                        | 1.00 |                                                                                              | 146,000
|Equity compensation plans not approved by shareholders |  | N/A                                                                                     |  |                                                                          | N/A  |                                                                                              | N/A    
|                                                       |  |                                                                                         |  |                                                                          |      |                                                                                              |        
|Total:                                                 |  | 1,500,000                                                                               |  | $                                                                        | 1.00 |                                                                                              | 146,000
|                                                       |  |                                                                                         |  |                                                                          |      |                                                                                              |        

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

The following discussion of our
plan of operation, financial condition and results of operations should be read in conjunction with the Companys consolidated financial statements, and notes thereto, included elsewhere herein. This discussion contains forward-looking
statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors including, but not limited to, those discussed in this Annual
Report.

Overview

We were
incorporated under the name DP Charters in Nevada on December 18, 1997. On April 18, 2002, we changed our name to Nomadic Collaboration International, Inc. Effective May 30, 2003, LGC Acquisition Company, a Delaware
corporation and wholly owned subsidiary of Nomadic Collaboration International, Inc., a Nevada corporation, merged with and into LiquidGolf Corporation, a Delaware corporation, such that LiquidGolf Corporation was the surviving entity, and by virtue
thereof, LiquidGolf corporation became a wholly owned subsidiary of Nomadic Collaboration. As a result of a merger, the name of the Company changed to LiquidGolf Holding Corporation. On September 29, 2003, the Company completed a re-incorporation
merger into a Delaware Corporation thus changing the state of incorporation from Nevada to Delaware.

On August 12, 2004 a majority of our
stockholders approved changing the name of the Company from LiquidGolf Holding Corporation to Horizon Holding Corporation to reflect our business direction of diversifying its revenue streams.

Since the date of the merger with LiquidGolf Corporation in May 2003, our goal has been to create an online community for golfers that provided an
e-commerce marketplace for the sale of golf-related equipment and apparel, golf-related news and information and e-commerce solutions for other golf-related businesses. In February 2005, we closed our retail golf operation in Apopka, Florida to
focus on our golf web site operations, by seeking to partner with an experienced golf e-tailer. As of March 2006, we have been unable to find an experienced partner in the golf industry.

In January 2006, in a continuing effort to build a revenue stream, we purchased the Silent SwordTMsoftware and all trademarks, service marks, and logos. As of March 30, 2006, we have issued a total of 10,000,000 shares of our common stock for Silent
SwordTM. Under the purchase agreement, we may issue a maximum of 20,000,000 common shares subject to certain
provisions in the agreement. The stock issued is considered restricted securities as defined by the Securities Act of 1933, as amended. We anticipate this product to be available for sale in the third quarter of 2006. We are currently
re-engineering, re-designing and re-testing our software, Silent SwordTM. The re-designing is being completed by our Chief Technology Officer and his team. This process will include redefining core business requirements along with re-documentation and re-testing of all operating systems and applicable
applications. Re-testing of the software has required an addition employee and the addition of a development and testing sandbox environment that has been purchased. The costs associated with redesign and retesting are approximately $100,000 for
labor, inclusive of officers salary of $66,000, and $10,000 for equipment. The redesign and retesting costs were incurred prior to June 2006 and have not been delayed since cash required for this process has been acquired through financing.
Additional capital for marketing, packaging and customer services will be needed after the product is complete. If the capital is not available after June 2006, the release of the product could be delayed.



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Plan of Operation

We plan to grow our business with the purchase of the Silent SwordTMsoftware. The purchase of the software will help diversify our revenue beyond golf retailing. We are currently designing and testing our software, Silent SwordTMand we anticipate this product will be available to end consumers in the third quarter of
2006. We are continuing to explore opportunities for our golf retailing segment. We are constantly reviewing our segments to determine our best overall strategy.

Based upon the Companys current level of revenues and cash position, we will need to raise additional capital in order to fund current operations.
These factors raise substantial doubt about our ability to continue as a going concern. We are pursuing several alternatives to address this situation, including raising additional funding through an equity or debt financing. As a part of our
purchase of the Silent SwordTMsoftware, the seller is
required to raise a minimum of two million dollars to help fund operations. If the funds are not raised, the seller will only be entitled to 50% of the $300,000 purchase price. On March 9, 2006, we sold in a private placement, a secured promissory
note in the amount of $250,000 to a stockholder of the Company. On April 3, 2006, we signed an agreement to sell up to 35 million shares of restricted stock with an investor. On April 17, 2006, the investor purchased 4 million shares for $180,000.
We are also currently in negotiations to sell approximately 3 million shares to another investor. There can be no assurance that the requisite financing will be consummated in the necessary time frame or on terms acceptable to us. Should we be
unable to raise sufficient funds, we may be required to curtail our operating plans or worst case, cease operations. No assurance can be given that we will be able to operate profitably on a consistent basis, or at all, in the future.

Cash Requirements

We
believe we will need an additional $2,400,000 to continue operations over the next twelve months. These expenses include the following:



|                                              |  |   |          
|--------------------------------------------- |  | - | ---------
|Marketing                                     |  | $ | 1,100,000
|Officers salaries and related taxes          |  |   | 390,000  
|Other general and admin expenses              |  |   | 240,000  
|Management consultants                        |  |   | 160,000  
|Payroll and related taxes                     |  |   | 135,000  
|Health and liability insurance                |  |   | 100,000  
|Legal, accounting and other professional fees |  |   | 100,000  
|Rent                                          |  |   | 57,000   
|Travel                                        |  |   | 40,000   
|Director fees                                 |  |   | 30,000   
|Web design and hosting                        |  |   | 22,000   
|Other computer and office equipment           |  |   | 16,000   
|Computer equipment for testing                |  |   | 10,000   
|                                              |  |   |          
|                                              |  | $ | 2,400,000
|                                              |  |   |          

If we are unable to raise the required capital, we will need to reduce current and expected
expenses in the future. The most significant reduction would be in marketing of our product. This may greatly reduce our ability to generate sales.

If
additional capital is raised, we plan to use the capital to further enhance our software, increase marketing, and accelerate our ability to reach the retail market by selling our product in retail stores. We currently are planning to sell our
software exclusively on our website. Additional capital would also allow us to pay for packaging and distribution of our software in a compact disc format.



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Results of Operations

We managed our business on a segment basis. We rely on an internal management reporting process that provides revenue and certain operating cost information for making financial decisions and allocating resources. Our
principal areas of measurement and decision-making for the fiscal year 2005 were the Golf Retail and Leather Products sales segments. As of December 2004, the leather goods segment was discontinued.

Comparison of the fiscal year ended December 31, 2005 and December 31, 2004.

CONSOLIDATED FINANCIAL INFORMATION



|                                       |  |      |           |   |      |   |          
|-------------------------------------- |  | ---- | --------- | - | ---- | - | ---------
|                                       |  | 2005 |           |   | 2004
|Net sales                              |  | $    | 33,391    |   |      | $ | 909,272  
|Cost of sales                          |  |      | 27,004    |   |      |   | 759,704  
|Gross profit                           |  |      | 6,387     |   |      |   | 149,568  
|General and administrative             |  |      | 1,135,778 |   |      |   | 2,058,939
|Interest (income) expense , net        |  |      | 67,001    |   |      |   | 645,348  
|Write down of impaired assets          |  |      | 2,666     |   |      |   | 10,809   
|(Gain) Loss on Discontinued Operations |  |      | (13,200   | ) |      |   | 306,094  
|Gain on extinguishment of debt         |  |      | (3,374    | ) |      |   |         

Net Sales. Net sales from continuing operations were $33,391 in 2005 a decrease of
approximately 96% from $909,272 in 2004. This decrease was due to the closing of the retail store activity during 2005.



|              |  |      |        |      |   |          
|------------- |  | ---- | ------ | ---- | - | ---------
|              |  | 2005 |        | 2004
|Net sales     |  | $    | 33,391 |      | $ | 1,116,226
|Cost of sales |  |      | 27,004 |      | $ | 907,614  

Sales, including sales from discontinued operations, decreased approximately 97%, or $1,082,835 in
2005 compared to 2004. The decrease was the result of closing our retail store in February 2005 and the discontinuing the operations of Leather Craft Technology, Inc. in November 2004.

Cost of Sales. Cost of sales from continuing operations was $27,004 in 2005, an decrease of approximately 96% from $759,704 in 2004. This
decrease was the result of a 96% decrease in net sales.

Gross Profit. Gross profit from continuing operations was $6,387 in
2005, an decrease of approximately 96% from gross profit of $149,568 in 2004. This decrease is consistent with our 96% decrease in net sales.



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Operating Expenses



|                           |  |      |           |      |   |          
|-------------------------- |  | ---- | --------- | ---- | - | ---------
|                           |  | 2005 |           | 2004
|General and administrative |  | $    | 1,132,404 |      | $ | 2,058,939

General and Administrative Expenses. General and Administrative expenses were $1,132,404 in
2005, a decrease of 45% from $2,058,939 in 2004. In 2005, a $408,750 non-cash expense was recorded for the amortization of a prepaid expense recorded in connection with an investment banking commitment retaining PanAmerica Capital Group, Inc. to
assist the Company in all financial activities of the Company. This was a 58% decrease from $981,000 in 2004. The compensation was 1,800,000 shares of common stock and the remaining term of the agreement was fully amortized as of May 30, 2005.
The additional decrease in 2005 is due to a $314,867 non-cash expense for the amortization of deferred restricted stock compensation an decrease of 45% from $572,324 in 2004. During 2005, as compared to 2004, we incurred approximately $180,000 of
fewer expenses due to the closing of our single retail location. We also incurred $91,000 and $122,000 less in advertising and administrative salaries during 2005 as we implemented cost control measures.

Other Income and Expenses

Interest income and
expense, net. Net interest expense was $67,001 in 2005, a net decrease of $628,347 from $695,348 of interest expense in 2004. The decrease interest expense is the result of interest expense paid on promissory notes and $600,000 of interest
expense recognized from a beneficial conversion during 2004.

Write down of impaired assets. Write down of impaired assets
decreased $8,143 or 75% in 2005. This decrease was due to the write down of certain property and equipment that was abandoned or sold when we discontinued our Leather Products operations in 2004 and closed our golf retail facility in February 2005.
The portion of this impairment related to the leather goods product segment has been reported as a component of discontinued operations.

