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

                                   Form 10-KSB

(Mark One)

[x]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934

                     For the fiscal year ended July 31, 2005

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

                   For the transition period from to ________

                        Commission file number 333-48746

                             Interactive Games, Inc.
                  --------------------------------------------
                 (Name of small business issuer in its charter)

            Nevada                                                87-0567853
-------------------------------                              -------------------
(State or other jurisdiction of                                (I.R.S. Employer
 incorporation or organization)                              Identification No.)

    319 Clematis Street, Suite 803
    West Palm Beach, Florida                                        33401
 ---------------------------------------------                --------------
 (Address of principal executive offices)                        (Zip Code)

                     Issuer's telephone number 561-651-1350

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

Title of each class                   Name of each exchange on which registered

       None                                         not applicable
------------------------             ---------------------------------------
Title of each class)

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

                                      none
                                      ----
                                (Title of class)

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

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

     Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act) Yes [ ] No [X]

     State issuer's revenues for its most recent fiscal year. $ 76,920 for the
fiscal year ended July 31, 2005.

     State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked prices of such common equity, as
of a specified date within the past 60 days. The aggregate market value of the
common equity held by non-affiliates computed at the closing price of the
registrant's common stock on November 30, 2005 ($0.21 per share) is
approximately $4,752,000

     November 30, 2005 46,055,100 shares of common stock are issued and
outstanding.


<PAGE>


                       DOCUMENTS INCORPORATED BY REFERENCE

     If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) of the Securities Act of 1933 ("Securities Act"). Not Applicable.

     Transitional Small Business Disclosure Form (check one): Yes    No    X
                                                               -----     -----

       CERTAIN CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

Certain statements in this annual report on Form 10-KSB contain or may contain
forward-looking statements that are subject to known and unknown risks,
uncertainties and other factors which may cause actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. These
forward-looking statements were based on various factors and were derived
utilizing numerous assumptions and other factors that could cause our actual
results to differ materially from those in the forward-looking statements. These
factors include, but are not limited to, our ability to our ability to raise
capital, obtain and retain customers, to provide our products and services at
competitive rates, execute our business strategy in a very competitive
environment, our degree of financial leverage, risks associated with our
acquiring and integrating companies into our own, risks related to market
acceptance and demand for our services, and other factors. Most of these factors
are difficult to predict accurately and are generally beyond our control. You
should consider the areas of risk described in connection with any
forward-looking statements that may be made herein. Readers are cautioned not to
place undue reliance on these forward-looking statements. Readers should
carefully review this Form 10-KSB in its entirety, including but not limited to
our financial statements and the notes thereto and the risks described in "Item
1. Business--Risk Factors." Except for our ongoing obligations to disclose
material information under the Federal securities laws, we undertake no
obligation to release publicly any revisions to any forward-looking statements,
to report events or to report the occurrence of unanticipated events.

When used in this annual report, the terms the "Company," "we", "our", and "us"
refers to Interactive Games, Inc., a Nevada corporation, and our subsidiaries
Torpedo Sports USA, Inc., a Delaware corporation ("Torpedo USA"), Torpedo
Sports, Inc., a Canadian corporation ("Torpedo Canada"), JamDirect, Inc., a
Florida corporation ("JamDirect") and Interactive Games, Inc., a Florida
corporation ("Interactive"). The information which appears on our web sites at
www.interactivegamesinc.com or www.jamdirect.com is not part of this annual
report.



<PAGE>


PART I

ITEM 1.       DESCRIPTION OF BUSINESS

Overview

We develop, license and market specialty slot machine and mobile entertainment
software. Our Interactive Games product line seeks to provide a unique game
experience by combining advanced technology with engaging content, celebrity
licensing, vivid graphics and rich sound. Our primary focus is to build a strong
base of clients for our gaming and other applications, provide value added
consulting services and continue the development of our gaming and mobile
entertainment products. Our products include licensed slot machine tiles and
gaming software, mobile games and wireless entertainment products with vertical
markets and services for event tickets, music, ring tones and real tones from
popular artists. Our products are developed and marketed internationally by
leaders in the regulated gaming and wireless industry. Our target markets
include Class III specialty licensing and mobile gaming applications.

Gaming software

Our business model provides that we will seek to introduce the Class II casino
specialty machines and wireless gaming applications. Class III casino specialty
machines are a segment that we believe provides a very large opportunity. We
intend to design all of our products to target similar market segments, and by
achieving a relationship and installed base with one product, we believe that
this will allow for different products from our line to be sold to the same
customer. By developing innovative products that target similar market segments,
we believe that we will build brand recognition and customer loyalty. Slot
machines are the engines that power the modern casino, accounting for up to 80%
of a gambling resort's gaming revenues. Tom Baker, president of International
Game Technology, was quoted as saying that the themed slot machines are all part
of bringing the best entertainment to gamblers. From a marketing standpoint,
gone is the emphasis on traditional reel slots with game formats that vary in
appearance but are standard in substance. The popular trend now is video display
terminals, games within games, multiple-coin spin formats, and most predominant
of all, licensing agreements with game manufacturers, celebrities and television
shows. Current trends make it clear that today's player is looking for an
interactive and entertaining slot experience that offers brand appeal and
familiarity. Further, multi-line play opportunities, and secondary bonus games
are equally important. We believe that our Ed McMahon's Million Dollar Madness
software described below will tap into all these current trends.

As part of our targeted marketing strategy, we have signed an exclusive
agreement with BestBet Media Group, Inc. to add Ed McMahon's image, voice and
likeness and unique stature which will embody Mr. McMahon's persona within the
new Interactive Games' "Ed McMahon's Million Dollar Madness" slot machine. Our
specialty game software is based on a methodology of imbedding very large "Life
Altering" jackpot awards into a "stand-alone" machine. We believe that this
approach is designed to maximize the player's entertainment value while
eliminating the casino's exposure. Players will interact with Mr. McMahon, who
is still identified as the face behind the Publishers Clearing House
Sweepstakes. In addition, Mr. McMahon will provide promotional support in the
form of video and photo sessions, recordings, and appearances. BestBet Media
Group, Inc. will also provide support to help place the machines in multiple
gaming locations.

                                      -2-
<PAGE>


Under the terms of the agreement entered into in March 2004 our subsidiary,
Interactive, we have the right to develop up to two additional games at dates as
may be mutually agreed to by the parties. BestBet Media developed the software
for us and we own all intellectual property rights associated therewith.
Interactive paid BestBet Media $50,000 and issued it 250,000 shares of its
common stock with registration rights as fixed compensation under the agreement.
BestBet Media is entitled to additional compensation of $500 per year for each
of the initial game installed by Interactive. The term of the agreement is for
five years from the end of the development period, subject to an automatic
renewal of an additional five years. The software for this project has been
completed and is presently undergoing the necessary licensing approvals. We
anticipate that we will enter into an agreement for the distribution of this
software product on a royalty basis during fiscal 2006.

We believe that the marketing and branding opportunities of Mr. McMahon's
celebrity status along with our business methodology are a powerful combination
that may allow us to enter the Class III marketplace quickly and with a clear
point of difference.

Wireless Entertainment Products

We have licensed the rights to mobile cell phone and wireless applications. Our
partnership with 9 Squared Inc. provides us with licensing rights to worldwide
distribution through most major wireless carriers of ringtones, wallpapers and
wireless multimedia content of over 10,000 popular music artists and
celebrities. We allow for download of all mobile games and ringtones via our web
site at www.Jamdirect.com. Our application portfolio includes single- and
multi-player games, ring tones, images and other entertainment content. Sales of
the applications are tied, in part, to the commercial introduction of new mobile
phone models. Many new mobile phone models are released in the fourth quarter to
coincide with the holiday shopping season. Since some customers may download our
applications soon after they purchase new mobile phones, we may experience some
seasonal fluctuations based on this key holiday selling period.

Our delivery system distributes today's most popular content through the
combined use of wireless technology's most innovative platforms, including.

     o    SMS - Delivery of ring tones, operator logos, group graphics, message
          based games,

     o    MMS - Delivery of multi media messages (graphics and sounds bundled
          within message),

     o    WAP - WAP enabled user interfaces that allow customers to download
          mobile applications,

     o    GPRS - Use of GPRS networks to connect and facilitate downloading and
          WAP protocols, and

     o    J2ME - Delivery of games to java enabled phones.

The fees for wireless games generally range from $4.99 to $1.99 for a one time
purchase and from $5.00 to $10.00 for a monthly subscription. The fees for ring
tones generally range from $0.99 for a single ring tone to $9.99 for a
collection of ring tones. We operate a mobile content delivery system capable of
content delivery to more than 220 phone models, across 255 carrier networks in
60 countries worldwide. We are supported by service providers such as Sprint
PCS, AT&T, Cingular, T-Mobile and top handset manufacturers including Samsung,
Nokia, Sony Ericsson, Motorola, LG, Sanyo, Hitachi, and AT&T.

                                      -3-
<PAGE>


Although we intend to continue distributing our applications primarily through
wireless carriers, we are also developing alternative means of marketing and
selling our applications directly to wireless subscribers, including marketing
our applications through Internet portal sites, including the Yahoo! and Jamba!
sites, and our own website, through mobile phone manufacturers and retail
stores. For instance, we recently partnered with Radio Shack to make our
applications available to Radio Shack customers who subscribe to wireless
carrier services using our proprietary JAMDAT Games-to-Go distribution system.
When using these alternative channels to distribute our wireless applications,
the wireless carrier generally provides the billing and collection service and
continues to retain a percentage of the purchase price for those services. In
addition, the third-party provider, such as a retailer or Internet portal, also
generally retains a percentage of the purchase price of sales taking place
through these alternative sales and marketing channels. As a result, we
typically will earn less from sales through these third-party providers than we
would from sales directly through wireless carriers.

We are also seeking to expand our revenue base by developing propriety software
applications which we can market in addition to the licensed products we
currently market. We will seek to develop original products both internally,
using our in-house development staff, and externally, using third party software
developers working under contract with our company. Management of our internal
staff will monitor the work of both inside and third party development teams
through design review, progress evaluation, milestone review and quality
assurance.

Product and software development

BestBet Media provided the software development services to us on a contract
basis in connection with our Ed McMahon's Million Dollar Madness software. In
addition, we also maintain an in-house staff of individuals who are engaged in
software development.

Marketing and Sales

Our marketing activities will vary depending upon whether a wireless or mobile
game title is based upon a licensed or an original property. A licensed property
has pre-existing brand popularity and thus often requires less initial effort by
us to promote. Our marketing efforts for titles based upon original properties
will begin in advance of a title's release and focus on building positive
awareness of our game concepts with consumers and retailers alike. We will
conduct consumer and retail research which provide our company with feedback to
position a title prior to its release. Our public relations promotional
activities for original titles in fiscal 2005 included coverage in broadcast,
print and online media targeting enthusiast, lifestyle and major mainstream
outlets. Additionally, we continue to increase our corporate public relations
efforts by establishing relationships with leading technology, retail outlets
and strategic business alliances.

Our sales and marketing organization works closely with third party gaming
software developers like BestBet Media and wireless carriers around the world to
create merchandising and marketing opportunities for our applications. Through
ongoing communications with gaming manufacturers, carrier sales and marketing
organizations, we match our application portfolio with the strategic needs of
the carrier and the preferences of their subscribers. Our sales and marketing
organization, working closely with our development staff, also identifies and
evaluates distribution opportunities for applications owned by third parties,
including developers and other publishers. We provide these distribution
services to third parties based upon our evaluation of the marketability of
their applications. In 2005, these third party distribution services accounted
for less than 1% of our revenues.

                                      -4-
<PAGE>


Our sales and marketing organization is also responsible for managing our own
marketing efforts. We market our applications using advertising, industry trade
shows and other events, sponsorships, public relations and our website network.
We intend to continue to build our direct marketing capabilities and further
develop our sales and marketing organization by hiring additional sales and
marketing personnel and increasing our marketing expenditures.

Our marketing strategy is also focused on establishing an identity within the
proprietary Class III specialty slot machine celebrity licenses, and wireless
applications for both the regulated gaming and wireless industry. We will focus
on capitalizing the relationships and industry contacts we have established in
the past. We will work with licensed distributors and wireless carriers
leveraging relationships in various jurisdictions for product placement.