Gain on extinguishment of debt. Gain on settlement of liabilities was $3,374 for 2005 compared to $310,125 for the same period in 2004. This decrease was the result of our determination that these amounts were not owed
for obligations in 2005 and 2004 or were obtained through negotiations with our vendors in the corresponding year. These amounts have been recorded as a reduction of operating expenses during 2005 and 2004.

Liquidity and Capital Resources

We had cash balances
totaling approximately $169,000 as of December 31, 2005. Historically, our principal source of funds has been cash generated from financing activities. Our operations are seasonal and our source of liquidity may vary during the year.

We believe that we will require an additional $2,400,000 to fund our currently anticipated requirements for ongoing operations for our
existing business for the next twelve-month period. We currently intend to satisfy our long-term liquidity requirements from cash flow from operations and to the extent such funds are insufficient, we must raise additional funds to sustain
operations.

Cash flow from operations. We have been unable to generate either significant liquidity or cash flow to fund our
current operations. We frequently change our pricing structure to take into account our customers fluctuating cash flows, service and product needs. We anticipate that cash flows from operations will be insufficient to fund our business
operations for the next twelve-month period.

Cash flows from financing activities. Net cash provided by financing activities
was generated from secured promissory notes in the amounts of $10,000, $5,000, $200,000 and $50,000 that we sold in a private placement to four stockholders. In December 2005, we entered into a promissory note conversion agreement with two
stockholders and converted $15,000, plus $562 of accrued interest, into common stock. Cash flows from discontinued operations consisted of impaired goodwill of $108,400, impaired property and equipment of $2,280, a change in prepaids of $8,393, a
change in other assets of $5,879, a change in accounts payable of $35,900 and a change in other liabilities of $24,250 for the year ended December 31, 2004. In 2005, cash flows from discontinued operations consisted of a change in accrued expenses
of $18,825. We believe that cash flows from discontinued operations will benefit us since less cash will be used to fund the operations of this business that was unable to generate the cash needed to support its own operations.



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##### Table of Contents

Variables and Trends

We have a limited operating history in connection with the current operation of our web site and software development. Accordingly, the comparison of the financial data for the periods presented may not be a
meaningful indicator of our future performance and must be considered in light of our limited operating history and our outsourcing of operations of our golf Internet website.

Critical Accounting Policies

We make use of estimates and assumptions that impact the reported
amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to bad debts, inventories
and goodwill. These estimates and assumptions are based on historical results and trends as well as our forecasts as to how these might change in the future.

We believe the following critical accounting policies, among others, impact the significant judgments and estimates we use in the preparation of our financial statements:

Revenue Recognition.

Revenue was earned by the
Company from the sale of golf equipment and related accessories through its online retail store and its retail location which was closed in February 2005. Online merchandise revenue was recognized upon the shipment of the merchandise, which accrued
only after credit card authorization was obtained. Customers were allowed to return items for credit within 14 days of purchase. The Company provided for estimated returns at the time of shipment based on historical data. For the years ended
December 31, 2005 and 2004, no allowance for returns was recorded because the estimated amounts were immaterial.

Upon the roll-out of
Silent Sword, we will recognize revenue from the
sale of software upon delivery of a license to the customer, provided that persuasive evidence of an arrangement exists, the license fee is fixed and determinable, and collection of the fee is considered probable.

The Company recognizes revenues on a gross basis when the goods are shipped to the end user. The Company uses the gross method of revenue recognition, as
prescribed under EITF 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent, as the Company is the primary obligor in the transaction and is obligated to pay the supplier for work performed regardless of whether the
customer accepts the product.

Stock-Based Compensation

We account for our employee stock-based compensation plans in accordance with APB Opinion No. 25 (APB No. 25), Accounting for Stock Issued to Employees and Financial Accounting Standards Board
Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensationan Interpretation of APB Opinion No. 25. Accordingly, no compensation cost is recognized for our restricted stock granted to employees
when the exercise price of each option equals or exceeds the fair value of the underlying common stock as of the grant date for each stock option.

Recent Accounting Pronouncements

In December 2004, the FASB issued Statement No. 123R, Share-Based
Payment, which requires companies to recognize in the statement of operations all share-based payments to employees, including grants of employee stock options, based on their fair values. Accounting for share-based compensation transactions
using the intrinsic method supplemented by pro forma disclosures will no longer be



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##### Table of Contents

permissible. The new statement will be effective for public entities in periods beginning after June 15, 2005, and, accordingly, will be adopted by us
in the first quarter of calendar year 2006. The actual impact of adoption of SFAS 123R cannot be fully predicted at this time because it will depend on levels of share-based payments granted in the future. The adoption of this new statement will
have no effect until share-based compensation is issued by the Company.

Off Balance Sheet Arrangements

We have no 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 investors.

ITEM 7. FINANCIAL STATEMENTS

The financial statements required to be filed hereunder are set forth on
pages F-1 through F-14 and are incorporated herein by this reference.

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

None.



|ITEM 8A. | CONTROLS AND PROCEDURES
|-------- | -----------------------

(a) Evaluation of
disclosure controls and procedures. Under the supervision and with the participation of our senior management, including our chief executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this Annual Report (the Evaluation Date).
Based on this evaluation, our chief executive officer and principal financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were, to the best of their knowledge, effective such that the information relating
to Horizon, including our consolidated subsidiaries, required to be disclosed in our Securities and Exchange Commission (SEC) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules
and forms, and (ii) is accumulated and communicated to Horizons management, including our chief executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting that
occurred during the quarter ended December 31, 2005 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.



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##### Table of Contents

PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The names of our executive officers and
directors, their ages as of March 1, 2006, and the positions currently held by each are as follows:



|                 |  |     |  |                                      
|---------------- |  | --- |  | -------------------------------------
|Name             |  | Age |  | Position                             
|Stewart York     |  | 38  |  | Chief Executive Officer and Director 
|Charles Wernicke |  | 39  |  | Chief Technology Officer and Director
|Steven Weldon    |  | 30  |  | Chief Financial Officer              
|William Parsons  |  | 58  |  | Director                             
|Dwight Day       |  | 42  |  | Director                             

Stewart Yorkhas served as the Chief Executive Officer of the Company since
February 1, 2006. From February 2005 to December 2005, Mr. York was self-employed as an IT consultant. From January 2001 to February 2005, Mr. York was the director of information technology for MicroMo Electronics, Inc., a motor and
gear head manufacturer. Mr. York was self-employed as the publisher of a weekly magazine from June 2002 to January 2003. From April 2001 to June 2002, Mr. York was the production systems manager for Tecstar Electronics, Inc., an airplane
parts manufacturer. Mr. York was the Vice President of Operation for Andco Industries, Inc. an architectural signage company from May 1995 to April 2001. Mr. York received a Bachelor of Science degree at the University of Rio Grande and a
Bachelor of Arts from University of North Carolina.

Charles Wernicke has served as the Chief Technology Officer and Director
of the Company beginning in February 2006. Mr. Wernicke has been the President of Emergency Computer Services, Inc., a computer service company since January 1993 and was the Chief Technology Officer of Delta Insights, LLC from June 2004 to
January 2006. Mr. Wernicke attended Manatee Community College.

Steven Weldon, a Certified Public Accountant,has served as our Chief Financial Officer since September 2005. Prior to joining Horizon Holding Corporation, Mr. Weldon was the Tax Manager for Westgate Resorts, Ltd., a timeshare developer, since July 2000. Mr. Weldon was an
adjunct professor at Florida Southern College from January 2002 to October 2005. Since May 2005, Mr. Weldon has served as the president, sole stockholder and director of Steven W. Weldon, PA, a public accounting firm providing tax and
accounting services. Mr. Weldon received his Bachelor of Science degree and his Masters in Business Administration from Florida Southern College. Mr. Weldon is also a Certified Public Accountant licensed by the State of Florida.

William Parsons has served as a Director of the Company since August 2004. Mr. Parsons was a Partner with Arthur
Anderson from 1992-2002. Mr. Parsons is currently an Executive Vice President and Partner with SENN-Delaney Leadership, where he has been since 2002. In addition, Mr. Parsons is the general partner of Parsons Partners. Mr. Parsons
received his Bachelor of Science degree at Clarkson University and his Masters in Business Administration from UCLA.

Dwight Day
Mr. Day has served as a Director of the Company since August 13, 2003. Mr. Day has served as a Director of BAC International since 2002. Mr. Day has served as Vice President of Mechanical Associates, Inc. from 2001
to 2004 and HVAC Contractors Supply since 1994. Additionally, Mr. Day has been President of KMA Mechanical from 1991 to the present.

Board of
Directors and Committees

The directors are elected to one-year terms. Each director holds office until the expiration of the
directors term, until the directors successor has been duly elected and qualified or until the earlier of such directors resignation, removal or death.



18



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##### Table of Contents

We have established an Audit Committee, Executive Compensation Committee and a Restricted Stock Plan
Distribution Committee.

Audit Committee. The Audit Committee approves the selection of our independent accountants and meets and
interacts with the independent accountants to discuss issues related to our financial reporting. In addition, the Audit Committee reviews the scope and results of the audit with the independent accountants, reviews with management and the
independent accountants our annual operating results, considers the adequacy of our internal accounting procedures and considers and reports to the Board of Directors with respect to other auditing and accounting matters, fees to be paid to our
independent auditors and the performance of our independent auditors. The Audit Committee consists of Messrs. Day, Parsons, both of whom are non-employee directors, and Weldon. The Board of Directors has not adopted a written charter of the Audit
Committee. The Audit Committee also includes at least one member  Mr. William Parson  determined by the Board to meet the qualifications of an audit committee financial expert, as defined by SEC rules. Stockholders should
understand that these designations related to an Audit Committee members experience and understanding do not impose upon him any duties, obligations or liabilities greater than those generally imposed on a member of the Audit Committee or the
Board. As CFO, Mr. Weldon is not considered independent as that term is defined by Rule 4200(a)(15) of the NASDs listing standards. The Audit Committee met 5 times in 2005.

Executive Compensation Committee. The Executive Compensation Committee reviews and recommends to the Board of Directors the salaries, and benefits
of all employees, consultants, directors and other individuals compensated by us. The Executive Compensation Committee currently consists of Messrs. Day and Parsons, both of whom are non-employee directors. None of our executive officers or
directors presently serves, or has served, on the Executive Compensation Committee of another company whose executive officers or directors served on our Board of Directors. Members of our Board of Directors own our common stock, as further
described in, the Principal Stockholders section of this prospectus.