Competition

The markets for our products are highly competitive. We will be competing with a
number of developers, manufacturers and distributors of products similar to
those that we license and market. The majority of these competitors are larger
and have greater access to capital resources than we do. Our future performance
may be affected by numerous factors, including the continued popularity of our
products as well as the ability of our technology partners to develop and
introduce new products that gain market acceptance and satisfy consumer
preferences.

The current competitive environment is placing increasing demands on equipment
makers, requiring a strong pipeline of new games and the ability to secure
rights to popular brand names and other entertainment-oriented content suitable
for adaptation for casino and pay-for-play games. Future growth opportunities in
the gaming equipment industry will result not only from a strong pipeline of
well-defined branded games, but also from new product developments and
technological advancements.

Our major competitors include International Game Technology, Alliance Gaming,
Aristocrat, Atro, JamDat Mobile, Sigma Game, Shuffle Master, Inc., Multi-Media
Games and THQ Wireless.

We believe that we will be able to compete favorably in the principal
competitive factors in our market, which will consist of the following:

     o    We will seek to build broad and deep distribution channels and third
         party content providers with strong carrier relationships;

     o    We will seek to build of a diverse portfolio of high-quality
          applications; and

     o    We will seek to establish technical capability and management
          experience and expertise.

However, as we only recently exited development stage, have limited revenues and
limited working capital, there are no assurances whatsoever that we will ever be
able to effectively compete in our target market. Many of our current and
potential competitors have significantly longer operating histories and
significantly greater managerial, financial, marketing, technical and other
competitive resources, as well as greater name recognition, than we do. As a
result, these companies may be able to adapt more quickly to changes in customer
preferences and may be able to devote greater resources to the promotion and
sale of their competing products.

                                      -5-
<PAGE>


Government Regulation

A portion of our business involves the licensing of software used to conduct
games for pay, or gambling. We do not, however, manufacture or own any gaming
hardware, operate any casinos or otherwise directly engage in this business. The
regulation of the gambling industry is complex, intensive and constantly
changing. We are not presently subject to any rules or regulations which require
us to obtain any licenses or governmental approvals to develop software used in
gaming applications. [CONFIRM]. However, the adoption or modification of laws or
regulations relating to gambling could adversely affect the manner in which we
currently conduct this portion of our business.

Intellectual Property

Our intellectual property is an essential element of our business. We use a
combination of trademark, copyright, trade secret and other intellectual
property laws, confidentiality agreements and license agreements to protect our
intellectual property. Our employees and independent contractors are required to
sign agreements acknowledging that all inventions, trade secrets, works of
authorship, developments and other processes generated by them on our behalf are
our property, and assigning to us any ownership that they may claim in those
works. Despite our precautions, it may be possible for third parties to obtain
and use without consent intellectual property that we own or license.
Unauthorized use of our intellectual property by third parties, and the expenses
incurred in protecting our intellectual property rights, may adversely affect
our business.

Employees

As of November 15, 2005, we had 6 full-time employees, including our executive
officers. None of our employees are covered by collective bargaining agreements,
and we believe our relationships with our employees to be good.

Our History

We were originally organized under the laws of the State of Nevada in 1996 as
Zacman Enterprises, Inc. and subsequently changed its name to eNutrition, Inc.
eNutrition was a direct mail marketing company engaged in the development and
marketing of nutritional supplements. Operation commenced in June 2000 by
securing the exclusive rights to market the nutritional supplement, HI-Q. In
September 2001, eNutrition entered into a License Agreement with HI-Q Nutrition,
Inc., a Nevada corporation, granting them the exclusive right to engage in the
business of marketing and distributing nutritional products under the trade name
HI-Q.

On April 30, 2002, we entered into an agreement with HI-Q Nutrition, Inc. for
the sale of all of our assets relating to our HI-Q brand of nutritional
supplements, including the brand name, trademark, product formulations, customer
base and marketing ideas, which comprised all of the assets and business of our
company. The agreement closed and became effective on May 20, 2002, immediately
prior to our acquisition of the Torpedo business described below. We received
cash consideration of $10,000, plus forgiveness of any uncollected royalties
owed to HI-Q Nutrition, Inc. In addition, HI-Q Nutrition, Inc. assumed all
liabilities relating to the HI-Q brand products. At a special shareholders'
meeting held on May 17, 2002, our stockholders approved the sale of all of
eNutrition's assets, and the assumption of all liabilities, to HI-Q Nutrition,
Inc. Our stockholders also approved a one share for 1.8870314 share reverse
stock split and the purchase and retirement of 4,478,430 post-reverse-split
shares.

                                      -6-
<PAGE>


On May 17, 2002, our stockholders also approved our acquisition of all of the
issued and outstanding securities of Torpedo Delaware in exchange for 8,000,000
shares of our common stock issued to the Torpedo USA stockholders. On May 20,
2002 we changed our name to Torpedo Sports USA, Inc. Torpedo USA, through its
wholly-owned subsidiary Torpedo Canada, was a manufacturer and distributor of
outdoor recreational products for children, such as, toboggans, baby sleds,
snowboards, tricycles, scooters and skateboards. The transaction was recorded as
a reverse acquisition based on factors demonstrating that Torpedo USA
constituted the accounting acquirer.

In January 2004, Torpedo Canada filed in Canada, a notice of its intention to
make a proposal to its creditors for the restructuring of its debts. The
proposal procedure allowed Torpedo Canada to continue to operate its business
subject to protection of the secured interests of its lenders and suspended
efforts by creditors to collect their debts while Torpedo Canada reviewed and
analyzed its financial condition. On May 6, 2004, Torpedo Canada filed for
protection under the Bankruptcy and Insolvency Act of Canada with the intention
to liquidate its assets. Torpedo Canada ceased its operating activities in May
2004.

On February 1, 2005, we acquired all of the issued and outstanding common stock
of Interactive. Pursuant to terms of the merger agreement, in exchange for all
of the issued and outstanding common shares of Interactive we issued 27,037,282
shares of our common stock to the former Interactive shareholders in order for
them to own 51% of our outstanding common stock on the closing date of the
merger, on a fully diluted basis. We agreed to issue additional shares if
certain agreed upon criteria, to be determined, are met in order to allow the
former Interactive security holders to hold 54% of our outstanding common stock
(based on the shares outstanding at the time of closing). Accordingly, we could
issue up to an additional 3,457,453 shares to the former Interactive
shareholders. As of November 30, 2005, we have not issued any of these
additional shares. In connection with the merger agreement, the former
Interactive shareholders agreed to use their best efforts post-closing to cause
our company to raise sufficient funds to pay-off or otherwise dispose of up to
$250,000 of our liabilities. Such pay-off or disposal has not occurred to date.
Finally, if Torpedo USA did not dispose of all of assets and liabilities within
three months following the acquisition closing date, we were required to issue
an additional 500,000 shares to the former Interactive shareholders. As
described below, we are currently in discussions for the sale of Torpedo Canada

In conjunction with the merger agreement, we changed our name to Interactive
Games, Inc. and approved an increase in our authorized common stock from
50,000,000 shares to 100,000,000 shares.

The acquisition of Interactive by us was accounted for as a reverse merger
because on a post-merger basis, the former Interactive shareholders hold a
majority of the outstanding common stock of our company on a voting and fully
diluted basis. As a result, Interactive was deemed to be the acquirer for
accounting purposes. Accordingly, the financial statements presented are those
of Interactive for all periods prior to the acquisition, and the financial
statements of the consolidated companies from the acquisition date forward. The
historical stockholders' deficit of Interactive prior to the acquisition have
been retroactively restated (a recapitalization) for the equivalent number of
shares received in the acquisition after giving effect to any differences in the
par value of our common stock and Interactive's common stock, with an offset to
additional paid-in capital. The restated consolidated accumulated deficit of the
accounting acquirer (Interactive) is carried forward after the acquisition.

There were no changes in management or the Board of Directors of our company
following the transaction with Interactive, and current management intends to
serve in office at least until certain liabilities of our company have been
disposed of as contemplated by the agreement. Thereafter, the shareholders of
Interactive prior to the transaction intend to appoint their designees to fill a
majority of the positions on the Board of Directors.

                                      -7-
<PAGE>


Pending bankruptcy and sale of Torpedo Canada

As described above, in May 2004 Torpedo Canada filed for bankruptcy protection
in Canada. In conjunction with the bankruptcy, a trustee was appointed to
oversee the Torpedo Canada estate. The trustee's functions are to recover the
maximum value of Torpedo Canada's assets and discharge bankruptcy claims based
upon priority and pursuant to Canadian bankruptcy laws. As a result of Torpedo
Canada's inability to meet its obligations which led to the bankruptcy filing,
certain creditors initiated legal action against Torpedo Canada and some of
these creditors have received judgments against that company. The assets and
liabilities related to Torpedo Canada are reflected on our balance sheet at July
31, 2005 as Assets of discontinued operations and Liabilities of discontinued
operations, respectively. The liabilities of Torpedo Canada exceed the estimated
net realizable values of Torpedo Canada's assets and will not be sufficient to
pay all of the obligations of Torpedo Canada. We are uncertain as to the
ultimate disposition of these liabilities, but we believe that there is no
significant exposure to our company.

We are in negotiations with VP Sports, Inc., an affiliate through common control
by our CEO, to sell 100% of our ownership interest in Torpedo Canada. If this
happens, VP Sports would assume the responsibility to liquidate Torpedo Canada
and relieve our company of any further obligations of Torpedo Canada.

RISK FACTORS

Before you invest in our securities, you should be aware that there are various
risks. You should consider carefully these risk factors, together with all of
the other information included in this annual report before you decide to
purchase our securities. If any of the following risks and uncertainties
develops into actual events, our business, financial condition or results of
operations could be materially adversely affected.

Our auditors have raised substantial doubts as to our ability to continue as a
going concern.

Our consolidated financial statements have been prepared assuming we will
continue as a going concern. Since inception we have experienced recurring
losses from operations, which losses have caused an accumulated deficit of
approximately $700,000 as of July 31, 2005. In addition, for the year ended July
31, 2005 and for the period from inception (December 3, 2003) to July 31, 2004
we incurred a comprehensive loss of $459,240 and $274,005, respectively. We have
a working capital deficit of approximately $4,050,000 at July 31, 2005 and cash
on hand of approximately $28,000. These factors, among others, raise substantial
doubt about our ability to continue as a going concern. Our financial statements
do not include any adjustments that might result from the outcome of this
uncertainty. We anticipate that we will continue to incur losses in future
periods and we will need to raise substantial amounts of capital to pay our
current obligations and implement our business model. No assurances can be given
that adequate financing can be obtained to meet our capital needs. If we are
unable to generate profits and unable to continue obtaining financing to meet
our working capital requirements we may have to curtail our business sharply, or
cease operations altogether. Our continuation as a going concern is dependent
upon our ability to generate sufficient cash flow to meet our obligations on a
timely basis, to obtain additional financing, and, ultimately, to attain
profitability. Should any of these events not occur, the accompanying financial
statements will be adversely effected and we may have to cease operations.

All of our assets serve as collateral under debt obligations to a related party
which are due upon demand. In addition, we are in default under a $75,000
promissory note.

                                      -8-
<PAGE>


At July 31, 2005 we owe parties which are affiliated to our company through
common control an aggregate of $1,600,426. All of these amounts are due on
demand. In addition, we have granted E2000, Inc., Gulfstream Financial Partners,
Ltd and USA Skate Corporation, affiliates (the "Affiliates") through common
control by Henry Fong, our CEO, $676,603. This amount is secured by a security
interest in all of our assets. We do not presently have sufficient capital to
satisfy these obligations if the Affiliates should demand payment of the amounts
due them. If any of the "Affiliates should demand payment of the amounts due it,
upon our default the Affiliates would be entitled to foreclose on our assets
which would prevent us from continuing our operations. Finally, we owe an
unrelated third party $75,000 under an unsecured note which matured in April
2005 and is currently in default.

Without the addition of qualified personnel, for which we do not currently have
adequate financial capacity, we may not be able to manage growth and expansion
and may not be able to grow our company to profitability.