Restricted Stock Plan Distribution
Committee. The Restricted Stock Plan Distribution Committee selects eligible persons to receive restricted stock awards under the Companys 2003 Restricted Stock Plan, determines the number of restricted stock awards to be granted 
the number of shares of common stock to which such restricted stock awards will relate, specifies times at which restricted stock awards will be vested, sets other terms and conditions of restricted stock awards, prescribes forms of restricted stock
award agreements, interprets and specifies rules and regulations relating to the 2003 Restricted Stock Plan, and makes all other determinations that may be necessary or advisable for the administration of the 2003 Restricted Stock Plan. Members of
our Restricted Stock Plan Distribution Committee include Messrs. York, Day and Parsons.

Section 16(a) Beneficial Ownership Reporting Compliance.

Based solely upon a review of Forms 3, 4 and 5, and amendments to these forms furnished to us, each of the following parties, who are
subject to the reporting requirements of Section 16(a) of the Exchange Act, were delinquent in filing all such required reports with respect to fiscal year 2005:

Skip McElvery  Mr. McElvery failed to file a Form 4 regarding shares received as compensation for his service on the Board of Directors.

Larry Abraham  Mr. Abraham failed to file a Form 4 regarding shares received as compensation for his service on the Board of
Directors.

Dwight Day  Mr. Day failed to file a Form 4 regarding shares received as compensation for his service
on the Board of Directors.

William ParsonsMr. Parsons failed to file a Form 4 regarding shares received
as compensation for his service on the Board of Directors.



19



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##### Table of Contents

The Company has taken steps to educate its officers, directors and ten percent owners regarding their
personal reporting obligations and has provided them with additional information to prevent further delinquent filings.

Code of Ethics

The Company has adopted the Horizon Holdings Corporation Code of Ethics (the Code of Ethics) which applies to our Chief Executive Officer,
Chief Financial Officer and other finance organization employees. If we make any substantive amendments to the Code of Ethics or grant to our Chief Executive Officer or Chief Financial Officer any waiver, including any implicit waiver, from a
provision of the Code of Ethics, we will disclose the nature of such amendment or waiver on that website or in a report on Form 8-K.

ITEM 10. EXECUTIVE COMPENSATION

We did not have any other executive officers or other employees serving
at the end of fiscal year 2005 whose total annual salary and bonus exceeded $100,000. The following table sets forth certain information regarding the compensation our Chief Executive Officer for 2005, 2004 and 2003.

Summary Compensation Table



|                   |  |      |  |                     |        |                              |   |                        |           |                       |  
|------------------ |  | ---- |  | ------------------- | ------ | ---------------------------- | - | ---------------------- | --------- | --------------------- | -
|                   |  |      |  | Annual Compensation |        | Long-Term CompensationAwards
|Name and Position  |  | Year |  | Salary ($)          |        | Other AnnualCompensation($)  |   | RestrictedStock Awards |           | All OtherCompensation
|Dwain Brannon, CEO |  | 2005 |  | $                   | 14,533 |                              |  |                        |          |                       | 
|                   |  | 2004 |  |                     | 99,092 |                              |  |                        |          |                       | 
|                   |  | 2003 |  |                     | 90,000 |                              |  |                        | 1,000,000 |                       | 

---

|(1) | Represents shares received pursuant to the Companys 2003 Restricted Stock Plan.
|--- | --------------------------------------------------------------------------------

Employment Agreements

On February 23, 2006 we entered into an Employment Agreement with Chuck
Wernicke to become the Chief Technology Officer. Mr. Wernicke will earn an annual salary of $96,000. He will also participate in the executive benefit package offered to other executives in the Company during the term of his employment. The
length of this agreement is for one year.

2003 Restricted Stock Plan

On June 30, 2003, our Board of Directors adopted the Horizon Holding Corporation 2003 Restricted Stock Plan (the 2003 Plan) and was submitted and approved by our stockholders at the 2003 Annual
Meeting. The terms of the 2003 Plan provide for grants of restricted stock awards. The purpose of the 2003 Plan is to provide a means through which the Company and its subsidiaries may attract key personnel to enter into and remain in the employ of
the Company and its subsidiaries, as well as to provide a means whereby those key persons upon whom the responsibilities of the successful administration and management of the Company rest, and whose present and potential contributions to the
welfare of the Company are of importance, can acquire and maintain stock ownership, thereby strengthening their commitment to the welfare of the Company and promoting the mutuality of interests between those key individuals and the Companys
stockholders.



20



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##### Table of Contents

Under the plan, the total number of shares of common stock that may be subject to the granting of awards
under the plan during the term of the plan shall be equal to 1,500,000 shares, plus the number of shares with respect to which awards previously granted thereunder that are forfeited or cancelled or terminated. As of December 31, 2004, we have
granted 1,000,000 shares of restricted stock under the Plan to Dwain Brannon, 202,000 shares of restricted stock under the plan to Allan Woodlief, and 102,000 shares of restricted stock under the plan to Dan McIlroy, our warehouse manager. The
35,000 shares of restricted stock issued under the plan to Bradford Doyle, our former operations manager was forfeited when Mr. Doyle employment ended. The 35,000 shares were combined with an additional 15,000 shares under the plan and the
50,000 share of restricted stock under the plan were issued to Darren DeCarlo operations manager.

Directors Compensation

Non-employee directors are paid a monthly retainer of $1,000 for serving on the Board of Directors, $500 each meeting attended, and $250 per meeting if a
member is unable to attend in person but attends telephonically. Each Board member also receives 1,500 shares of our common stock per quarter of service. We also reimburse directors for reasonable travel expenses incurred in connection with
traveling to meetings, including first class air travel and accommodations.



21



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##### Table of Contents

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

The following table presents information known to us, as of March 5, 2006, relating to the beneficial ownership of common stock by:



| |  |  | each person who is known by us to be the beneficial holder of more than 5% of our outstanding common stock;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | each of our named executive officers and directors; and
| | - |  | -------------------------------------------------------



| |  |  | our directors and executive officers as a group.
| | - |  | ------------------------------------------------

We
believe that all persons named in the table have sole voting and investment power with respect to all shares beneficially owned by them, except as noted.

Percentage ownership in the following table is based on 24,319,750 shares of common stock outstanding as of March 5, 2006. A person is deemed to be the beneficial owner of securities that can be acquired by that
person within 60 days from the date of this Annual Report upon the exercise of options, warrants or convertible securities. Each beneficial owners percentage ownership is determined by dividing the number of shares beneficially owned by that
person by the base number of outstanding shares, increased to reflect the shares underlying options, warrants or other convertible securities included in that persons holdings, but not those underlying shares held by any other person.



|                                       |  |                                                  |     |  |                                        |  
|-------------------------------------- |  | ------------------------------------------------ | --- |  | -------------------------------------- | -
|Name of Beneficial Owner               |  | Number ofShares of CommonStock BeneficiallyOwned |     |  | Percentage of SharesBeneficially Owned |  
|Charles Wenicke                        |  | 3,666,907                                        |     |  | 15.08                                  | %
|Dwain Brannon(2)                       |  | 1,500,332                                        | (3) |  | 6.17                                   |  
|Brunswick Growth Ventures, LLC         |  | 1,387,673                                        |     |  | 5.71                                   |  
|San Rafael Consulting Group, LLC(5)    |  | 1,387,673                                        |     |  | 5.71                                   |  
|Dwight Day(1)                          |  | 658,143                                          |     |  | 2.71                                   |  
|Skip McElvery(6)                       |  | 345,707                                          | (4) |  | 1.42                                   |  
|Stewart York                           |  | 309,171                                          |     |  | 1.27                                   |  
|William Parsons(1)                     |  | 226,333                                          |     |  | 0.93                                   |  
|Larry Abraham(7)                       |  | 219,500                                          |     |  | 0.90                                   |  
|All directors and officers (7 persons) |  | 2,875,000                                        |     |  | 28.49                                  | %

---

|(1) | Unless otherwise noted, the address of each person listed isc/o Horizon Holding Corporation, 1800 2ndStreet, Suite 735, Sarasota, Fl, 34236.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Dwain Brannons address is 4044 W. Lake Mary Blvd., #104-347, Lake Mary, Florida 32746.
|--- | ---------------------------------------------------------------------------------------

|(3) | Includes 1,000,000 shares of restricted common stock in the Company granted under the Companys 2003 Restricted Stock Plan pursuant to an employment agreement between
Mr. Brannon and the Company entered into on May 30, 2003.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Includes 127,707 shares of common stock owned by Mr. McElverys spouse.
|--- | -----------------------------------------------------------------------

|(5) | San Rafael Consulting Groups address is 8560 Heron Lagoon Circle, Sarasota, Fl 34242.
|--- | --------------------------------------------------------------------------------------

|(6) | Skip McElverys address is 3171 Saint Ives Country Club, Diluth, Georgia 30097.
|--- | -------------------------------------------------------------------------------

|(7) | Larry Abrahams address is 4012 52ndAvenue
NW, Mineral, Washington 98355.
|--- | -------------------------------------------------------------------------



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##### Table of Contents

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None

ITEM 13. EXHIBITS, LISTS AND REPORTS ON FORM 8-K

Exhibits and Financial Statements.



|(A) | Financial Statements and Schedules
|--- | ----------------------------------

See Index to
Financial Statements



|(B) | Exhibits
|--- | --------



|              |  |                                                                                                                                                                                
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBITNUMBER |  | DESCRIPTION                                                                                                                                                                    
|3.1           |  | Form of Articles of Incorporation of LiquidGolf Holding Corporation(1)                                                                                                         
|              | 
|3.2           |  | Bylaws of LiquidGolf Holding Corporation(2)                                                                                                                                    
|              | 
|10.1          |  | Agreement and Plan of Merger by and among Nomadic Collaboration International, Inc., LGC Acquisition Company, and LiquidGolf Corporation dated
February 12, 2003(3)            
|              | 
|10.2          |  | LiquidGolf Holding Corporation 2003 Restricted Stock Plan(4)                                                                                                                   
|              | 
|10.3          |  | Employment Agreement between the Company and Dwain Brannon dated May 29, 2003(5)                                                                                               
|              | 
|10.4          |  | Lease Agreement dated May 2, 2002, between the Company and Victoria Plaza, Inc.(6)                                                                                             
|              | 
|10.5          |  | Software Purchase Agreement date January 31, 2006 between the Company and Delta Insights, LLC(10)                                                                              
|              | 
|10.6          |  | Employment Agreement between Company and Chuck Wernicke dated February 23, 2006(9)                                                                                             
|              | 
|21.1          |  | Subsidiaries of the Company(7)                                                                                                                                                 
|              | 
|31.1          |  | Certification of Chief Executive Officer Pursuant to Securities and Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.*
|              | 
|31.2          |  | Certification of Chief Financial Officer Pursuant to Securities and Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.*
|              | 
|32.1          |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.*                            
|              | 
|32.2          |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.*                            
|              | 
|99.1          |  | Audit Committee Pre-Approval Policy(8)                                                                                                                                         