Due to the nature of the industry, rapid growth in the scope of operations is
anticipated. This growth will require additional personnel, and will have
associated higher levels of operating expenses. In order to manage these
operations effectively, we will need to continuously implement and improve our
operational, financial, and management information systems, as well as manage
customer service, personnel and business systems. Our ultimate success may be
dependent in part upon our ability to attract and retain additional personnel in
such areas as product development, operations, management, manufacturing,
customer service and marketing. There can be no assurance that suitable persons
for such areas can be located or retained, or that we will successfully meet the
other challenges imposed by a highly competitive market and rapid growth.

We have a large number of financially strong competitors that may preclude us
from penetrating the market adequately to meet our business plan.

Our target markets are, in general, intensely competitive and subject to rapid
change. Competitors vary in size and in the scope and breadth of the products
offered. We compete against a number of companies, almost all of which have
greater financial resources, brand recognition and operating history than we do.
We will require additional capital to establish a competitive position.
Increased competition may result in price reductions, reduced gross margins and
failure to attain or increase market share.

We will require additional capital to pay our operating expenses and otherwise
implement our business plan.

While we have commenced generating revenues from operations, our revenues are
not sufficient to enable us to meet our operating expenses and otherwise
implement our business plan. We will need to raise additional capital to
continue to implement our business plan and to pay our obligations as they
become due. We do not have any commitments from any third parties for additional
capital and there can be no assurances that we will be successful in raising
additional working capital. If we cannot raise capital as needed, we may be
unable to continue our operations.

We have not voluntarily implemented various corporate governance measures, in
the absence of which, stockholders may have reduced protections against
interested director transactions, conflicts of interest and other matters.

                                      -9-
<PAGE>


We are not subject to any law, rule or regulation requiring that we adopt any of
the corporate governance measures that are required by the rules of national
securities exchanges or Nasdaq such as independent directors, audit committees
and codes of ethics. It is possible that if we were to adopt some or all of the
corporate governance measures, stockholders would benefit from somewhat greater
assurances that internal corporate decisions were being made by disinterested
directors and that policies had been implemented to define responsible conduct.
Prospective investors should bear in mind our current lack of corporate
governance measures in formulating their investment decisions

Because our stock currently trades below $5.00 per share, and is quoted on the
OTC Bulletin Board, our stock is considered a "penny stock" which can adversely
affect its liquidity.

For so long as the trading price of our common stock is less than $5.00 per
share, our common stock is considered a "penny stock," and trading in our common
stock is subject to the requirements of Rule 15g-9 under the Securities Exchange
Act of 1934. Under this rule, broker/dealers who recommend low-priced securities
to persons other than established customers and accredited investors must
satisfy special sales practice requirements. The broker/dealer must make an
individualized written suitability determination for the purchaser and receive
the purchaser's written consent prior to the transaction.

SEC regulations also require additional disclosure in connection with any trades
involving a "penny stock," including the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock market and its
associated risks. These requirements severely limit the liquidity of securities
in the secondary market because few broker or dealers are likely to undertake
these compliance activities. In addition to the applicability of the penny stock
rules, other risks associated with trading in penny stocks could also be price
fluctuations and the lack of a liquid market. Finally, as a penny stock we may
not be entitled to the protections provided by the Private Securities Litigation
Reform Act of 1995.

We may be exposed to potential risks relating to our internal controls over
financial reporting and our ability to have those controls attested to by our
independent auditors.

As directed by Section 404 of the Sarbanes-Oxley Act of 2002 ("SOX 404"), the
Securities and Exchange Commission adopted rules requiring public companies to
include a report of management on the company's internal controls over financial
reporting in their annual reports, including Form 10-KSB. In addition, the
independent registered public accounting firm auditing a company's financial
statements must also attest to and report on management's assessment of the
effectiveness of the company's internal controls over financial reporting as
well as the operating effectiveness of the company's internal controls. We were
not subject to these requirements for the fiscal year ended December 31, 2004.
We are evaluating our internal control systems in order to allow our management
to report on, and our independent auditors attest to, our internal controls, as
a required part of our annual report on Form 10-KSB beginning with our report
for the fiscal year ended July 31, 2007.

While we expect to expend significant resources in developing the necessary
documentation and testing procedures required by SOX 404, there is a risk that
we will not comply with all of the requirements imposed thereby. At present,
there is no precedent available with which to measure compliance adequacy.
Accordingly, there can be no positive assurance that we will receive a positive
attestation from our independent auditors.

In the event we identify significant deficiencies or material weaknesses in our
internal controls that we cannot remediate in a timely manner or we are unable
to receive a positive attestation from our independent auditors with respect to
our internal controls, investors and others may lose confidence in the
reliability of our financial statements and our ability to obtain equity or debt
financing could suffer.

Provisions of our articles of incorporation and bylaws may delay or prevent a
take-over which may not be in the best interests of our stockholders.

                                      -10-
<PAGE>


Provisions of our articles of incorporation and bylaws may be deemed to have
anti-takeover effects, which include when and by whom special meetings of our
stockholders may be called, and may delay, defer or prevent a takeover attempt.
In addition, certain provisions of the Nevada Revised Statutes also may be
deemed to have certain anti-takeover effects which include that control of
shares acquired in excess of certain specified thresholds will not possess any
voting rights unless these voting rights are approved by a majority of a
corporation's disinterested stockholders.

In addition, our articles of incorporation authorize the issuance of up to
5,000,000 shares of preferred stock with such rights and preferences as may be
determined from time to time by our board of directors, of which no shares are
presently issued and outstanding. Our board of directors may, without
stockholder approval, issue preferred stock with dividends, liquidation,
conversion, voting or other rights that could adversely affect the voting power
or other rights of the holders of our common stock.

ITEM 2.       DESCRIPTION OF PROPERTY

Our corporate headquarters is located in West Palm Beach, Florida, where we
lease approximately 1700 square feet under a lease that expires in April 2007.
We also have access for showroom and a storage facility of approximately 20,000
square feet in Fort Lauderdale, FL. through our alliance with Spin Inc. and
director Paul Aires. We have no lease or payment schedule with the use of the
Fort Lauderdale location. We lease other office facilities in Las Vegas, Nevada
on a month to month basis for executive office space when needed. We believe our
space is adequate for our current needs and that suitable additional or
substitute space will be available to accommodate the foreseeable expansion of
our business and operations.


ITEM 3.       LEGAL PROCEEDINGS

Due to Torpedo's inability to meet its obligations timely, certain creditors
have initiated legal action against the Company, some of which have received
judgments for payment. The Company is involved in other claims and legal actions
arising out of the ordinary course of business. In the opinion of management,
the ultimate disposition of these matters will not have a material adverse
impact either individually or in the aggregate or consolidated results of
operations, financial positions or cash flows of the company.

In addition to the foregoing, from time to time we may be involved in other
litigation relating to claims of alleged infringement, misuse or
misappropriation of intellectual property rights of third parties. We may also
be subject to claims arising out of our operations in the normal course of
business. As of the date of this Form 10-K, we are not a party to any such other
litigation that would have a material adverse effect on us or our business

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

None.

                                      -11-
<PAGE>


PART II

ITEM 5.       MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is quoted on the OTC Bulletin Board under the symbol "IGAM."
The following table sets forth the high and low closing sale prices for our
common stock as reported on the OTCBB and for the last two fiscal years and the
subsequent interim period. These prices do not include retail mark-ups,
markdowns or commissions, and may not necessarily represent actual transactions.

                                                         High            Low
                                                         ----            ---
Fiscal 2004

First quarter ended October 31, 2003                    $ 0.43          $ 0.20
Second quarter ended January 31, 2004                   $ 0.37          $ 0.12
Third quarter ended April 30, 2004                      $ 0.52          $ 0.30
Fourth quarter ended July 31, 2004                      $ 0.45          $ 0.27

Fiscal 2005

First quarter ended October 31, 2004                    $ 0.35          $ 0.20
Second quarter ended January 31, 2005                   $ 0.33          $ 0.18
Third quarter ended April 30, 2005                      $ 0.26          $ 0.18
Fourth quarter ended July 31, 2005                      $ 0.22          $ 0.07

Fiscal 2006

First quarter ended October 31, 2005                    $ 0.25          $ 0.09

On December 14, 2005 the last reported sale prices of the common stock on OTCBB
was $0.29 per share. As of October 10, 2005 there were 68 stockholders of record
of the common stock according to our transfer agent. This amount excludes an
indeterminate number of shareholders whose shares are held in "street" or
"nominee" name.

Dividend Policy

We have never declared or paid any cash dividends on our common stock. We
currently expect to retain future earnings, if any, to finance the growth and
development of our business. Under Nevada law, we are prohibited from paying
dividends if the distribution would result in our company not be able to pay its
debts as they become due in the usual course of business or if our total assets
would be less than the sum of our total liabilities plus the amount that would
be needed, we were to be dissolved at the time of distribution, to satisfy the
preferential rights upon dissolution of stockholders whose preferential rights
are superior to those receiving the distribution.

                                      -12-
<PAGE>


Recent Sales of Unregistered Securities

For each of the following transactions, we relied upon the exemption from
registration provided by Section 4(6) or 4(2) of the Securities Act and Rule 506
promulgated thereunder based upon (i) representations from each investor that it
is an accredited or sophisticated investor with experience in investing in
securities such that it could evaluate merits and risks related to our
securities; (ii) that no general solicitation of the securities was made by us;
(iii) each investor represented to us that it was acquiring the securities for
its own account and not with a view towards further distribution; (iv) the
securities issued were "restricted securities" as that term is defined under
Rule 144 promulgated under the Securities Act; and (v) we placed appropriate
restrictive legends on the certificates representing the securities regarding
the restrictive nature of these securities; and (vi) prior to the completion of
the transaction, each investor was informed in writing of the restricted nature
of the securities, provided with all information regarding Torpedo Sports as
required under Rule 502 of Regulation D and were given the opportunity to ask
questions of and receive additional information from us regarding our financial
condition and operations.

Prior to the reverse merger, Torpedo USA issued 715,000 shares of its common
stock in a private placement for $0.15 per share and received proceeds of
$107,250.

During the same period Torpedo USA issued 125,000 shares of its common stock to
an officer of the Company in exchange for consulting fees of $18,750;
accordingly, the shares were valued at $0.15 per share and also issued 375,000
shares of its common stock to a consultant for services performed valued at
$75,000. In connection with the issuance, the consultant agreed to cancel
remaining warrants to purchase 750,000 shares of common stock.

In February 2005, the Company issued 41,333 shares of its common stock in a
private placement for $0.15 per share and received proceeds of $6,200. The
shares were issues to a Company affiliated through common ownership.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth securities authorized for issuance under equity
compensation plans, including individual compensation arrangements, by us under
our 2002 and 2003 Stock Option Plans.
<TABLE>
<CAPTION>

                                    Number of                                                Number of
                                Securities to be                                      securities remaining
                                   issued upon             Weighted average            available for future
                                   exercise of              exercise price             issuance under equity
                                 of outstanding             of outstanding              compensation plans
                                options, warrants          options, warrants           (excluding securities
     Plan category                 and rights                 and rights              reflected in column (a)
     -------------                 ----------                 ----------              -----------------------
                                      (a)                         (b)                            (c)

<S>                                <C>                         <C>                              <C>
Equity compensation plans
not approved by security
        holders                    2,527,000                  $     0.22                       800,000

                                      -13-
</TABLE>

<PAGE>


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

The following analysis of our results of operations and financial condition
should be read in conjunction with the accompanying consolidated financial
statements for the year ended July 31, 2005 and notes thereto appearing
elsewhere in this annual report.

Overview

On February 1, 2005, we acquired all of the issued and outstanding common stock
of Interactive pursuant to a definitive merger agreement. Interactive was formed
in December 2003. Interactive's plan is to deliver to its customers, gaming
technology that produces a high return on investment by providing both software
and gaming hardware. However, Interactive has minimal assets and no
revenue-generating operations. In addition, the report of the independent
registered public accounting firm on Interactive's July 31, 2004 financial
statements included an explanatory paragraph that describes substantial doubt
about Interactive's ability to continue as a going concern. Interactive is also
engaged in developing and marketing interactive casino technologies and slot
machine games to the Native American Class II, Class III and charitable gaming
markets.

The acquisition of Interactive by our company was accounted for as a reverse
merger because on a post-merger basis, the former Interactive stockholders hold
a majority of our outstanding common stock on a voting and fully diluted basis.
As a result, Interactive was deemed to be the acquirer for accounting purposes,
although our company remained the legal survivor. Accordingly, the financial
statements presented, beginning with the period ending April 30, 2005, are those
of Interactive for all periods prior to the acquisition, and the financial
statements of the consolidated companies from the acquisition date forward. The
historical stockholders' deficit of Interactive prior to the acquisition will be
retroactively restated (a recapitalization) for the equivalent number of shares
received in the acquisition after giving effect to any differences in the par
value of each company's common stock, with an offset to additional paid-in
capital. The restated consolidated accumulated deficit of the accounting
acquirer (Interactive) will be carried forward after the acquisition.

As we continue to implement our business model in fiscal 2006, we will be
focused on the following goals:

     o    publish high-quality entertainment applications
     o    develop innovative applications
     o    emphasize Groovetouch(TM) branded applications
     o    license world-class brands
     o    enhance our distribution channels
     o    increase our deployment capability
     o    strengthen our wireless carrier relationships
     o    expand use of alternative sales and marketing channels
     o    build the Jamdirect brand

                                      -14-
<PAGE>


Results of Operations

For the year ended July 31, 2005 compared to the period from December 4, 2003
(Inception) to July 31, 2004.
<TABLE>
<CAPTION>

                                                          For the Year Ended                     Increase/
                                                               July 31,                          (Decrease)
                                                    --------------------------------            2005 vs 2004
                                                        2005                   2004                   $
                                                    ---------              --------------------------------

<S>                                                 <C>                    <C>                    <C>
Revenues                                            $  76,920              $    --                $  76,920

Operating expenses:

  Selling, general and administrative                 636,166                272,530                363,636
                                                    ---------              ---------              ---------
Operating loss                                       (559,246)              (272,530)               286,716
                                                    ---------              ---------              ---------

Other income(expenses):

Gain on settlement                                    254,900                   --                  254,900

Interest expense-related party                        (72,035)                  --                   72,035

Interest expense                                       (8,776)                (1,475)                 7,301
                                                    ---------              ---------              ---------


     Total other income (expenses)                    174,089                 (1,475)               175,564
                                                    ---------              ---------              ---------


 Loss before discontinued operations                 (385,157)              (274,005)               111,152


Loss from discontinued operations                      43,435                   --                   43,435
                                                    ---------              ---------              ---------


Net loss                                            $(428,592)             $(274,005)             $ 154,587
                                                    =========              =========              =========
</TABLE>

NM: not meaningful

Revenues

Revenues consist primarily of commissions earned pursuant to the sale of
gambling products. The increase in revenues is primarily due to the first sales
we generated during fiscal 2005 while no such sales occurred during 2004.

                                      -15-
<PAGE>


Sales, general and administrative expenses

Sales, general and administrative expenses primarily consist of stock-based
compensation to consultants as well as professional fees incurred to support our
operations. The increase in sales, general and administrative expenses during
fiscal 2005 is primarily due to the amortization of deferred compensation which
was amortized over a full year during fiscal 2005 while it was amortized over a
lesser number of months during fiscal 2004. Additionally, we incurred higher
consulting expenses during fiscal 2005 when compared to fiscal 2004 due to the
expansion of its operations during fiscal 2005 as well as those associated with
Torpedo Canada's operations subsequent to February 1, 2005.

Gain on settlement

Gain on settlement consists of monies received pursuant to a one-time settlement
with Inhibiton Therapeutics, Inc. which occurred during fiscal 2005. No similar
settlement occurred during fiscal 2004.

Interest expense and interest expense-related parties

Interest expense and interest expense-related parties consist of interest
payable on various note payable and due to related parties. The increase in
interest expense during fiscal 2005 when compared to fiscal 2004 is primarily
due to higher debt assumed by us upon the merger with our company.

Loss from discontinued operations

Loss from discontinued operations primarily consists of trustee fees associated
with the bankruptcy proceedings of Torpedo Canada. The increase in loss from
discontinued operations in fiscal 2005 compared to fiscal 2004 is attributable
to our assumption of the discontinued operations upon the merger of Interactive
with our company.

Liquidity and Capital Resources

We have generated approximately $36,000 in cash from operating activities during
fiscal 2005, primarily resulting from:

     o    Our net loss of approximately $345,000 adjusted for amortization of
          deferred compensation of approximately $404,000;
     o    Increase in prepaid expenses and other current assets of approximately
          $25,000;
     o    Increased in unpaid accrued interest and accounts payable and accrued
          expenses of approximately $60,000 and $34,000, respectively; and
     o   Decrease in assets of discontinued operations amounting to
         approximately $250,000 following their disposition by the bankruptcy
         trustee which funded the payment of liabilities of discontinued
         operations of approximately $310,000.

During fiscal 2005, we have also incurred capital expenditures of approximately
$5,000 which were funded from advances from related parties of approximately
$18,000 and issuance of shares of our common stock which generated proceeds of
$6,200.

We have used approximately $130,000 in cash from operating activities during
fiscal 2004, primarily resulting from:

     o    Our net loss of approximately $274,000 adjusted for amortization of
          deferred compensation of approximately $170,000; and,

     o    Increase in prepaid expenses and other current assets of approximately
          $34,000.

                                      -16-
<PAGE>


During fiscal 2004, we have also incurred capital expenditures of approximately
$1,000. Our operating and investing activities were funded from advances from
related parties of approximately $59,000 and issuance of shares of our common
stock which generated proceeds of $78,000.

At July 31, 2005 we had cash on hand of $28,114 and a working capital deficit of
$4,047,798. Included in our liabilities at July 31, 2005 are $1,600,426 which is
due to related parties, $75,000 due to an unaffiliated third party under a
promissory note which is presently in default and $2,150,352 of liabilities
related to Torpedo Canada.

Going Concern

The report of our independent registered public accounting firm on our
consolidated financial statements as of July 31, 2005, and for the period from
inception (December 3, 2003) to July 31, 2004 includes a "going concern"
explanatory paragraph, that describes substantial doubt about our ability to
continue as a going concern.

We incurred a net loss of $428,592 during fiscal 2005. Additionally, one of our
subsidiaries, Torpedo Canada, is in bankruptcy proceedings, and we generated
minimal revenues; accordingly, we have no ready source of working capital. These
factors raise substantial doubt about our ability to continue as a going
concern. The consolidated financial statements do not include any adjustments
relating to the recoverability and classification of assets or the amounts and
classification of liabilities that might be necessary should we be unable to
continue as a going concern. While we may be able to raise funds through the
issuance of debt or equity instruments, there is no assurance that we will raise
sufficient funds to operate in the future.

Critical Accounting Policies

Our financial statements and accompanying notes are prepared in accordance with
generally accepted accounting principles in the United States. Preparing
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenue and expenses. These
estimates and assumptions are affected by management's applications of
accounting policies. Critical accounting policies for our company include the
following:

Accounting for Stock Based Compensation - We account for stock based
compensation utilizing Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"), which encourages, but
does not require, companies to record compensation cost for stock-based employee
compensation plans at fair value. We have chosen to account for stock-based
compensation using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and
related interpretations. Accordingly, compensation cost for stock options is
measured as the excess, if any, of the estimated fair market value of our stock
at the date of the grant over the amount an employee must pay to acquire the
stock. We have adopted the "disclosure only" alternative described in SFAS 123
and SFAS 148 (See Recent Accounting Pronouncements), which require pro forma
disclosures of net income and earnings per share as if the fair value method of
accounting had been applied.

Recent Accounting Pronouncements

In December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment,
an Amendment of FASB Statement No. 123" ("FAS No. 123R"). FAS No. 123R requires
companies to recognize in the statement of operations the grant- date fair value
of stock options and other equity-based compensation issued to employees. FAS
No. 123R is effective beginning in the second quarter of fiscal 2006. We are in
process of evaluating the impact of this pronouncement on our financial
position.

                                      -17-
<PAGE>


In December 2004, the FASB issued SFAS Statement No. 153, "Exchanges of
Non-monetary Assets." The Statement is an amendment of APB Opinion No. 29 to
eliminate the exception for non-monetary exchanges of similar productive assets
and replaces it with a general exception for exchanges of non-monetary assets
that do not have commercial substance. We believe that the adoption of this
standard will have no material impact on our financial statements.

ITEM 7.       FINANCIAL STATEMENTS

Our financial statements are contained in pages F-3 through F-6, which appear at
the end of this annual report.

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

On June 14, 2005, we dismissed GHP Horwath, P.C. as our independent registered
public accounting firm. GHP Horwath, P.C. had been our independent registered
public accounting firm for and audited the consolidated financial statements for
the years ended July 31, 2004 and 2003. The reports of GHP Horwath, P.C. on our
consolidated financial statements for the past two fiscal years contained no
adverse opinion or disclaimer of opinion, and were not qualified or modified as
to uncertainty, audit scope or accounting principles, except for an explanatory
paragraph relating to our ability to continue as a "going concern." The decision
to change accountants was approved unanimously by the Board of Directors.

In connection with the audits for the two most recent fiscal years and in
connection with GHP Horwath, P.C.'s review of the subsequent interim periods
through the date of dismissal on June 14, 2005, there have been no disagreements
between our company and GHP Horwath, P.C. on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure,
which, if not resolved to the satisfaction of GHP Horwath, P.C., would have
caused GHP Horwath, P.C. to make reference thereto in their report on our
financial statements for these fiscal years.

On June 14, 2005, we engaged Sherb & Co., LLP. as our independent registered
public accounting firm. We had not consulted with Sherb & Co., LLP. regarding
the application of accounting principles to any contemplated or completed
transactions nor the type of audit opinion that might be rendered on our
financial statements, and neither written nor oral advice was provided that
would be an important factor considered by us in reaching a decision as to an
accounting, auditing or financial reporting issues.

ITEM 8A.      CONTROLS AND PROCEDURES

Our Chief Executive Officer and Chief Financial Officer (collectively, the
"Certifying Officers") are responsible for establishing and maintaining
disclosure controls and procedures for us. Based upon such officers' evaluation
of these controls and procedures as of a date as of the end of the period
covered by this annual report, and subject to the limitations noted hereinafter,
the Certifying Officers have concluded that our disclosure controls and
procedures are effective to ensure that information required to be disclosed by
us in this annual report is accumulated and communicated to management,
including our principal executive officers as appropriate, to allow timely
decisions regarding required disclosure.

The Certifying Officers' evaluation has also concluded that there have been no
occurrences during the fourth quarter of the fiscal year covered by this annual
report that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.

                                      -18-
<PAGE>


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

ITEM 8B. OTHER INFORMATION

None.

PART III

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

Executive Officers and Directors

      Name                       Age                        Position
      ----                       ---                        --------

      Henry Fong                 69                Director, CEO and President
      Barry Hollander            48                Chief Financial Officer
      Thomas Olson               39                Secretary/Treasurer

Henry Fong. Mr. Fong has served as our President, CEO and sole member of our
Board of Directors since 2002. Mr. Fong has been the president, treasurer and a
director of Equitex, Inc. since its inception. Since 1999 Mr. Fong has been a
director of iGenisys, Inc., a business project management software company. From
December 2000 to January 2002, Mr. Fong was a director of PopMail.com, Inc., a
publicly traded Internet marketing company. From July 1996 to October 1997, Mr.
Fong was a director of Stellant, Inc. (f/k/a Intranet Solutions, Inc.), a
publicly-held investee company which provided internet/intranet solutions to
Fortune 1000 companies and was the chairman of the board and treasurer of its
predecessor company, MacGregor Sports and Fitness, Inc. from February 1991 until
the two companies merged in July 1996. From January 1993 to January 1999, Mr.
Fong was chairman of the board and chief executive officer of California Pro
Sports, Inc., a publicly traded manufacturer and distributor of in-line skates,
hockey equipment and related accessories. From 1959 to 1982, Mr. Fong served in
various accounting, finance and budgeting positions with the Department of the
Air Force. During the period from 1972 to 1981, he was assigned to senior
supervisory positions at the Department of Air Force headquarters in the
Pentagon. In 1978, he was selected to participate in the Federal Executive
Service. In 1970 and 1971, he attended the Woodrow Wilson School, Princeton
University and was a Princeton Fellow in Public Affairs. Mr. Fong has passed the
uniform certified public accountant exam. In March 1994, Mr. Fong was one of
twelve CEOs selected as Silver Award winners in FINANCIAL WORLD magazine's
corporate American "Dream Team."