---

|* | Filed Herewith
|- | --------------

|(1) | Incorporated by reference to Exhibit 3.1 of the Companys Form SB-2 (filed 1/30/03) (No. 333-111865)
|--- | ----------------------------------------------------------------------------------------------------

|(2) | Incorporated by reference to Exhibit 3.2 of the Companys Form SB-2 (filed 1/30/03) (No. 333-111865).
|--- | -----------------------------------------------------------------------------------------------------

|(3) | Incorporated by reference to Exhibit 10.1 of the Companys Form SB-2 (filed 1/30/03) (No. 333-111865).
|--- | ------------------------------------------------------------------------------------------------------

|(4) | Incorporated by reference to the Companys Proxy Statement on Schedule 14A (filed 8/01/03) (No. 000- 27131).
|--- | ------------------------------------------------------------------------------------------------------------



23



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##### Table of Contents

|(5) | Incorporated by reference to Exhibit 10.3 of the Companys Form SB-2 (filed 1/30/03) (No. 333-111865).
|--- | ------------------------------------------------------------------------------------------------------

|(6) | Incorporated by reference to Exhibit 10.4 of the Companys Form SB-2 (filed 1/30/03) (No. 333-111865).
|--- | ------------------------------------------------------------------------------------------------------

|(7) | Incorporated by reference to Exhibit 21.1 of the Companys Form 10KSB (filed 3/29/04) (No. 000-27131).
|--- | ------------------------------------------------------------------------------------------------------

|(8) | Incorporated by reference to Exhibit 99.1 of the Companys Form 10KSB (filed 3/29/04) (No. 000-27131).
|--- | ------------------------------------------------------------------------------------------------------

|(9) | Incorporated by reference to Exhibit 10.1 of the Companys Form 8-K (filed 2/27/06) (No. 000-27131).
|--- | ----------------------------------------------------------------------------------------------------

|(10) | Incorporated by reference to Exhibit 99.1 of the Companys Form 8-K (filed 2/02/06) (No. 000-27131).
|---- | ----------------------------------------------------------------------------------------------------

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES



|                      |  |             |        |             |   |       
|--------------------- |  | ----------- | ------ | ----------- | - | ------
|                      |  | Fiscal 2005 |        | Fiscal 2004
|Audit Fees(1)         |  | $           | 48,000 |             | $ | 46,500
|Audit-Related Fees(2) |  |             | -0-    |             |   | -0-   
|Tax Fees(3)           |  |             | 7,500  |             |   | 8,123 
|                      |  |             |        |             |   |       
|Subtotal              |  | $           | 55,500 |             | $ | 54,623
|All other Fees(4)     |  |             | -0-    |             |   | -0-   
|                      |  |            
|Total                 |  | $           | 55,500 |             | $ | 54,623
|                      |  |             |        |             |   |       

---

|(1) | Audit Fees  Audit fees billed to the Company by Tedder, James, Worden & Associates, P.A. for auditing the Companys annual
financial statements and reviewing the financial statements included in the Companys Quarterly Reports on Form 10-QSB.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Audit-Related Fees  There were no other fees billed by during the last two fiscal years for assurance and related services that were reasonably
related to the performance of the audit or review of the Companys financial statements and not reported under Audit Fees above.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Tax Fees  Tax fees billed to the Company by Tedder, James, Worden & Associates, P.A. include the preparation of all state and federal
returns for 2004. The Company anticipates billings by Tedder, James, Worden & Associates, P.A. for the preparation of all state and federal returns for 2005 to be approximately $7,500.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | All Other Fees  There were no other fees billed by during the last two fiscal years for products and services provided.
|--- | ------------------------------------------------------------------------------------------------------------------------

Pre-approval of Audit and Non-Audit Services of Independent Auditor

The Board of Directors policy is to pre-approve all audit and non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services and other
services. Pre-approval is generally provided for up to 12 months from the date of pre-approval and any pre-approval is detailed as to the particular service or category of services. The Board of Directors may delegate pre-approval authority to one
or more of its members when expedition of services is necessary. The Board of Directors has determined that the provision of non-audit services by Tedder, James, Worden & Associates, P.A. is compatible with maintaining its independence.



24



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##### Table of Contents

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                        |  |                                |  |                                                           
|----------------------- |  | ------------------------------ |  | ----------------------------------------------------------
|                        |  | INVERTED PARADIGMS CORPORATION
|                        |  |                               
|Dated: February 8, 2007 |  |                                |  |                                                           
|                        |  |                               
|                        |  | By:                            |  | /S/ Stewart York                                          
|                        |  | Name:                          |  | Stewart York                                              
|                        |  | Title:                         |  | Chief Executive Officer, President, Secretary and
Director

In accordance with the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.



|                        |  |                                |  |                                                           
|----------------------- |  | ------------------------------ |  | ----------------------------------------------------------
|                        |  | INVERTED PARADIGMS CORPORATION
|                        |  |                               
|Dated: February 8, 2007 |  |                                |  |                                                           
|                        |  |                               
|                        |  | By:                            |  | /S/ Stewart York                                          
|                        |  | Name:                          |  | Stewart York                                              
|                        |  | Title:                         |  | Chief Executive Officer, President, Secretary and
Director
|                        |  |                               
|                        |  | By:                            |  | /S/ Steven Weldon                                         
|                        |  | Name:                          |  | Steven Weldon                                             
|                        |  | Title:                         |  | Chief Financial Officer                                   
|                        |  |                               
|                        |  | By:                            |  | /S/ Dwight Day                                            
|                        |  | Name:                          |  | Dwight Day                                                
|                        |  | Title:                         |  | Director                                                  
|                        |  |                               
|                        |  | By:                            |  | /S/ William Parsons                                       
|                        |  | Name:                          |  | William Parsons                                           
|                        |  | Title:                         |  | Director                                                  



25



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##### Table of Contents

INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

(Formerly Horizon Holding Corporation)

Consolidated Financial Statements (As Restated)

December 31, 2005

Table of Contents



|                                                                                                                            |  |    
|--------------------------------------------------------------------------------------------------------------------------- |  | ---
|Report of Independent Registered Certified Public Accounting Firm                                                           |  | F-1
|                                                                                                                            | 
|Consolidated Financial Statements:                                                                                          |  |    
|                                                                                                                            | 
|Consolidated Balance Sheet  December 31, 2005 (As restated)                                                                |  | F-2
|                                                                                                                            | 
|Consolidated Statements of Operations  Years ended December 31, 2005 and 2004 (As restated)                                |  | F-3
|                                                                                                                            | 
|Consolidated Statements of Stockholders Equity (Capital Deficiency)  Years ended December 31, 2005 and 2004 (As restated) |  | F-4
|                                                                                                                            | 
|Consolidated Statements of Cash Flows  Years ended December 31, 2005 and 2004 (As restated)                                |  | F-5
|                                                                                                                            | 
|Notes to Consolidated Financial Statements                                                                                  |  | F-6



---

##### Table of Contents

Report of Independent Registered Certified Public Accounting Firm

To the Board of
Directors and Stockholders of

Inverted Paradigms and Subsidiaries:

We have audited the consolidated balance sheet of Inverted Paradigms Corporation (formerly Horizon Holding Corporation) and Subsidiaries as of December 31, 2005, and the related consolidated statements of
operations, stockholders equity (capital deficiency), and cash flows for the years ended December 31, 2005 and 2004. 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 Inverted Paradigms Corporation and Subsidiaries as of December 31, 2005, and the results of their operations and their cash flows for the years ended December 31,
2005 and 2004, in conformity with U.S. generally accepted accounting principals.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has incurred net losses and negative cash flows from operations since inception. These factors, and the need for
additional financing in order for the Company to meet its business plans, raise substantial doubt about its ability to continue as a going concern. Managements plans in regard to these matters are also discussed in Note 3. The consolidated
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 13, 2006, except for Notes 2, 3, 4, 8, 9

and 13 as to which the date

is February 7, 2007



F-1



---

##### Table of Contents

INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheet (As Restated)

December 31, 2005



|                                                                                                   |  |   |             |  
|-------------------------------------------------------------------------------------------------- |  | - | ----------- | -
|Assets                                                                                             |  |   |             |  
|Current assets:                                                                                    |  |   |             |  
|Cash and cash equivalents                                                                          |  | $ | 169,505     |  
|Loan receivable                                                                                    |  |   | 10,000      |  
|Prepaid expenses                                                                                   |  |   | 9,267       |  
|                                                                                                   |  |   |             |  
|Total current assets                                                                               |  |   | 188,772     |  
|                                                                                                   | 
|Other assets                                                                                       |  |   | 180         |  
|                                                                                                   |  |   |             |  
|Total assets                                                                                       |  | $ | 188,952     |  
|                                                                                                   |  |   |             |  
|Liabilities and Stockholders Equity (Capital Deficiency)                                          |  |   |             |  
|Current liabilities:                                                                               |  |   |             |  
|Accounts payable                                                                                   |  | $ | 139,529     |  
|Other current liabilities                                                                          |  |   | 40,325      |  
|Notes payable to stockholders                                                                      |  |   | 255,000     |  
|                                                                                                   |  |   |             |  
|Total current liabilities                                                                          |  |   | 434,854     |  
|                                                                                                   | 
|Stockholders equity (capital deficiency)                                                          |  |   |             |  
|Common stock, $0.001 par , 100,000,000 shares authorized, 13,420,068 shares issued and outstanding |  |   | 13,420      |  
|Additional paid-in capital                                                                         |  |   | 37,397,104  |  
|Deferred stock-based employee compensation                                                         |  |   | (57,706     | )
|Accumulated deficit                                                                                |  |   | (37,598,720 | )
|                                                                                                   |  |   |             |  
|Total capital deficiency                                                                           |  |   | (245,902    | )
|                                                                                                   |  |   |             |  
|Total liabilities and stockholders equity (capital deficiency)                                    |  | $ | 188,952     |  
|                                                                                                   |  |   |             |  

See accompanying notes to consolidated financial statements.



F-2



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##### Table of Contents

INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations (As Restated)

For the years ended December 31, 2005 and 2004



|                                                                                                                                                            |  |      |            |   |      |   |            |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                                                                                                            |  | 2005 |            |   | 2004 |  
|Net sales                                                                                                                                                   |  | $    | 33,391     |   |      | $ | 909,272    |  
|Cost of sales                                                                                                                                               |  |      | 27,004     |   |      |   | 759,704    |  
|                                                                                                                                                            |  |      |            |   |      |   |            |  
|Gross profit                                                                                                                                                |  |      | 6,387      |   |      |   | 149,568    |  
|                                                                                                                                                            |  |     
|Operating expenses:                                                                                                                                         |  |      |            |   |      |   |            |  
|Sales and marketing                                                                                                                                         |  |      | 182,326    |   |      |   | 104,942    |  
|General and administrative (inclusive of non-cash stock-based employee compensation of $314,867 and $572,324 in the years ended
December 31, 2005 and 2004) |  |      | 1,132,404  |   |      |   | 2,058,939  |  
|Technology and content                                                                                                                                      |  |      | 20,549     |   |      |   | 58,478     |  
|Write down of impaired assets                                                                                                                               |  |      | 2,666      |   |      |   | 10,809     |  
|Depreciation and amortization                                                                                                                               |  |      | 1,920      |   |      |   | 16,034     |  
|                                                                                                                                                            |  |      |            |   |      |   |            |  
|Total operating expenses                                                                                                                                    |  |      | 1,339,865  |   |      |   | 2,249,202  |  
|                                                                                                                                                            |  |      |            |   |      |   |            |  
|Loss from operations                                                                                                                                        |  |      | (1,333,478 | ) |      |   | (2,049,634 | )
|                                                                                                                                                            |  |     
|Other income (expense):                                                                                                                                     |  |      |            |   |      |   |            |  
|Interest income                                                                                                                                             |  |      | 1,737      |   |      |   | 1,931      |  
|Interest expense                                                                                                                                            |  |      | (68,738    | ) |      |   | (697,279   | )
|Other                                                                                                                                                       |  |      | (16,263    | ) |      |   |           |  
|                                                                                                                                                            |  |      |            |   |      |   |            |  
|Net other (expense) income                                                                                                                                  |  |      | (83,264    | ) |      |   | (695,348   | )
|                                                                                                                                                            |  |     
|Net loss from continuing operations                                                                                                                         |  |      | (1,416,742 | ) |      |   | (2,794,982 | )
|                                                                                                                                                            |  |      |            |   |      |   |            |  
|Gain (loss) from discontinued operations                                                                                                                    |  |      | 13,200     |   |      |   | (306,094   | )
|                                                                                                                                                            |  |      |            |   |      |   |            |  
|Net loss                                                                                                                                                    |  |      | (1,403,542 | ) |      | $ | (3,101,076 | )
|                                                                                                                                                            |  |      |            |   |      |   |            |  
|Net loss per share from continuing operations  basic                                                                                                       |  | $    | (0.11      | ) |      | $ | (0.25      | )
|                                                                                                                                                            |  |      |            |   |      |   |            |  
|Net loss per share from discontinued operations  basic                                                                                                     |  | $    | (0.00      | ) |      | $ | (0.03      | )
|                                                                                                                                                            |  |      |            |   |      |   |            |  
|Weighted average shares used in calculating basic loss per share                                                                                            |  |      | 13,004,154 |   |      |   | 11,373,354 |  
|                                                                                                                                                            |  |      |            |   |      |   |            |  

See accompanying notes to consolidated financial statements.



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INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Stockholders Equity
(Capital Deficiency) (As Restated)

For the years ended December 31, 2005 and 2004



|                                                                   |              |            |                |        |   |        |  |         |        |  |         |   |                            |   |            |                                           |  |   |                    |   |  |       |             |   |  |   |            |  
|------------------------------------------------------------------ | ------------ | ---------- | -------------- | ------ | - | ------ |  | ------- | ------ |  | ------- | - | -------------------------- | - | ---------- | ----------------------------------------- |  | - | ------------------ | - |  | ----- | ----------- | - |  | - | ---------- | -
|                                                                   |              |            |                |        |   |        |  |         |        |  |         |   | Additional paid-in capital |   |            | Deferredstock-based employee compensation |  |   | Accumulateddeficit |   |  | Total |            
|                                                                   | Common stock |            | Treasury stock |        |   |        |  |        
|                                                                   | Shares       |            |                | Amount |   | Shares |  |         | Amount |  |         |   |                            |  
|Balance, December 31, 2003                                         |              | 10,742,447 |                |        | $ | 10,742 |  |        |        |  |        |   |                            | $ | 35,706,315 |                                           |  | $ | (852,917           | ) |  | $     | (33,094,102 | ) |  | $ | 1,770,038  |  
|                                                                   |              |            |                |        |   |        |  |         |        |  |         |   |                            |   |            |                                           |  |   |                    |   |  |       |             |   |  |   |            |  
|Cost incurred in conjunction with the exercise of warrants         |              |            |                |        |   |        |  |         |        |  |         |   |                            |   | (20,000    | )                                         |  |   |                    |   |  |       |             |   |  |   | (20,000    | )
|Amortization of deferred stock based employee compensation         |              |            |                |        |   |        |  |         |        |  |         |   |                            |   |            |                                           |  |   | 572,324            |   |  |       |             |   |  |   | 572,324    |  
|Treasury stock acquired due to forfeiture in restricted stock plan |              | (35,000    | )              |        |   |        |  | 35,000  |        |  | (28,279 | ) |                            |   |            |                                           |  |   | 28,279             |   |  |       |             |   |  |   |           |  
|Issuance of common stock for Directors compensation                |              | 4,500      |                |        |   | 4      |  |         |        |  |         |   |                            |   | 4,900      |                                           |  |   |                    |   |  |       |             |   |  |   | 4,904      |  
|Cost incurred in conjunction with conversion of note payable       |              |            |                |        |   |        |  |         |        |  |         |   |                            |   | (30,000    | )                                         |  |   |                    |   |  |       |             |   |  |   | (30,000    | )
|Issuance of common stock for Game for Golf acquisition             |              | 10,000     |                |        |   | 10     |  |         |        |  |         |   |                            |   | 10,890     |                                           |  |   |                    |   |  |       |             |   |  |   | 10,900     |  
|Issuance of common stock for conversion of note payable            |              | 714,285    |                |        |   | 714    |  |         |        |  |         |   |                            |   | 599,286    |                                           |  |   |                    |   |  |       |             |   |  |   | 600,000    |  
|Proceeds from the issuance of common stock                         |              | 1,239,497  |                |        |   | 1,240  |  |         |        |  |         |   |                            |   | 311,914    |                                           |  |   |                    |   |  |       |             |   |  |   | 313,154    |  
|Issuance of employee restricted stock                              |              | 219,000    |                |        |   | 184    |  | (35,000 | )      |  | 28,279  |   |                            |   | 91,796     |                                           |  |   | (120,259           | ) |  |       |             |   |  |   |           |  
|Net loss                                                           |              |            |                |        |   |        |  |         |        |  |         |   |                            |   |            |                                           |  |   |                    |   |  |       | (3,101,076  | ) |  |   | (3,101,676 | )
|Interest on beneficial conversion feature of note payable          |              |            |                |        |   |        |  |         |        |  |         |   |                            |   | 600,000    |                                           |  |   |                    |   |  |       |             |   |  |   | 600,000    |  
|                                                                   |              |            |                |        |   |        |  |         |        |  |         |   |                            |   |            |                                           |  |   |                    |   |  |       |             |   |  |   |            |  
|Balance, December 31, 2004                                         |              | 12,894,729 |                |        | $ | 12,894 |  |        |        |  |        |   |                            | $ | 37,275,101 |                                           |  | $ | (372,573           | ) |  | $     | (36,195,178 | ) |  | $ | 720,244    |  
|                                                                   |              |            |                |        |   |        |  |         |        |  |         |   |                            |   |            |                                           |  |   |                    |   |  |       |             |   |  |   |            |  
|Amortization of deferred stock based employee compensation         |              |            |                |        |   |        |  |         |        |  |         |   |                            |   |            |                                           |  |   | 314,867            |   |  |       |             |   |  |   | 314,867    |  
|Issuance of common stock for Directors compensation                |              | 272,000    |                |        |   | 272    |  |         |        |  |         |   |                            |   | 35,728     |                                           |  |   |                    |   |  |       |             |   |  |   | 36,000     |  
|Cost incurred in conjunction with conversion of note payable       |              |            |                |        |   |        |  |         |        |  |         |   |                            |   | (3,000     | )                                         |  |   |                    |   |  |       |             |   |  |   | (3,000     | )
|Issuance of common stock for conversion of note payable            |              | 129,595    |                |        |   | 130    |  |         |        |  |         |   |                            |   | 10,238     |                                           |  |   |                    |   |  |       |             |   |  |   | 10,368     |  
|Issuance of common stock for conversion of note payable            |              | 57,076     |                |        |   | 57     |  |         |        |  |         |   |                            |   | 5,137      |                                           |  |   |                    |   |  |       |             |   |  |   | 5,194      |  
|Issuance of common stock for services                              |              | 66,668     |                |        |   | 67     |  |         |        |  |         |   |                            |   | 6,600      |                                           |  |   |                    |   |  |       |             |   |  |   | 6,667      |  
|Interest on beneficial conversion feature of note payable          |              |            |                |        |   |        |  |         |        |  |         |   |                            |   | 65,000     |                                           |  |   |                    |   |  |       |             |   |  |   | 65,000     |  
|Warrants issued to broker                                          |              |            |                |        |   |        |  |         |        |  |         |   |                            |   | 2,300      |                                           |  |   |                    |   |  |       |             |   |  |   | 2,300      |  
|Net loss                                                           |              |            |                |        |   |        |  |         |        |  |         |   |                            |   |            |                                           |  |   |                    |   |  |       | (1,403,542  | ) |  |   | (1,403,542 | )
|                                                                   |              |            |                |        |   |        |  |         |        |  |         |   |                            |   |            |                                           |  |   |                    |   |  |       |             |   |  |   |            |  
|Balance, December 31, 2005                                         |              | 13,420,068 |                |        | $ | 13,420 |  |        |        |  |        |   |                            | $ | 37,397,104 |                                           |  | $ | (57,706            | ) |  | $     | (37,598,720 | ) |  | $ | (245,902   | )
|                                                                   |              |            |                |        |   |        |  |         |        |  |         |   |                            |   |            |                                           |  |   |                    |   |  |       |             |   |  |   |            |  

See accompanying notes to consolidated financial statements.