                                      -19-
<PAGE>


Barry S. Hollander. Mr. Hollander has our Chief Financial Officer since 2002.
Mr. Hollander has been the chief financial officer of VP Sports since March
1999. From 1994 to 1999, Mr. Hollander was the chief financial officer of
California Pro Sports, Inc., an in-line skate importer, marketer and
distributor. In 1999 California Pro merged with Imaginon, Inc. Mr. Hollander has
been in the sporting goods industry since 1980 in various accounting, senior
management and executive positions. Mr. Hollander has a BS degree from Fairleigh
Dickinson University and passed the uniform certified public accountant exam.

Thomas Olson. Mr. Olson has served as our Secretary since April 2002. Mr. Olson
has been secretary of Equitex, Inc. since January 1988. From February 1990 to
February 2000, Mr. Olson was a director, and from May 1994 to February 2000,
secretary of Immune Response, Inc., a publicly held investee of Equitex which
merged with Opticon Medical, Inc., in February 2000. Since March 2003, Mr. Olson
has been a director of Chex Services, Inc., a wholly owned subsidiary of
Equitex, Inc. Mr. Olson has attended Arizona State University and the University
of Colorado at Denver.

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

Pending Changes in Management and Board of Directors

There were no changes in management or the Board of Directors of our company
following the transaction with Interactive, and current management intends to
serve in office at least until certain liabilities of our company have been
disposed of as contemplated by the agreement. Thereafter, the shareholders of
Interactive prior to the transaction intend to appoint their designees to fill a
majority of the positions on the Board of Directors.

Directors' Compensation

We do not pay fees to directors for their attendance at meetings of the Board of
Directors or of committees; however, we may adopt a policy of making such
payments in the future. We will reimburse out-of-pocket expenses incurred by
directors in attending board and committee meetings.

Director independence, Audit Committee of the Board of Directors and Audit
Committee financial expert

As our Board of Directors is comprised of only one individual, none of the
members of our Board of Directors are "independent" within the meaning of
definitions established by the Securities and Exchange Commission. As a result
of our limited operating history and minimal resources, small companies such as
ours generally have difficulty in attracting independent directors. In addition,
we will require additional resources to obtain directors and officers insurance
coverage which is generally necessary to attract and retain independent
directors. As we grow, in the future our Board of Directors intends to seek
additional members who are independent, have a variety of experiences and
backgrounds, who will represent the balanced, best interests of all of our
stockholders and at least one of which who is an "audit committee financial
expert" described below.

Our Board of Directors has also not yet established an Audit Committee, and the
functions of the Audit Committee are currently performed by the entire Board of
Directors. At such time as we expand our Board of Directors to include
independent directors, we intend to establish an Audit Committee of our Board of
Directors. We are not currently subject to any law, rule or regulation, however,
requiring that all or any portion of our Board of Directors include
"independent" directors, nor are we required to establish or maintain an Audit
Committee of our Board of Directors.

Our sole directors is not an "audit committee financial expert" within the
meaning of Item 401(e) of Regulation S-B. In general, an "audit committee
financial expert" is an individual member of the audit committee or Board of
Directors who:

                                      -20-
<PAGE>


     o    understands generally accepted accounting principles and financial
          statements,
     o    is able to assess the general application of such principles in
          connection with accounting for estimates, accruals and reserves,
     o    has experience preparing, auditing, analyzing or evaluating financial
          statements comparable to the breadth and complexity to our financial
          statements,
     o    understands internal controls over financial reporting, and
     o    understands audit committee functions.

Code of Ethics

In 2003 we adopted a Code of Ethics for Senior Financial Management to promote
honest and ethical conduct and to deter wrongdoing. This Code applies to our
Chief Executive Officer, Chief Financial Officer, controller, principal
accounting officer and other employees performing similar functions. The
obligations of the Code of Ethics supplement, but do not replace, any other code
of conduct or ethics policy applicable to our employees generally.

Under the Code of Ethics, all members of the senior financial management shall:

     o    Act honestly and ethically in the performance of their duties at our
          company,
     o    Avoid actual or apparent conflicts of interest between personal and
          professional relationships,
     o    Provide full, fair, accurate, timely and understandable disclosure in
          reports and documents that we file with, or submits to, the SEC and in
          other public communications by our company,
     o    Comply with rules and regulations of federal, state and local
          governments and other private and public regulatory agencies that
          affect the conduct of our business and our financial reporting,
     o    Act in good faith, responsibly, with due care, competence and
          diligence, without misrepresenting material facts or allowing the
          member's independent judgment to be subordinated,
     o    Respect the confidentiality of information acquired in the course of
          work, except when authorized or legally obtained to disclosure such
          information,
     o    Share knowledge and maintain skills relevant to carrying out the
          member's duties within our company,
     o    Proactively promote ethical behavior as a responsible partner among
          peers and colleagues in the work environment and community,
     o    Achieve responsible use of and control over all assets and resources
          of our company entrusted to the member, and
     o    Promptly bring to the attention of the Chief Executive Officer any
          information concerning (a) significant deficiencies in the design or
          operating of internal controls which could adversely affect our
          ability to record, process, summarize and report financial date or (b)
          any fraud, whether or not material, that involves management or other
          employees who have a significant role in our financial reporting or
          internal controls.

We will provide a copy of the Code of to any person without charge, upon
request. Requests can be sent to Interactive Games, Inc., 319 Clematis Street,
Suite 803, West Palm Beach, Florida 33401.

Compliance With Section 16(a) of the Exchange Act

We have no equity securities registered under Section 12(g) of the Securities
Exchange Act of 1934, and accordingly, our officers, directors and principal
stockholders are not required to file reports under Section 16(a) of the
Exchange Act.

                                      -21-
<PAGE>


ITEM 10.      EXECUTIVE COMPENSATION

The following table summarizes all compensation recorded by us in each of the
last three fiscal years for our Chief Executive Officer and each other executive
officers serving as such (the "Named Executive Officers") whose annual
compensation exceeded $100,000.

Summary Compensation Table
<TABLE>
<CAPTION>

                           Annual Compensation                                         Long-term compensation
                           -------------------                                         ----------------------
                                                                          Awards                                 Payouts
                                                                          ------                                ----------
Name                                              Other                         Securities                      All other
and                                               Annual         Restricted     underlying          LTIP          compen-
principal                    Salary      Bonus    Compen-         stock          options/        payouts          sation
position          Year         ($)        ($)     sation ($)      awards         SARs (#)           ($)             ($)
--------          ----     -------       -----    ---------      ----------     ----------       -------        ----------

<S>               <C>      <C>
Henry Fong,       2005     $30,000         -         -               -             -                -                -
Chief Executive   2004     $30,000         -         -               -             -                -                -
Officer           2003     $30,000         -         -               -             -                -                -

Barry Hollander   2005           -         -         -               -             -                -                -
                  2004     $45,000         -         -               -             -                -                -
                  2004     $45,000         -         -               -             -                -                -

Thomas Olson      2005     $30,000         -         -               -             -                -                -
Secretary         2004     $30,000         -         -               -             -                -                -
                  2003     $30,000         -         -               -             -                -                -

Stock Option Information

There were no stock options granted in fiscal year ending July 31, 2005.

The following table sets forth certain information regarding stock options held
as of July 31, 2005 by the Named Executive Officers.

Aggregate Option Exercises in Year Ended July 31, 2005
and Year-End Option Values

                                                  NO. OF SECURITIES
                      S                        UNDERLYING UNEXERCISED               VALUE OF UNEXERCISED
                      SHARES                         OPTIONS AT                   IN-THE-MONEY OPTIONS AT
                     ACQUIRED     VALUE            JULY 31, 2005                       JULY 31, 2005(1)
                        ON      REALIZED  ------------------------------------    --------------------------
NAME                 EXERCISE       $      EXERCISABLE          UNEXERCISABLE     EXERCISABLE  UNEXERCISABLE
----                 --------       -      -----------           -------------    ----------- --------------

Henry Fong               0         $0       1,265,000                 0                $0            -
Barry Hollander          0         $0         622,000                 0                $0            -
Thomas Olson             0         $0         250,000                 0                $0            -

</TABLE>

(1)  The dollar value of the unexercised in-the-money options is calculated
     based upon the difference between the option exercise price and $0.09 per
     share, being the last sale price of our common stock on August 3, 2005 as
     reported by the OTC Bulletin Board. As the exercise price of the
     outstanding options range from $0.20 to $0.26 per share, based upon the
     trading price of our common stock on August 3, 2005 none of these
     outstanding options are in the money at July 31, 2005.

In March 2002, the Company granted 1,000,000 options to purchase common stock
under the 2002 Stock Option Plan (the "2002 Plan"). Of these 1 million options,
113,000 have been exercised and 60,000 have been cancelled. There are 827,000
outstanding options in the 2002 Plan.

In January 2004, the Company granted 1,700,000 shares to officers and directors,
exercisable at $0.20 per share. These options are all currently outstanding.

                                      -22-
<PAGE>


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

At November 30, 2005, there were 46,055,010 shares of our common stock issued
and outstanding. The following table sets forth, as of that date information
known to us relating to the beneficial ownership of these shares by:

     -    each person who is the beneficial owner of more than 5% of the
          outstanding shares of the class of stock;
     -    each director;
     -    each executive officer; and
     -    all executive officers and directors 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. Under securities
laws, a person is considered to be the beneficial owner of securities he owns
and that can be acquired by him within 60 days from November 30, 2005 upon the
exercise of options, warrants, convertible securities or other understandings.
We determine a beneficial owner's percentage ownership by assuming that options,
warrants or convertible securities that are held by him, but not those held by
any other person and which are exercisable within 60 days of that date have been
exercised or converted.

(a) (b) Security Ownership of Certain Beneficial Owners and Security Ownership
of Management

The following table contains information as of July 31, 2005, for any person,
known to us, to be the beneficial owner of more than five (5) percent or more of
the outstanding shares of the class, each person who is a director or executive
officer of us and all persons as a group who are directors and executive
officers and as to the percentage of outstanding shares so held by them as of
July 31, 2005.
<TABLE>
<CAPTION>

                                      Name                              Amount
     Title of                    and Address of                      and Nature of                   Percent of
       Class                    Beneficial Owner                   Beneficial Owner                   Class (1)
------------------         --------------------------         --------------------------         ------------------

<S>                                         <C>                          <C>                             <C>
Common Stock                     Gulfstream 1998                         2,493,188                       5.4%
                                Irrevocable Trust
                               7315 E Peakview Ave
                               Englewood, CO 80111

Common Stock                       Henry Fong                        5,169,872 (2)                      10.9%
                               7315 E Peakview Ave
                               Englewood, CO 80111

Common Stock                    Michele Friedman                        16,675,713                      36.2%
                              319 Clematis St, #803
                            West Palm Beach, FL 33401

Common Stock                     Barry Hollander                       793,757 (4)                       1.7%

Common Stock                      Thomas Olson                         601,297 (3)                       1.3%
                               7315 E Peakview Ave
                               Englewood, CO 80111

Common Stock               All officers and directors                5,942,926 (5)                      12.3%
                             as a group (4 persons)
</TABLE>

                                      -23-
<PAGE>

(1)  As of July 31, 2005, 46,055,100 shares of our common stock were
     outstanding.

(2)  Includes 365,000 and 900,000 shares underlying options granted under our
     2002 and 2003 Stock Option Plans, respectively; includes 1,794,465 shares
     of common stock owned by a partnership in which Mr. Fong is a partner;
     includes 1,060,673 shares owned by a corporation in which Mr. Fong is an
     80% shareholder.

(3)  Includes 250,000 shares underlying options granted under our 2003 Stock
     Option Plan.

(4)  Includes 122,000 and 500,000 shares underlying options granted under our
     2002 and 2003 Stock Option Plan, respectively.

(5) Includes 487,000 and 1,650,000 shares underlying options granted under our
2002 and 2003 Stock Option Plans, respectively.


ITEM 12.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In July 2003, an employee loaned us $50,000 CAD ($35,695 U.S.). In July 2003,
$13,000 CAD ($9,281U.S.) of this loan was repaid. As of July 31, 2005 we owe
$30,251 (U.S.), which is included in liabilities from discontinued operations at
July 31, 2005.

During the year ended July 31, 2004, we issued 638,560 shares of our common
stock in exchange for subscription and related party receivable from officers
and affiliates of our company for $60,133 and $3,723, respectively. During the
year ended July 31, 2003 the amount due from officers was reduced by $40,000 in
exchange for a reduction in accounts payable to this person. During the year
ended July 31, 2004 the amount due from officers was reduced by $19,200 in
exchange for a reduction in accounts payable to this person. In January 2005 we
issued 125,000 shares of our common stock to an officer of the Company in
exchange for $18,750 of consulting fees due the officer.

In February 2005 we sold 41,333 shares of our common stock to Gulfstream
Financial Partners, a company affiliated with us through common control by Henry
Fong, an officer of our company, in a private transaction. We received gross
proceeds of $6,200 which we used for general working capital.

At July 31, 2005 we owe VP Sports, Inc., a related party through common control
by Mr. Fong, our CEO, an aggregate of $668,230 for advances substantially made
in 2000. The balance bears interest at 9% per annum and is due upon demand.

At July 31, 2005 we owe three affiliated companies through common control by
Henry Fong, our CEO, $676,603. This amount was substantially advanced to us in
2000 and is secured by a security interest in all of our assets. The outstanding
amount bears interest at ranges from 8% to 10% and is payable upon demand.

Finally, at July 31, 2005 we owe Michael Friedman, a stockholder of our company,
$77,492 which was advanced to us during the year ended July 31, 2005 and used by
us for working capital. This amount bears interest at rate of 6% per annum and
is due upon demand.


PART IV

ITEM 13.      EXHIBITS

The following documents are filed as a part of this report or are incorporated
by reference to previous filings, if so indicated:

                                      -24-
<PAGE>


EXHIBIT NO.         DESCRIPTION
-----------         -----------

2.1               Agreement Concerning the Exchange of Securities by and among
                    Torpedo Sports USA,  Inc.,  orpedo  Newco, Inc. and
                  Interactive Grams, Inc. and the security holders of
                    Interactive Games, Inc. (1)
2.2               Merger Document as filed with Nevada
3.1               Certificate of Amendment increasing authorized common and
                    changing names
14.1              Code of Ethics (2)
16.1              Letter from GHP Horwath, P.C. to the Securities and Exchange
                   Commission dated June 16, 2005 (3)
31.1              Section 302 Certificate of Chief Executive Officer *
31.2              Section 302 Certificate of Chief Financial Officer *
32.1              Section 906 Certificate of Chief Executive Officer *
32.2              Section 906 Certificate of Chief Financial Officer *

*     filed herewith

(1)  Incorporated by reference to the Report on Form 8-K as filed on February 7,
     2005.
(2)  Incorporated by reference to the Annual Report on Form 10-KSB for the
     fiscal year ended July 31, 2003 as filed on December 29, 2003.
(3)  Incorporated by reference to the Report on Form 8-K as filed on June 17,
     2005.


ITEM 14.      PRINCIPAL ACCOUNTANT FEES AND SERVICES

Sherb & Co., LLP served as our independent registered public accounting firm for
fiscal 2005 and 2004. The following table shows the fees that were billed for
the audit and other services provided by Sherb & Co., LLP for the 2004 and 2005
fiscal years.

                                                     Fiscal 2005
                                                     -----------

Audit Fees                                           $     17,500
Audit-Related Fees                                          8,500
Tax Fees
All Other Fees
                                                     -------------
         Total                                       $     26,000
                                                     ============

Audit Fees -- This category includes the audit of our annual financial
statements, review of financial statements included in our Form 10-QSB Quarterly
Reports and services that are normally provided by the independent auditors in
connection with engagements for those fiscal years. This category also includes
advice on audit and accounting matters that arose during, or as a result of, the
audit or the review of interim financial statements.

Audit-Related Fees -- This category consists of assurance and related services
by the independent auditors that are reasonably related to the performance of
the audit or review of our financial statements and are not reported above under
"Audit Fees." The services for the fees disclosed under this category include
consultation regarding our correspondence with the SEC and other accounting
consulting.

Tax Fees -- This category consists of professional services rendered by our
independent auditors for tax compliance and tax advice. The services for the
fees disclosed under this category include tax return preparation and technical
tax advice.

                                      -25-
<PAGE>


All Other Fees -- This category consists of fees for other miscellaneous items.

Our Board of Directors has adopted a procedure for pre-approval of all fees
charged by our independent auditors. Under the procedure, the Board approves the
engagement letter with respect to audit, tax and review services. Other fees are
subject to pre-approval by the Board, or, in the period between meetings, by a
designated member of Board. Any such approval by the designated member is
disclosed to the entire Board at the next meeting. The audit and tax fees paid
to the auditors with respect to fiscal year 2005 were pre-approved by the entire
Board of Directors.

                                      -26-
<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Date: December 15, 2005             INTERACTIVE GAMES, INC.
                                    (Registrant)

                                    By /S/ Henry Fong
                                       -----------------------------------------
                                        Henry Fong, Chief Executive Officer and
                                        Principal Executive Officer


                                    By /S/ Barry Hollander
                                       -----------------------------------------
                                        Barry Hollander, Chief Financial Officer

         Pursuant to the requirement of 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.

Date: December 15, 2005                  /S/ Henry Fong
                                         ---------------------------------------
                                         Henry Fong, Chief Executive Officer and
                                        Principal Executive Officer


                                      -27-
<PAGE>


                    INTERACTIVE GAMES, INC. AND SUBSIDIARIES

                       YEARS ENDED JULY 31, 2005 AND 2004

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Consolidated financial statements:

       Consolidated balance sheet                                          F-3

       Consolidated statements of operations                               F-4

       Consolidated statements of changes in shareholders' deficit         F-5

       Consolidated statements of cash flows                               F-6

       Notes to consolidated financial statements                          F-7
<PAGE>

<TABLE>
<CAPTION>

                             INTERACTIVE GAMES, INC. AND SUBSIDIARIES
                                    CONSOLIDATED BALANCE SHEET
                                          July 31, 2005



                                             ASSETS
<S>                                                                           <C>
Current Assets:
  Cash                                                                        $    28,114
  Prepaid expenses and other current assets                                        10,000
  Assets of discontinued operations                                                 6,736
                                                                              -----------
     Total current assets                                                          44,850

Property and equipment, net of accumulated depreciation of $2,338                   2,757

     Total assets                                                             $    47,607
                                                                              ===========

                               LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
  Accounts payable and accrued expenses                                       $   266,870
  Note payable                                                                     75,000
  Due to related parties                                                        1,600,426
  Liabilities of discontinued operations                                        2,150,352
                                                                              -----------

     Total current liabilities                                                  4,092,648
                                                                              -----------

Stockholders' deficit:
  Preferred stock, par value $.001 per share,
     5,000,000 shares authorized,
     none issued and outstanding                                                     --
  Common stock; $.001 par value, 100,000,000 shares authorized,
    46,055,100 issued and outstanding                                              46,055
  Additional paid-in capital                                                   (3,249,416)
  Subscriptions receivable                                                         (4,856)
  Deferred compensation                                                          (103,399)
  Accumulated other comprehensive loss                                            (30,828)
  Accumulated deficit                                                            (702,597)
                                                                              -----------

     Total stockholders' deficit                                               (4,045,041)
                                                                              -----------

     Total liabilities and stockholders' deficit                              $    47,607
                                                                              ===========

                See notes to consolidated financial statements.                       F-3
<PAGE>


                               INTERACTIVE GAMES, INC. AND SUBSIDIARIES
                                CONSOLIDATED STATEMENTS OF OPERATIONS



                                                                                For the Period
                                                      For the                    from Inception
                                                     Year Ended               (December 3, 2003)
                                                    July 31, 2005              to July 31, 2004
                                                    -------------              ----------------


Revenues                                             $     76,920                $       --

Operating expenses:
  Selling, general and administrative                     636,166                     272,530
                                                     ------------                ------------

Operating loss                                           (559,246)                   (272,530)
                                                     ------------                ------------

Other expenses:
Gain on settlement                                        254,900                        --
Interest expense-related party                            (72,035)                       --
Interest expense                                           (8,776)                     (1,475)
                                                     ------------                ------------

     Total other income (expenses)                        174,089                      (1,475)
                                                     ------------                ------------

Loss before discontinued operations                      (385,157)                   (274,005)

Loss from discontinued operations                          43,435                        --
                                                     ------------                ------------

Net loss                                                 (428,592)                   (274,005)

Other comprehensive loss
  Foreign currency translation adjustment                 (30,828)                       --
                                                     ------------                ------------

     Comprehensive loss                              $   (459,420)               $   (274,005)
                                                     ============                ============

Basic and diluted net loss from
  continuing operations per common share             $      (0.01)               $      (0.01)
                                                     ============                ============

Basic and diluted net loss from discontinued
 operations per common share                         $       --                  $       --

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

Basic and diluted weighted average common
 shares outstanding                                    46,037,095                  41,559,528
                                                     ============                ============

                       See notes to consolidated financial statements.                    F-4


<PAGE>


                                                      INTERACTIVE GAMES, INC. AND SUBSIDIARIES
                                  CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT AND OTHER COMPREHENSIVE INCOME
                                  FOR THE YEAR ENDED JULY 31, 2005 AND THE PERIOD FROM INCEPTION TO JULY 31, 2004

                                                                                                   Additional
                                                                                Common              Paid-In         Subscriptions
                                                                 Shares          Stock              Capital         Receivable
                                                                 -------------------------------------------------------------------

Balance at  inception (December 4, 2003)                          27,037,282   $    27,037        $   (27,037)   $      --
Issuance of shares pursuant to the merger agreement               17,761,485        17,762          3,108,892         (4,856)
Fair value of shares issued for services,
 pre-merger, Interactive                                                --            --                 --             --
Amortization of deferred compensation                                   --            --                 --             --
Net loss                                                                --            --                 --             --
                                                                 -----------   ----------------------------------------------
Balance at July 31, 2004                                          44,798,767        44,799          3,081,855         (4,856)

Recapitalization, February 1, 2005                                      --          (1,200)        (6,805,831)          --
Issuance of shares pursuant to the merger agreement                1,215,000         1,215            320,485           --
Fair value of shares issued pre-merger, Interactive                     --           1,200            147,916           --
Issuance of shares of common stock for cash consideration             41,333            41              6,159           --
Amortization of deferred compensation                                   --            --                 --             --
Net loss                                                                --            --                 --             --
Foreign currency translation adjustments                                --            --                 --             --
                                                                 -----------   ---------------------------------------------

Balance at July 31, 2005                                          46,055,100   $    46,055        $(3,249,416)   $    (4,856)
                                                                 ===========   =============================================

                                        See notes to consolidated financial statements.
                                                 (Continued on next page)
<PAGE>


                                               INTERACTIVE GAMES, INC. AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT AND OTHER COMPREHENSIVE INCOME
                           FOR THE YEAR ENDED JULY 31, 2005 AND THE PERIOD FROM INCEPTION TO JULY 31, 2004


                                                                               Accumulated
                                                                                 Other
                                                                  Deferred    Comprehensive     Accumulated
                                                                Compensation      Income          Deficit        Total
                                                                ----------------------------------------------------------

Balance at  inception (December 4, 2003)                         $      --      $      --      $      --      $      --
Issuance of shares pursuant to the merger agreement                     --             --             --        3,121,798
Fair value of shares issued for services,
 pre-merger, Interactive                                            (475,000)          --             --         (475,000)
Amortization of deferred compensation                                115,104           --             --          115,104
Net loss                                                                --             --         (274,005)
                                                                 --------------------------------------------------------