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##### Table of Contents

INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2005 and 2004



|                                                                      |  |               |            |   |               |   |            |  
|--------------------------------------------------------------------- |  | ------------- | ---------- | - | ------------- | - | ---------- | -
|                                                                      |  | 2005          |            |   | 2004          |  
|                                                                      |  | (As restated) |            |   | (As restated) |  
|Cash flows from operating activities:                                 |  |               |            |   |               |   |            |  
|                                                                      |  |               |            |   |               |   |            |  
|Net Loss                                                              |  | $             | (1,403,542 | ) |               | $ | (3,101,076 | )
|Adjustments to reconcile net loss to cash used in operations:         |  |               |            |   |               |   |            |  
|Interest from beneficial conversion feature of notes payable          |  |               | 65,000     |   |               |   | 600,000    |  
|Amortization of deferred stock-based employee compensation            |  |               | 314,867    |   |               |   | 572,324    |  
|Gain on extinguishment of debt                                        |  |               | (3,374     | ) |               |   | (310,125   | )
|Amortization of stock issued for services                             |  |               | 408,750    |   |               |   | 1,030,545  |  
|Stock issued to directors for services                                |  |               | 36,000     |   |               |   | 4,904      |  
|Stock issued to vendor for services                                   |  |               | 6,667      |   |               |   |           |  
|Impairment of property and equipment                                  |  |               | 2,666      |   |               |   | 10,809     |  
|Depreciation and amortization                                         |  |               | 1,920      |   |               |   | 76,414     |  
|Interest                                                              |  |               | 2,200      |   |               |   |           |  
|Loss on disposal of fixed assets                                      |  |               | 500        |   |               |   |           |  
|Discontinued operations:                                              |  |               |            |   |               |   |            |  
|Impairment of goodwill                                                |  |               |           |   |               |   | 108,400    |  
|Impairment of property and equipment                                  |  |               |           |   |               |   | 2,280      |  
|Changes in operating assets and liabilities:                          |  |               |            |   |               |   |            |  
|Inventories                                                           |  |               | 48,967     |   |               |   | 227,109    |  
|Other current assets                                                  |  |               | 181,582    |   |               |   | 33,980     |  
|Other assets                                                          |  |               | 4,077      |   |               |   | 12,177     |  
|Accounts payable                                                      |  |               | (10,942    | ) |               |   | (179,698   | )
|Accrued expenses                                                      |  |               | (31,034    | ) |               |   | (89,395    | )
|                                                                      |  |               |            |   |               |   |            |  
|Net cash used in continuing operations                                |  |               | (375,696   | ) |               |   | (1,001,253 | )
|Net cash provided by discontinued operations                          |  |               | 18,825     |   |               |   | 62,664     |  
|                                                                      |  |               |            |   |               |   |            |  
|Net cash used in operating activities                                 |  |               | (356,871   | ) |               |   | (938,589   | )
|                                                                      |  |               |            |   |               |   |            |  
|Cash flows from investing activities:                                 |  |               |            |   |               |   |            |  
|Proceeds from sale of certificate of deposit                          |  |               | 35,000     |   |               |   |           |  
|Issuance of loan receivable                                           |  |               | (10,000    | ) |               |   |           |  
|Purchase of Games for Golf                                            |  |               |           |   |               |   | (30,000    | )
|Purchase of property and equipment                                    |  |               |           |   |               |   | (2,279     | )
|                                                                      |  |               |            |   |               |   |            |  
|Net cash provided by (used in) in investing activities:               |  |               | 25,000     |   |               |   | (32,279    | )
|                                                                      |  |               |            |   |               |   |            |  
|Cash flows from financing activities:                                 |  |               |            |   |               |   |            |  
|Payments on deferred loan costs                                       |  |               |           |   |               |   | (60,000    | )
|Proceeds from the sale of common stock                                |  |               |           |   |               |   | 313,154    |  
|Payments on capital lease                                             |  |               | (9,915     | ) |               |   | (11,360    | )
|Proceeds from notes payable                                           |  |               | 265,562    |   |               |   | 600,000    |  
|Fees paid to issue convertible note                                   |  |               | (3,000     | ) |               |   | (30,000    | )
|Fees paid to convert warrants                                         |  |               |           |   |               |   | (20,000    | )
|                                                                      |  |               |            |   |               |   |            |  
|Net cash provided by financing activities                             |  |               | 252,647    |   |               |   | 791,794    |  
|                                                                      |  |               |            |   |               |   |            |  
|Net decrease in cash and cash equivalents                             |  |               | (79,224    | ) |               |   | (179,074   | )
|                                                                      |  |               |            |   |               |   |            |  
|Cash and cash equivalents, beginning of period                        |  |               | 248,729    |   |               |   | 427,803    |  
|                                                                      |  |               |            |   |               |   |            |  
|Cash and cash equivalents, end of period                              |  | $             | 169,505    |   |               | $ | 248,729    |  
|                                                                      |  |               |            |   |               |   |            |  
|                                                                      |  |              
|Supplemental disclosures of cash flow information:                    |  |               |            |   |               |   |            |  
|Cash paid during the period for Interest                              |  | $             | 561        |   |               | $ | 36,494     |  
|                                                                      |  |               |            |   |               |   |            |  
|Supplemental schedule of noncash investing and financing activities:  |  |               |            |   |               |   |            |  
|Issuance of common stock for acquisition of Games for Golf            |  | $             |           |   |               | $ | 10,900     |  
|                                                                      |  |               |            |   |               |   |            |  
|Conversion of note payable into common stock                          |  | $             | 15,562     |   |               | $ | 600,000    |  
|                                                                      |  |               |            |   |               |   |            |  
|Issuance of common stock and warrants in connection with note payable |  | $             | 7,300      |   |               | $ |           |  
|                                                                      |  |               |            |   |               |   |            |  

See accompanying notes to consolidated financial statements.



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##### Table of Contents

INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 1  ORGANIZATION AND PRINCIPLES OF CONSOLIDATIONS

Reporting Entity. Horizon Holding Corporation and Subsidiaries
(Horizon or the Company) were incorporated in the State of Nevada on December 18, 1997. On September 29, 2003, the Company completed a re-incorporation merger into a Delaware Corporation thus changing the state of
incorporation from Nevada to Delaware. The Company is in the business of operating a golf retail website where manufactures can link to their products.

Name Change.On August 12, 2004 a majority of the stockholders approved changing the name of the Company from LiquidGolf Holding Corporation to Horizon Holding Corporation.

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  AS RESTATED

Principles of Consolidation. The consolidated financial statements include the accounts of Horizon Holding Corporation and its two wholly- owned subsidiaries. All significant intercompany accounts and transactions are
eliminated in the consolidated financial statements.

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



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##### Table of Contents

INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

Cash and Cash Equivalents.The Company considers all
short-term investments with an original maturity of three months or less when purchased to be cash equivalents.

Impairment of Long-Lived Assets.The carrying values of long-lived assets are reviewed if the facts and circumstances indicate a potential impairment of their carrying values. Management evaluates the recoverability of the net carrying value of its property and equipment
and goodwill by comparing the carrying values to the estimated future undiscounted cash flows. A deficiency in these cash flows relative to the carrying amounts is an indication of the need for a write-down due to impairment. The impairment
write-down would be the difference between the carrying amounts and the fair value of these assets. Any loss on impairment is recognized by a charge to operations in the period identified.

Income Taxes.The Company accounts for income taxes utilizing the asset and liability method. This approach requires the recognition of deferred tax assets
and liabilities for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the period that includes the enacted date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Net Loss Per Share Information.Basic and diluted loss per share is calculated by dividing net loss by the weighted-average number of common shares
outstanding during the reporting period. The Companys common stock warrants have been excluded from the diluted loss per share computation since their effect is anti-dilutive.

Stock-Based Compensation. The Company has elected to account for its stock-based compensation granted to employees in accordance with the provisions of Accounting Principles Board Opinion 25 (APB 25),
Accounting for Stock Issued to Employees. Under APB 25, compensation expense is based on the difference, if any, on the date of the grant, between the fair value of the Companys stock and the amount the employee is required to pay.
Stock issued to non-employees is accounted for under the provisions of Statement of Financial Accounting Standards (SFAS)123, Accounting for Stock-Based Compensation and the Emerging Issues Task Force (EITF) Consensus in Issue No. 96-18,
Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with, Selling Goods or Services(EITF 96-18).

Under Statement 123, non-employee stock-based compensation is accounted for based on the fair value of the consideration received or equity instruments issued, whichever is more readily determinable. However, Statement 123 does not address
the measurement date and recognition period. EITF 96-18 states a consensus that the measurement date should be the earlier of the date at which a commitment for performance by the counterparty is reached or the date at which the counterpartys
performance is complete.

The Companys nonemployee stock-based compensation is determined using the fair value of the Companys equity
instruments.

Revenue Recognition.Revenue was earned by the Company from the sale of golf equipment and related accessories through its
online retail store and its retail location which was closed in February 2005. Online merchandise revenue was recognized upon the shipment of the merchandise, which accrued only after credit card authorization was obtained. Customers were allowed to
return items for credit within 14 days of purchase. The Company provided for estimated returns at the time of shipment based on historical data. For the years ended December 31, 2005 and 2004, no allowance for returns was recorded because the
estimated amounts were immaterial.

Upon the roll-out of Silent Sword, we will recognize revenue from the sale of software upon delivery of a license
to the customer, provided that persuasive evidence of an arrangement exists, the license fee is fixed and determinable, and collection of the fee is considered probable.

The Company recognizes revenues on a gross basis when the goods are shipped to the end user. The Company uses the gross method of revenue recognition, as prescribed under EITF 99-19, Reporting Revenue Gross as a
Principal versus Net as an Agent, as the Company is the primary obligor in the transaction and is obligated to pay the supplier for work performed regardless of whether the customer accepts the product.

Website Design Costs. Website design costs include direct costs incurred by the Company to develop and enhance the Companys website. Website design
costs are expensed as incurred and totaled approximately $7,700 and $42,500 for the years ended December 31, 2005 and 2004, respectively. These amounts are included in technology and content expense in the accompanying consolidated statements of
operations.