Balance at July 31, 2004                                            (359,896)          --         (274,005)     2,487,897

Recapitalization, February 1, 2005                                      --             --             --       (6,807,031)
Issuance of shares pursuant to the merger agreement                     --             --             --          321,700
Fair value of shares issued pre-merger, Interactive                 (147,914)          --             --            1,200
Issuance of shares of common stock for cash consideration               --             --             --            6,200
Amortization of deferred compensation                                404,411           --             --          404,411
Net loss                                                                --             --         (428,592)      (428,592)
Foreign currency translation adjustments                                --          (30,828)          --          (30,828)
                                                                 --------------------------------------------------------

Balance at July 31, 2005                                         $  (103,399)   $   (30,828)   $  (702,597)   $(4,045,041)
                                                                 ========================================================

                                 See notes to consolidated financial statements.                                       F-5

<PAGE>


                                          INTERACTIVE GAMES, INC. AND SUBSIDIARIES
                                          CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                  For the                For the Period
                                                                 Year Ended              from Inception
                                                                   July 31,            (December 3, 2003)
                                                                     2005               to July 31, 2004
                                                                 ------------           ----------------

Cash flows from operating activities:
Net loss before discontinued operations                          $  (385,157)             $  (274,005)
Adjustments to reconcile net loss before discontinued
operations to net cash used in operating activities:
  Amortization of deferred compensation                              404,411                  170,274
   Depreciation                                                        3,317                       71
Change in operating assets and liabilities:
  Prepaid expenses and other current assets                           24,832                  (34,832)
  Accrued interest payable                                            59,718                     --
  Accounts payable and accrued expenses                               33,911                   11,074
                                                                 -----------              -----------
Net cash provided by (used) in continuing
 operating activities                                                141,032                 (127,418)

Loss from discontinued operations                                    (43,435)                    --
Decrease in assets of discontinued operations                        251,611                     --
Decrease in liabilities of discontinued operations                  (312,871)                    --
                                                                 -----------              -----------
Net cash used in discontinued operations                            (104,695)                    --

Net cash provided by (used in) operating activities                   36,337                 (127,418)
                                                                 -----------              -----------

Cash flows from investing activities:
   Purchases of property and equipment                                (4,735)                  (1,410)
   Cash received upon merger                                             329                     --
                                                                 -----------              -----------
Net cash used in investing activities                                 (4,406)                  (1,410)

Cash flows from financing activities:
   Proceeds from issuance of note payable- related party                --                     59,000
   Proceeds from sale of common stock                                  6,200                   77,500
   Increase (decrease) in due to related parties                     (17,786)                    --
                                                                 -----------              -----------

Net cash provided by financing activities                            (11,586)                 136,500
                                                                 -----------              -----------

Effect of exchange rate changes on cash                                   97                     --
                                                                 -----------              -----------

Increase in cash                                                      20,442                    7,672

Cash, beginning of period                                              7,672                     --
                                                                 -----------              -----------

Cash, end of period                                              $    28,114              $     7,672
                                                                 ===========              ===========

Supplemental disclosures of cash flow information:
     Cash paid during the year for interest                      $      --                $      --
                                                                 ===========              ===========

     Cash paid during the year for taxes                         $      --                $      --
                                                                 ===========              ===========

Non-Cash Investing and Financing Activities:

Nonmonetary assets acquired upon merger                          $   251,611              $      --
                                                                 ===========              ===========

Nonmonetary liabilities acquired upon merger                     $ 4,374,787              $      --
                                                                 ===========              ===========

Fair value of shares issued for services                         $   120,000              $      --
                                                                 ===========              ===========

                             See notes to consolidated financial statements.                      F-6
</TABLE>

<PAGE>



                    INTERACTIVE GAMES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        FOR THE YEAR ENDING JULY 31, 2005


NOTE 1 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Interactive Games, Inc. (the "Company"), formerly known as Torpedo Sports USA,
Inc. ("Torpedo USA"), through its wholly-owned Canadian subsidiary Torpedo
Sports Inc. ("Torpedo") manufactured and distributed outdoor recreational
products for children for sale in the United States and Canada through May 6,
2004.

On May 6, 2004, Torpedo filed for protection under the Bankruptcy and Insolvency
Act of Canada (the "Torpedo Bankruptcy") with the intention to liquidate its
assets. Torpedo ceased its operating activities in May 2004, and is presented as
discontinued operations in the accompanying interim consolidated financial
statements (Note 2).

On February 1, 2005, Torpedo USA acquired all of the issued and outstanding
common stock of Interactive Games, Inc. ("Interactive"), pursuant to a
definitive merger agreement (the "Merger Agreement"). Interactive's plan is to
deliver to its customers, gaming technology that produces a high return on
investment by providing both software and gaming hardware. However, Interactive
has few assets and minimal revenue-generating operations. In addition, the
report of the Independent Registered Public Accounting Firm on Interactive's
July 31, 2004 financial statements includes an explanatory paragraph that
describes substantial doubt about Interactive's ability to continue as a going
concern. Interactive is engaged in developing and marketing interactive casino
technologies and slot machine games to the Native American Class II, Class III
and charitable gaming markets. Interactive has access to a 20,000 square foot
corporate office and showroom for shipment and storage of its products, both
domestically and internationally in Fort Lauderdale, Florida. Interactive also
leases office space in West Palm Beach, Florida and Las Vegas, Nevada.

Pursuant to terms of the Merger Agreement, Torpedo USA, in exchange for all of
the issued and outstanding common shares of Interactive, issued 27,037,282
shares of Torpedo USA's common stock to the former Interactive shareholders in
order for them to own 51% of the outstanding common stock of the Company on the
closing date of the merger, on a fully diluted basis. The Company may issue
additional shares if certain agreed upon criteria, to be determined, are met in
order to allow the former Interactive security holders to hold 54% of the
outstanding common stock of the Company (based on the shares outstanding at the
time of closing). Accordingly, Torpedo could issue up to an additional 3,457,453
shares to the former Interactive shareholders. In connection with the

                                                                             F-7
<PAGE>


                    INTERACTIVE GAMES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        FOR THE YEAR ENDING JULY 31, 2005


NOTE 1 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
       (CONTINUED)

ORGANIZATION (CONTINUED)

Merger Agreement, the former Interactive shareholders agreed to use their best
efforts post-closing to cause Torpedo USA to raise sufficient funds to pay-off
or otherwise dispose of up to $250,000 of Torpedo USA's liabilities. Such
pay-off or disposal has not occurred to date. Finally, should Torpedo USA not
dispose of all of its assets and liabilities within three months following the
acquisition closing date, the Company will be required to issue an additional
500,000 shares to the former Interactive shareholders. The Company has
determined that it will issue such shares once Torpedo USA raises sufficient
funds to satisfy up to $250,000 of its liabilities.

In conjunction with the Merger Agreement, Torpedo USA changed its name to
Interactive Games, Inc. and approved an increase in its authorized common stock
($0.001 par value) from 50,000,000 shares to 100,000,000 shares.

The acquisition of Interactive by Torpedo USA was accounted for as a reverse
merger because on a post-merger basis, the former Interactive shareholders hold
a majority of the outstanding common stock of Torpedo USA on a voting and fully
diluted basis. As a result, Interactive was deemed to be the acquirer for
accounting purposes. Accordingly, the financial statements presented, from
inception, are those of Interactive for all periods prior to the acquisition,
and the financial statements of the consolidated companies from the acquisition
date forward. The historical stockholders' deficit of Interactive prior to the
acquisition have been retroactively restated (a recapitalization) for the
equivalent number of shares received in the acquisition after giving effect to
any differences in the par value of Torpedo USA's and Interactive's common
stock, with an offset to additional paid-in capital. The restated consolidated
accumulated deficit of the accounting acquirer (Interactive) is carried forward
after the acquisition.

BASIS OF PRESENTATION

The consolidated financial statements are prepared in accordance with generally
accepted accounting principles in the United States of America ("US GAAP"). The
consolidated financial statements of the Company include the Company and its
subsidiaries. All material intercompany balances and transactions have been
eliminated.

                                                                             F-8

<PAGE>


                    INTERACTIVE GAMES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        FOR THE YEAR ENDING JULY 31, 2005


NOTE 1 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (CONTINUED)

GOING CONCERN AND MANAGEMENT'S PLANS

The Company incurred a net loss of $428,592 during fiscal 2005. Additionally,
one of its subsidiaries, Torpedo, is in bankruptcy proceedings, and the Company
generated minimal revenues. Accordingly, the Company has no ready source of
working capital. These factors raise substantial doubt about the Company's
ability to continue as a going concern. The consolidated financial statements do
not include any adjustments relating to the recoverability and classification of
assets or the amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. While management
believes the Company may be able to raise funds through the issuance of debt or
equity instruments, there is no assurance the Company will be able to raise
sufficient funds to operate in the future.

The Company is in negotiations with VP Sports, Inc. ("VP Sports"), a company
affiliated through common control, to sell 100% of its ownership interest in
Torpedo to VP Sports. If this occurs, VP Sports would assume the responsibility
to liquidate Torpedo and relieve the Company of any further obligations of
Torpedo. Presently, there is no assurance the Company will be successful in
selling its ownership in Torpedo.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
will differ from those estimates.

CONCENTRATION OF CREDIT RISKS

The Company is subject to concentrations of credit risk primarily from cash and
assets from discontinued operations.

The Company minimizes its credit risks associated with cash, including cash
classified as assets from discontinued operations, by periodically evaluating
the credit quality of its primary financial institutions.

                                                                             F-9

<PAGE>


                   INTERACTIVE GAMES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        FOR THE YEAR ENDING JULY 31, 2005


NOTE 1 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
       (CONTINUED)

CUSTOMER CONCENTRATION

The Company had one customer which accounted for 100% of its revenues during
fiscal 2005. The Company intends to minimize its customer concentration risks by
diversifying its existing customer base.

SERVICES CONCENTRATION

All of the Company's revenues during fiscal 2005 are derived from commissions
earned on the sale of slot machines.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with original maturities of
three months or less to be cash equivalents.

STOCK-BASED COMPENSATION

The Company accounts for stock options issued to employees in accordance with
the provisions of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations. As
such, compensation cost is measured on the date of grant as the excess of the
current market price of the underlying stock over the exercise price. Such
compensation amounts are amortized over the respective vesting periods of the
option grant. The Company adopted the disclosure provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation" and SFAS 148, "Accounting for
Stock-Based Compensation -Transition and Disclosure", which permits entities to
provide pro forma net income (loss) and pro forma earnings (loss) per share
disclosures for employee stock option grants as if the fair-valued based method
defined in SFAS No. 123 had been applied. The Company accounts for stock options
and stock issued to non-employees for goods or services in accordance with the
fair value method of SFAS 123. No employee stock-based compensation was granted
during fiscal 2005 and 2004.

                                                                            F-10
<PAGE>


                   INTERACTIVE GAMES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        FOR THE YEAR ENDING JULY 31, 2005


NOTE 1 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
       (CONTINUED)

LOSS PER COMMON SHARE

Basic loss per share is computed by dividing net loss by weighted average number
of shares of common stock outstanding during each period. Diluted loss per share
is computed by dividing net loss by the weighted average number of shares of
common stock, common stock equivalents and potentially dilutive securities
outstanding during each period. Diluted loss per common share is not presented
because it is anti-dilutive. The outstanding warrants amounted to 5,227,000 at
July 31, 2005 were excluded from the computation of the diluted loss per share
due their antidilutive effect.

FOREIGN CURRENCY TRANSACTIONS

The financial statements of the Company's discontinued foreign subsidiary,
Torpedo, are measured using the local currency (the Canadian Dollar "CAD") as
the functional currency. Assets and liabilities of Torpedo are translated at
exchange rates as of the balance sheet date. Revenues and expenses are
translated at average rates of exchange in effect during the period. The
resulting cumulative translation adjustments have been recorded as a component
of comprehensive loss, included as a separate item in shareholders' deficit.
Gains and losses from foreign currency transactions are included in loss from
discontinued operations.

COMPREHENSIVE LOSS

Comprehensive loss is defined as a change in equity during the period from
transactions and other events and circumstances from non-owner resources.

Included in this category is the change resulting from foreign currency
translation adjustments from the Company's foreign subsidiary which amounted to
approximately $30,000 from the date of the reverse merger (January 31, 2005) to
July 31, 2005.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of cash, assets of discontinued operations, accounts payable
and accrued expenses approximate their fair value due to their short-term
maturities. The carrying amount of the note payable and due to related parties
approximate their fair value based on the Company's incremental borrowing rate.
The fair value of the liabilities of discontinued operations is $0 at July 31,
2005 considering that there are substantially insufficient recoverable assets at
the balance sheet date to repay such liabilities.

                                                                            F-11
<PAGE>


                   INTERACTIVE GAMES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        FOR THE YEAR ENDING JULY 31, 2005


NOTE 1 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
       (CONTINUED)

INCOME TAXES

Income taxes are accounted for in accordance with SFAS No. 109, Accounting for
Income Taxes. SFAS No. 109 requires the recognition of deferred tax assets and
liabilities to reflect the future tax consequences of events that have been
recognized in the Company's financial statements or tax returns. Measurement of
the deferred items is based on enacted tax laws. In the event the future
consequences of differences between financial reporting bases and tax bases of
the Company's assets and liabilities result in a deferred tax asset, SFAS No.
109 requires an evaluation of the probability of being able to realize the
future benefits indicated by such assets. A valuation allowance related to a
deferred tax asset is recorded when it is more likely than not that some or all
of the deferred tax asset will not be realized.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment,
an Amendment of FASB Statement No. 123" ("FAS No. 123R"). FAS No. 123R requires
companies to recognize in the statement of operations the grant- date fair value
of stock options and other equity-based compensation issued to employees. FAS
No. 123R is effective for the first fiscal year beginning after December 15,
2005. The Company is in process of evaluating the impact of this pronouncement
on its financial position.

In December 2004, the FASB issued SFAS Statement No. 153, "Exchanges of
Non-monetary Assets." The Statement is an amendment of APB Opinion No. 29 to
eliminate the exception for non-monetary exchanges of similar productive assets
and replaces it with a general exception for exchanges of non-monetary assets
that do not have commercial substance. The Company believes that the adoption of
this standard will have no material impact on its financial statements.

In March 2004, the Emerging Issues Task Force ("EITF") reached a consensus on
Issue No. 03-1, "The Meaning of Other-Than-Temporary Impairment and its
Application to Certain Investments." The EITF reached a consensus about the
criteria that should be used to determine when an investment is considered
impaired, whether that impairment is other-than-temporary, and the measurement
of an impairment loss and how that criteria should be applied to investments
accounted for under SFAS No. 115, "Accounting in

                                                                            F-12
<PAGE>


                   INTERACTIVE GAMES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        FOR THE YEAR ENDING JULY 31, 2005


NOTE 1 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
       (CONTINUED)

RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

Certain Investments in Debt and Equity Securities." EITF 03-01 also included
accounting considerations subsequent to the recognition of an
other-than-temporary impairment and requires certain disclosures about
unrealized losses that have not been recognized as other-than-temporary
impairments. Additionally, EITF 03-01 includes new disclosure requirements for
investments that are deemed to be temporarily impaired. In September 2004, the
Financial Accounting Standards Board (FASB) delayed the accounting provisions of
EITF 03-01; however the disclosure requirements remain effective for annual
reports ending after June 15, 2004. The Company believes that the adoption of
this standard will have no material impact on its financial statements.

REVENUE RECOGNITION

The Company recognizes revenue in accordance with Staff Accounting Bulletin No.
104, "Revenue Recognition in Financial Statements" This statement established
that revenue can be recognized when persuasive evidence of an arrangement
exists, the services have been delivered, all significant contractual
obligations have been satisfied, the fee is fixed or determinable and collection
is reasonably assured.

NOTE 2 DISCONTINUED OPERATIONS

Torpedo's operations were primarily located in Montreal, Canada.
In conjunction with the Torpedo bankruptcy proceedings, a trustee was appointed
to oversee the Torpedo estate. The Trustee's functions are to recover the
maximum value of Torpedo's assets and discharge bankruptcy claims based on
priority and pursuant to Canadian bankruptcy laws. The carrying amounts of
Torpedo's assets and liabilities subject to compromise at July 31, 2005, are as
follows:

Assets:
     Cash, held in trust                                              $    6,736
                                                                      ==========

Liabilities subject to compromise:
     Notes payable                                                    $  384,455
     Due to related party                                                127,961
     Accounts payable and accrued expenses                             1,637,936
                                                                      ----------
                                                                       2,150,352
                                                                      ==========

                                                                            F-13
<PAGE>

                   INTERACTIVE GAMES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        FOR THE YEAR ENDING JULY 31, 2005


NOTE 2 DISCONTINUED OPERATIONS (CONTINUED)

Liabilities subject to compromise above do not include intercompany payables
which have been eliminated in the accompanying consolidated financial
statements. The notes payable consist of three notes with carrying values
ranging from approximately $30,000 to $225,000 and bearing interest ranging from
8% to 10%. The notes are unsecured and are in default.

Due to related party consists of amounts owed to VP Sports and are comprised of
management fees and accrued interest payable.

The liabilities of Torpedo exceed the estimated net realizable values of
Torpedo's assets and will not be sufficient to pay all obligations of Torpedo.
Management is uncertain as to the ultimate disposition of these liabilities, but
believes there is no significant exposure to the Company

NOTE 3 NOTE PAYABLE

At July 31, 2005, the Company had an unsecured note payable of $75,000, bearing
interest at 8%, which matured in April 2005. The note payable is in default at
July 31, 2005.

NOTE 4 DUE TO RELATED PARTIES

Due to related parties at July 31, 2005, consist of the following:

     o    Due to related parties affiliated through common control of the
          Company's chief executive officer, unsecured, bearing interest at 9%,
          payable on demand, amounting to $668,230;
     o    Due to related parties affiliated through common control of one the
          Company's stockholders, secured by substantially all assets of the
          Company, bearing interest at ranges from 8% to 10%, payable on demand,
          amounting to $676,603;
     o    Due to stockholder, unsecured, bearing interest at 6%, payable on
          demand, amounting to $72,643;
     o    Accrued interest on the aforementioned payables, amounting to
          $182,950.

The Company recognized approximately $72,000 as interest expense in connection
with the due to related parties during fiscal 2005.

                                                                            F-14
<PAGE>


                    INTERACTIVE GAMES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        FOR THE YEAR ENDING JULY 31, 2005


NOTE 5 COMMITMENTS AND CONTINGENCIES:

LITIGATION:

Due to Torpedo's inability to meet its obligations timely, certain creditors
have initiated legal action against Torpedo, some of which have received
judgments for payment.

The Company is involved in other claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse impact either
individually or in the aggregate on consolidated results of operations,
financial position or cash flows of the Company.

NOTE 6 STOCKHOLDERS' DEFICIT

COMMON STOCK

Torpedo USA received proceeds of $107,250 from the issuance of 715,000 shares of
common stock under a private placement, prior to the reverse merger, during
fiscal 2005. During the same period, Torpedo USA issued 375,000 shares of common
stock for services provided, valued at $75,000 as well as 125,000 shares of
common stock to satisfy accrued expenses amounting to $18,750.

On February 1, 2005, pursuant to a Merger Agreement, the Company issued
27,037,282 shares of common stock to the former Interactive stockholders.

On February 23, 2005, the Company received proceeds of $6,200 from the sale of
41,333 shares of common stock under a private placement to a company affiliated
through common ownership and control by an officer of the Company.

STOCK OPTIONS AND WARRANTS

In March 2002, one of the Company's subsidiaries, Torpedo USA, adopted the 2002
Stock Option Plan, covering up to 1,000,000 shares of the Company's common
stock, and in July 2003, the Company adopted the 2003 Stock Option Plan covering
up to 2,500,000 shares of the Company's common stock.

Torpedo USA issued options and warrants prior to its merger, which was assumed
by the Company. A summary of the activity of the Company's outstanding options
and warrants during fiscal 2005 and 2004 is as follows:

                                                                            F-15
<PAGE>


                    INTERACTIVE GAMES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        FOR THE YEAR ENDING JULY 31, 2005


NOTE 6 STOCKHOLDERS' DEFICIT

STOCK OPTIONS AND WARRANTS (CONTINUED)
<TABLE>
<CAPTION>

                                                              Options                 Weighted
                                                                 and                   Average
                                                              Warrants             Exercise Price
                                                              --------             --------------

<S>                   <C>                                                               <C>
Outstanding, December 1, 2003                                      --                   $  --
Granted                                                            --                      --
Exercised                                                          --                      --
Expired                                                            --                      --
                                                              ---------                 -----
Outstanding and exercisable at July 31, 2004                       --                     --

Granted                                                       5,227,000                   0.18
Exercised                                                          --                      --
Expired                                                            --                      --
                                                              ---------                 -----
Outstanding and exercisable at July 31, 2005                  5,227,000                 $ 0.18
                                                              =========                 =====
</TABLE>


                          Warrants          Weighted Average       Weighed
  Range of             outstanding and         Remaining           Average
exercise prices          exercisable        Contractual Life   Exercise Price
---------------          -----------        ----------------   --------------

    $0.05                  300,000                 1.87           $ 0.05
     0.10                1,150,000                 2.06             0.10
     0.15                  300,000                 2.40             0.15
     0.20                2,650,000                 2.50             0.20
     0.26                  827,000                 3.00             0.26

The weighted average remaining contractual life of the terms of the warrants and
options is 2.4 years.

All options and warrants issued by Torpedo USA were issued prior to the merger
on February 1, 2005 and have been expensed prior to such date. Accordingly, no
expense associated with the assumption of the warrants and options by the
Company has been included in the accompanying consolidated statement of
operations.

                                                                            F-16
<PAGE>


                    INTERACTIVE GAMES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        FOR THE YEAR ENDING JULY 31, 2005


NOTE 7 GAIN ON SETTLEMENT

During fiscal 2005, the Company entered into a settlement agreement with
Inhibiton Therapeutics, Inc., whereby the Company accepted a sum of $250,000 as
full and final payment for relinquishing our rights to a Cooperative Research
and Development Agreement and discharged Inhibiton from any and all liabilities
to the Company. The amount due from this settlement has been applied to amounts
owed by the Company to Inhibiton of $250,000 and Inhibiton agreed to waive any
and all interest due or other fees associated with this payment.

NOTE 8 INCOME TAXES

Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the net deferred taxes, as of July 31, 2005, are as follows:


     Deferred tax assets:
         Net operating loss carryforward                          $ 48,000
       Less valuation allowance                                    (48,000)
                                                                  --------
     Total net deferred tax assets:                               $   --
                                                                  ========

SFAS No. 109 requires a valuation allowance to reduce the deferred tax assets
reported, if any, based on the weight of the evidence, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
Management has determined that a valuation allowance of $ 800 at July 31, 2005
is necessary to reduce the deferred tax assets to the amount that will more
likely than not be realized. The change in the valuation allowance during fiscal
2005 and 2004 was an increase of approximately $8,000 and $40,000, respectively.

The Company had net operating loss carryforward amounting to approximately
$120,000 at July 31, 2005. The Company may have had a change of ownership as
defined by the Internal Revenue Code Section 382. As a result, a substantial
annual limitation may be imposed upon the future utilization of its net
operating loss carryforwards. At this point, the Company has not completed a
change in ownership study and the exact impact of such limitations is unknown.

                                                                            F-17
<PAGE>


                    INTERACTIVE GAMES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                        FOR THE YEAR ENDING JULY 31, 2005


NOTE 8 INCOME TAXES (CONTINUED)

The federal statutory tax rate reconciled to the effective tax rate during
fiscal 2005 and 2004, respectively, is as follows:

                                                         2005        2004
                                                        ------       ------

Tax at U.S. Statutory Rate:                               35.0%        35.0%
State tax rate, net of federal benefits                    5.0          5.0
Change in valuation allowance                            (40.0)       (40.0)
                                                        ------       ------
Effective tax rate                                         0.0%         0.0%
                                                        ======       ======

                                                                            F-18