Software Development Costs -The Company capitalizes software development costs incurred to develop certain of the
Companys products in accordance with Financial Accounting Standards No. 86, Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed (SFAS 86). Costs are capitalized only after the technological
feasibility of the project has been established. In accordance with Statement of Financial Accounting Standards No. 142 Goodwill and Other Intangible Assets (SFAS No.142), the Company has recorded its software development costs as a
definite-lived intangible asset and is amortizing these costs over the three-year estimated useful life of the software. All other costs to develop software, either in the preliminary project stage or post implementation stage are expensed as
incurred.



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##### Table of Contents

INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

Fair Value of Financial Instruments. The carrying amount
of cash and cash equivalents, loan receivable, accounts payable, and other current liabilities approximates fair value because of the short maturity of those instruments.

Recent Accounting Pronouncements. In December 2004, the FASB issued Statement No. 123R, Share-Based Payment, which requires companies to recognize in the statement of operations all
share-based payments to employees, including grants of employee stock options, based on their fair values. Accounting for share-based compensation transactions using the intrinsic method supplemented by pro forma disclosures will no longer be
permissible. The new statement will be effective for public entities in periods beginning after June 15, 2005, and, accordingly, will be adopted by us in the first quarter of calendar year 2006. The adoption of this new statement will have no
effect until share-based compensation is issued by the Company.

NOTE 3  BASIS OF PRESENTATION  AS RESTATED

The Companys consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has experienced net losses
since February 16, 1999 (date of inception), which losses have caused an accumulated deficit of approximately $37,600,000 as of December 31, 2005. In addition, the Company has consumed cash in its operating activities of approximately
$376,000 and $1,001,000 for the years ended December 31, 2005 and 2004, respectively. These factors, among others, raise substantial doubt about the Companys ability to continue as a going concern.

Management has been able, thus far, to finance the losses, through a series of private placements. The Company is continuing to seek other sources of financing and
attempting to explore alternate ways of generating revenues through partnerships with other businesses. Conversely, the maintenance of our website and the development of our software segment is expected to result in operating losses for the
foreseeable future. There are no assurances that the Company will be successful in achieving its goals.

In view of these conditions, the Companys
ability to continue as a going concern is dependent upon its ability to obtain additional financing or capital sources, to meet its financing requirements, and ultimately to achieve profitable operations. Management believes that its current and
future plans provide an opportunity to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and
classification of liabilities that may be necessary in the event the Company cannot continue as a going concern.



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##### Table of Contents

INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 4  DISCONTINUED OPERATIONS  AS RESTATED

Acquisition of Leather Craft. On December 22, 2003, the Company
acquired certain assets from Leather Craft Technology, Inc. (Leather Craft), including the name, for a single cash payment of $45,000. In addition to the single cash payment, the Company incurred a finders fee of $22,500 relating
to the acquisition. Leather Craft sells leather bound notebooks and related products. The Company acquired Leather Craft in order to diversify its revenue streams. In connection with the purchase of assets, the Company entered into consulting
agreements with the two principals of Leather Craft to provide the Company consulting services for a period of three years. As compensation for services, each consultant may annually elect to receive: (i) cash payments in arrears of $37,500; or
(ii) 12,500 shares of our common stock.

The acquisition was accounted for under the purchase method of accounting; accordingly, the purchase price
has been allocated to reflect the fair value of assets and liabilities acquired at the date of acquisition The results of operations of the acquired business have been included in the accompanying consolidated financial statements since the date of
acquisition. The Company recorded Goodwill of $67,500 as the purchase price exceeds the fair values of the assets acquired by that amount. The Company expects all of the goodwill to be deducted for tax purposes.

Acquisition of Game Fore Golf. On June 30, 2004 the Company acquired the Game Fore Golf business including the name, for common stock. The Company issued
10,000 shares of its common stock for this acquisition. Game Fore Golf is accounted for as a part of Leather Craft. Game For Golf distributed specialty golf bags and head covers adorned with wildlife artist works that Game Fore Golf is licensed, by
the artist, to distribute.

The acquisition was accounted for under the purchase method of accounting; accordingly, the purchase price has been allocated
to reflect the fair value of assets and liabilities acquired at the date of acquisition The results of operations of the acquired business have been included in the accompanying consolidated financial statements since the date of acquisition. The
Company recorded Goodwill of $40,900 as the purchase price exceeded the fair values of the assets acquired by that amount. The Company expects all of the goodwill to be deducted for tax purposes.

Discontinued Operations. In November 2004, the Company decided to discontinue the operations of Leather Craft and Game Fore Golf, due to significantly fewer
orders than expected for leather goods from Leather Crafts largest customer (the Companys leather goods product segment). As a result of this the Company recorded a gain from discontinued operations of $13,200 and a loss from
discontinued operations of $306,094 as of December 31, 2005 and 2004, respectively. The loss from discontinued operations in 2004 includes a loss of $108,400 which was all goodwill associated with the purchase of Leather Craft and Game Fore
Golf. The remaining loss corresponds to operations for the year ended December 31, 2004.



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##### Table of Contents

INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 5  LOAN RECEIVABLE

During 2005, the Company loaned Delta Insights, LLC the principal sum of $10,000. The loan
bears interest at 10%, was due and paid in full on January 18, 2006. Subsequent to the issuance of the loan, the Company closed a significant software purchase with the borrower. See Note 12.

NOTE 6  OTHER CURRENT LIABILITIES

Other
current liabilities consist of the following as of December 31, 2005:



|                      |  |   |       
|--------------------- |  | - | ------
|Accrued payroll       |  | $ | 12,537
|Accrued interest      |  |   | 977   
|Accrued director fees |  |   | 24,000
|Other                 |  |   | 2,811 
|                      |  |   |       
|                      |  | $ | 40,325
|                      |  |   |       

NOTE 7  NOTES PAYABLE  STOCKHOLDERS

Notes payable stockholders are summarized as follows as of December 31, 2005:



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |   |        
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | -------
|Unsecured Promissory note payable to Burns Family Trust for $200,000 including interest at a fixed rate of 11%. The maturity date is April
2006 at which time all principal and interest is due. As additional consideration, 50,000 shares of stock will be delivered (see Note 9).                                                                                                                                                                                                                  |  | $ | 200,000
|Unsecured Promissory note payable to Ken Hall for $50,000 including interest at a fixed rate of prime plus 8% (15% at December 31, 2005). The
note holder has the sole option of converting the principle represented by this note into our common stock at a strike price equal to a 50 percent discount to the average closing bid price of the stock 10 days immediately prior to the conversion
(see Note 9). The maturity date is December 2006 at which time all principal and interest is due. |  |   | 50,000 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |   |        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |   | 250,000
|Less: current portion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |   | 250,000
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |   |        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | $ |       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |   |        



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##### Table of Contents

INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 8 INCOME TAXESAS RESTATED

At December 31, 2005, the Company had net operating loss carryforwards for
income tax purposes of approximately $37,452,000 available as offsets against future taxable income. The net operating loss carryforwards are expected to expire at various times from 2019 through 2025.

The tax effects of the primary temporary differences giving rise to the Companys deferred tax assets and liabilities are as follows for the year
ended December 31, 2005:



|                                |  |      |             |  
|------------------------------- |  | ---- | ----------- | -
|                                |  | 2005 |            
|Deferred tax assets:            |  |      |             |  
|Net operating loss carryforward |  | $    | 14,093,266  |  
|Start-up costs                  |  |      | 4,265       |  
|Stock based compensation        |  |      | 23,315      |  
|                                |  |      |             |  
|Total deferred tax assets       |  |      | 14,120,846  |  
|                                | 
|Deferred tax liabilities:       |  |      |             |  
|Depreciation                    |  |      | (1,512      | )
|                                |  |      |             |  
|Net deferred tax assets         |  |      | 14,122,358  |  
|Less valuation allowance        |  |      | (14,122,358 | )
|                                |  |      |             |  
|Net deferred tax asset          |  | $    |            |  
|                                |  |      |             |  

Because of the Companys lack of earnings history, the deferred tax assets have been fully offset by a
valuation allowance. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during those periods that the temporary differences become deductible. During the years ended December 31, 2005, the increase in deferred tax asset valuation allowance amounted to
approximately $693,000.

U.S. tax rules impose limitations on the use of net operating losses and tax credits following certain defined changes in stock
ownership under Section 382 of the Internal Revenue Code and the accompanying Treasury Regulations. Calculating the impact of Section 382 would be a very costly and time consuming process. By completing this calculation, we would be required to
include a valuation allowance for the amount of net operating losses limited by Section 382. Since we currently offset 100% of our deferred asset with a valuation allowance, we believe we do not need to complete this calculation until such time we
become profitable and are required to for the filing of our federal income tax return in a profitable year.



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##### Table of Contents

INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 9 STOCKHOLDERS EQUITY  AS RESTATED

Common Stock.The Board of Directors has authorized 100,000,000
shares of common stock with a par value of $.001. Each share of common stock entitles its holder to one vote on all matters submitted to vote of the stockholders. The holders of common stock do not have cumulative voting rights or preemptive rights.

Warrants. On July 23, 2003, the company notified the holders of the Companys convertible notes of the Companys intent to
exercise the option to convert the notes into shares of common stock at a $1.00 per share and a warrant to purchase an equal number of shares at $1.50 per share. The warrants have an exercise price of $1.50, are exercisable at issuance, and have a
contractual life of three years expiring three years from the date of the convertible note. As of July 23, 2003 the Company issued 744,505 shares of common stock and warrants for 744,505 shares of common stock in connection with the conversion.

2002 Warrants. In 2002, in connection with the sale of 1,220,000 shares of Common Stock for $0.25 per share, the Company issued fully vested
warrants in two classes to purchase 1,220,000 shares of Common Stock in a Class A Warrant and 1,220,000 shares of Common Stock in a Class B Warrant. These warrants were issued in connection with a certain Confidential Private Offering
Memorandum dated April 16, 2002. These Class A and Class B Warrants have an exercise price of $1.00 and $1.50 respectively, are exercisable at issuance and have a contractual life of five years and expire from April to May of 2007.

2004 Secured Promissory Note. On February 16, 2004, the Company sold in a private placement, a secured promissory note in the amount of
$600,000 to a stockholder. Interest accrued on the outstanding principal balance from and after February 16, 2004 at a rate of 18 percent per annum. The note holder had the sole option of converting the principal represented by this note
into the Companys common stock at a strike price equal to a 40 percent discount to the average closing bid price of the stock for the twenty days immediately prior to the conversion. As a result of this beneficial conversion feature, the
Company recognized interest expense of $600,000 during the year ended December 31, 2004. The note holder may convert all or any part of the principal represented by this note. As part of the same transaction, the note holder acquired a warrant,
issued by the Company, to purchase 50,000 shares of the Companys common stock at $1.25 per share. On June 14, 2004, the Company entered into a promissory note conversion agreement (the Agreement) with this stockholder. The
agreement called for the holder of the note to exercise the option to convert the principal sum of $600,000 into shares of the Companys common stock at the lesser of $1.25 per share or a 40% discount to the average closing bid price for the
thirty days after the signing of the agreement. In addition, per the agreement, the Company paid the accrued interest on the note in cash. On August 4, 2004 the Company issued 714,285 shares of common stock to satisfy the promissory note
conversion agreement.

2004 Private Placement. Commencing on or about August 14, 2004, the Company offered $1,500,000 in $0.30 units. Each unit
consisted of one share of common stock and a warrant to purchase three shares of common stock at a purchase price of $0.75 per share. The Company sold $371,185 in units to 12 accredited investors. Each of the investors had access to and was provided
with relevant information concerning the company. The securities were exempt from registration pursuant to Rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933, as amended.

2005 Secured Promissory Notes. On July 7, 2005, the Company sold in a private placement, secured promissory notes in the amounts of $5,000 and $10,000 to two
stockholders. The note holder has the sole option of converting the principal represented by this note into our common stock at a strike price equal to a 50 percent discount to the average closing bid price of the stock for the ten days immediately
prior to the conversion. Due to the beneficial conversion feature of these notes, the Company charged $15,000 to interest expense during the year ended December 31, 2005. On November 28, 2005 we issued 129,595 shares of our common stock to
satisfy the principal and accrued interest of the $10,000 promissory note. On December 6, 2005 we issued 57,076 shares of our common stock to satisfy the principal and interest of the $5,000 promissory note.

The Company sold, in a private placement, secured promissory notes in the amounts of $200,000 (the November 2005 Loan) and $50,000 to two stockholders in
November and December of 2005, respectively. At maturity, in addition to the payment of principal and accrued interest, the Company will deliver, as additional incentive for making the November 2005 Loan, 50,000 shares of our common stock. These
shares will be restricted securities, as defined by the Securities Act of 1933, as Amended. The November 2005 Loan agreement became effective on November 15, 2005, at which time our stock was trading at $0.10 per share. As a result, $5,000 will be
amortized as interest expense over the life of the loan. The $50,000 note payable has a conversion feature for which the Company recognized $50,000 to interest expense during the year ended December 31, 2005 as a result of the beneficial
conversion feature. As of December 31, 2005, the unamortized portion of $3,500 is included in prepaid expenses in the accompanying consolidated balance sheet. In addition, $1,500 has been charged to interest expense for the year ended December 31,
2005 in the accompanying consolidated statement of operations.

Also, as part of the November 2005 Loan agreement, the broker acquired a warrant as
compensation, issued by the Company, to purchase 50,000 shares of common stock at $0.50 per share and the warrant is exercisable at issuance. The fair value of the warrant amounts to $2,300 based on the Black-Scholes pricing model and will be
amortized over the life of the loan. The Company used the following assumptions in determining this value:



|               |  |         |  
|-------------- |  | ------- | -
|Risk-free rate |  | 4.5     | %
|Expected life  |  | 3 years |  
|Volatility     |  | 121     | %
|Dividend Yield |  | 0       | %

As of December 31, 2005, the unamortized portion of $1,600 is included in prepaid expenses in the accompanying
consolidated balance sheet. In addition, $700 has been charged to interest expense for the year ended December 31, 2005 in the accompanying consolidated statement of operations.



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##### Table of Contents

INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 9 STOCKHOLDERS EQUITY, CONTINUED



|     |  |                                          |  |               |   |  |               |      |                 |                  |             |   |       
|---- |  | ---------------------------------------- |  | ------------- | - |  | ------------- | ---- | --------------- | ---------------- | ----------- | - | ------
|Year |  | Warrant Type                             |  | WarrantShares |   |  | ExercisePrice |      | Expiration Date |                  | NetProceeds
|2002 |  | Class A warrants                         |  | 1,220,000     |   |  | $             | 1.00 |                 | April - May 2007 |             |   |       
|2003 |  | Class A warrants cancelled               |  | (160,000      | ) |  |               |      |                 |                  |             |   |       
|2003 |  | Class A warrants exercised               |  | (63,000       | ) |  |               | 1.00 |                 |                  |             | $ | 63,000
|     |  |                                          |  |               |   |  |               |      |                 |                  |             |   |       
|     |  |                                          |  | 997,000       |   |  |               |      |                 |                  |             |   |       
|     |  |                                          |  |               |  
|2002 |  | Class B warrants                         |  | 1,220,000     |   |  |               | 1.50 |                 | April - May 2007 |             |   |       
|2002 |  | Class B warrants cancelled               |  | (160,000      | ) |  |               |      |                 |                  |             |   |       
|     |  |                                          |  |               |   |  |               |      |                 |                  |             |   |       
|     |  | Total Class B warrants outstanding       |  | 1,060,000     |   |  |               |      |                 |                  |             |   |       
|     |  | Total Notes payable warrants outstanding |  |              |   |  |               |      |                 |                  |             |   |       
|     |  |                                          |  |               |  
|     |  | Convertible Notes payable warrants       |  | 744,505       |   |  |               | 1.50 |                 | June 2006        |             |   |       
|     |  |                                          |  |               |  
|2004 |  | Notes payable warrants                   |  | 50,000        |   |  |               | 0.92 |                 | None             |             |   |       
|     |  |                                          |  |               |  
|2004 |  | Private placement warrants               |  | 3,718,491     |   |  |               | 0.75 |                 | Aug. - Oct. 2007 |             |   |       
|     |  |                                          |  |               |  
|2005 |  | Broker warrants                          |  | 50,000        |   |  |               | 0.50 |                 | Dec. 2008        |             |   |       
|     |  |                                          |  |               |   |  |               |      |                 |                  |             |   |       
|     |  | Total warrants outstanding               |  | 6,619,996     |   |  |               |      |                 |                  |             |   |       
|     |  |                                          |  |               |  
|     |  | Total proceeds from warrants exercised   |  |               |   |  |               |      |                 |                  |             | $ | 63,000

NOTE 10 RESTRICTED STOCK BASED COMPENSATION

On June 10, 2003, the Board of Directors adopted the Horizon Holding Corporation 2003 Restricted Stock Plan (the 2003 Plan) and it was approved by
our stockholders at the 2003 Annual Meeting. The terms of the 2003 Plan provide for grants of restricted stock awards.

Under the 2003 Plan, the total
number of shares of restricted common stock that may be subject to the granting of Awards during the term of the 2003 Plan shall be equal to 1,500,000 shares. Shares with respect to which awards previously granted that are forfeited, cancelled or
terminated are returned to the plan and may be reissued. As of December 31, 2005, 1,354,000 shares have been issued under this Plan.

NOTE 11 -
COMMITMENTS AND CONTINGENCIES

Gain on Extinguishment of Debt. Gain on extinguishment of debt was $3,374 and $310,125 for 2005 and 2004,
respectively. This gain was the result of our determination that these amounts were not owed for these obligations in 2005 and 2004 or were obtained through negotiations with our vendors and were legally released from these agreements in the
corresponding year.



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##### Table of Contents

INVERTED PARADIGMS CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

NOTE 12  SUBSEQUENT EVENTS

Resignation of Chief Executive Officer.On January 31, 2006, Dwain Brannon resigned from the
positions of Chief Executive Officer, Secretary and Director of the Company.

Software Purchase. The Company closed a Software Purchase and
Development Agreement with Delta Insights, LLC. to purchase its Silent Sword software and all trademarks, service marks, and logos. As of March 30, 2006, we have issued a total of 10,000,000 shares of our common stock for Silent Sword. Under the purchase agreement, we may issue a maximum
of 20,000,000 common shares subject to certain provisions in the agreement. The stock issued is considered restricted securities as defined by the Securities Act of 1933, as amended. The Company plans on developing this as a new segment of business.

Operating Lease. On February 7, 2006, the Company committed to a non-cancelable operating lease on operating facilities which expires
February 28, 2009. The following is a schedule of future minimum rental commitments, by year and in the aggregate, to be paid under this non-cancelable operating lease.





|                                 |  |   |        
|-------------------------------- |  | - | -------
|For the year ending December 31, |  |  
|2006                             |  | $ | 41,000 
|2007                             |  |   | 49,200 
|2008                             |  |   | 49,200 
|2009                             |  |   | 8,200  
|                                 |  |   |        
|Total                            |  | $ | 147,600
|                                 |  |   |        

Employment Agreement. On February 23, 2006 the Company entered into an Employment Agreement with Chuck
Wernicke to become the Chief Technology Officer. Mr. Wernicke will earn an annual salary of $96,000. He will also participate in the executive benefit package offered to other executives in the Company during the term of his employment. The
length of this agreement is for one year.

Promissory Note. On March 9, 2006, we sold in a private placement, a secured promissory note in the
amount of $250,000 to a stockholder. Interest accrues on the outstanding principal balance from and after March 6, 2006 at a rate of 11 percent per annum. At maturity, October 31, 2006, in addition to the payment of principal and accrued interest,
we will deliver as additional incentive for making the loan, 75,000 shares of our common stock. The stock is considered restricted securities as defined by the Securities Act of 1933, as amended.

NOTE 13  RESTATEMENT

The Company erroneously did not record
interest expense in the amount of $65,000 from the beneficial conversion feature of convertible promissory notes entered into in July 2005 and November 2005. In addition, the Company did not record interest expense of $600,000 from the beneficial
conversion feature of a convertible promissory note entered into in 2004. Also, the Company erroneously did not record interest expense from the amortization of warrants issued as compensation and the amortization of the value of common stock to be
issued as an inducement at the maturity of a promissory note entered into in November 2005.

This created a restatement of interest expense from $1,538, as
originally filed, to $68,738 and $97,279, as originally filed, to $697,279 on the amended consolidated statements of operations for the years ended December 31, 2005 and 2004, respectively. In addition, prepaid expenses have been restated to $9,267
from $ 4,167, notes payable to stockholders to $255,000 from $250,000 due to the valuation of warrants; additional paid-in capital to $37,397,104 from $36,729,804 and accumulated deficit to $37,598,720 from $36,931,520 on the December 31, 2005
consolidated balance sheet.



F-14