**UNITED
        STATES SECURITIES AND EXCHANGE COMMISSION**
 WASHINGTON,
        D.C. 20549
 
 **FORM
        10-KSB**
 
 **x
        ANNUAL REPORT UNDER
        SECTION 13 OR 15(d) OF THE**
 **SECURITIES
        EXCHANGE ACT OF 1934**
 
 For
        the
        fiscal year ended December 31, 2005.
 or
 **o
        TRANSITION REPORT UNDER
        SECTION 13 OR 15(d) OF THE**
 **SECURITIES
        EXCHANGE ACT OF 1934**
 
 For
        the
        transition period from ____________ to ______________.
 
 *Commission
        File Number 1-16187*
 
 **THE
        BLUEBOOK INTERNATIONAL HOLDING COMPANY**
 
 (Exact
        name of registrant as specified in its charter)
 DELAWARE
              
              98-0215787(State
                  or other jurisdiction
                  of
              
              (I.R.S.
                  Employerincorporation
                  or
                  organization)
              
              Identification
                  No.)
  **21098
        BAKE PARKWAY, SUITE 100**
 **LAKE
        FOREST, CALIFORNIA 92630-2163**
 (Address,
        including zip code, of principal executive offices)
 
 (949)
        470-9534
 (Registrant's
        Telephone Number, Including Area Code)
 
 Securities
        registered under to Section 12(b) of the Exchange Act: None.
 
 Securities
        registered under to Section 12(g) of the Exchange Act:
 Common
        Stock, $0.0001 par value.
 (Title
        of
        Class)
  Check
        whether the issuer is not required to file reports pursuant to Section 13
        or
        15(d) of the Exchange Act. Yes o No x
 
 Check
        whether the Registrant (1) filed all reports required to be filed by Section
        13
        or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
        (or for such shorter period that the registrant was required to file such
        reports), and (2) has been subject to such filing requirements for the past
        90
        days. Yes x No o
 
 Check
        if
        there is no disclosure of delinquent filers in response to Item 405 of
        Regulation S-B is not contained in this form, and no disclosure will be
        contained, to the best of Registrant's knowledge, in definitive proxy or
        information statements incorporated by reference to Part III of this Form
        10-KSB
        or any amendment to this Form 10-KSB. o
  Indicate
        by check mark whether the Registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act). Yes x No
o
 
 Registrant’s
        revenues for its fiscal year ended December 31, 2005: $619,747.
 
 The
        aggregate market value of the voting and non-voting common equity held by
        non-affiliates of the Registrant computed by reference to the price at which
        the
        common equity was sold, or the average bid and asked price of such common
        equity, as of a specified date within the past 60 days: $2,115,846 (based
        on the
        average of the high ask and low bid prices, respectively, of the Registrant’s
        common stock as reported on the OTC Bulletin Board on June 23, 2006,
        of
        $ .50 cents per share).
 
 As
        of
        June 23, 2006, there were outstanding an aggregate of 9,336,630 shares of
        the
        Registrant's common stock, par value $0.0001 per share.
  Transitional
        Small Business Disclosure Format (Check one): Yes o No x
  
  **THE
        BLUEBOOK INTERNATIONAL HOLDING COMPANY**
 
 **FORM
        10-KSB**
 PART
                    IItem
                    1.
                
                Description
                    of BusinessItem
                    2.
                
                Description
                    of PropertyItem
                    3.
                
                Legal
                    ProceedingsItem
                    4.
                
                Submission
                    of Matters to a Vote of Security HoldersPART
                    IIItem
                    5.
                
                Market
                    for Common Equity and Related Stockholder MattersItem
                    6.
                
                Management's
                    Discussion and Analysis or Plan of OperationItem
                    7.
                
                Financial
                    StatementsItem
                    8.
                
                Change
                    in and Disagreements With Accountants on Accounting and Financial
                    DisclosureItem
                    8A.
                
                Controls
                    and ProceduresItem
                    8B.
                
                Other
                    InformationPART
                    IIIItem
                    9.
                
                Directors,
                    Executive Officers, Promotors and Control Persons; Compliance
                    With Section
                    16(a) of the Exchange ActItem
                    10.
                
                Executive
                    CompensationItem
                    11.
                
                Security
                    Ownership of Certain Beneficial Owners and Management and Related
                    Stockholder MattersItem
                    12.
                
                Certain
                    Relationships and Related TransactionsItem
                    13.
                
                ExhibitsItem
                    14.
                
                Principal
                    Accountant Fees and ServicesSignatures
 
 **EXPLANATORY
        NOTE**
  As
        used
        in this report the terms “the Company,” “we,” “us,” “our,” or “Bluebook” refer
        to The Bluebook International Holding Company (“Bluebook Holding”) and our
        wholly-owned subsidiary, The Bluebook International, Inc., a Nevada corporation
        (“Bluebook International”).
  
  **CAUTIONARY
        STATEMENT ABOUT FORWARD-LOOKING INFORMATION**
  Some
        of
        the information in this report may contain forward-looking statements. These
        statements can be identified by the use of forward-looking words such as
“may,”
“expect,” “anticipate,” “estimate,” “continue” or other similar words. These
        statements discuss plans, goals and objectives for future operations and
        growth,
        contain projections of results of operations or financial condition or state
        other “forward-looking” information. You should understand that these
        forward-looking statements are estimates reflecting our judgment, not guarantees
        of future performance. They are subject to a number of assumptions, risks
        and
        uncertainties that could cause actual results to differ materially from those
        expressed or implied in the forward-looking statements. The following important
        factors, in addition to those discussed in “Risk Factors” and other unforeseen
        events or circumstances, could affect our future results and could cause
        those
        results or other outcomes to differ materially from those expressed or implied
        in our forward-looking statements: general economic conditions; competition;
        our
        ability to control costs; changes within our industries; release of new and
        upgraded products and services by us or our competitors; development of our
        sales force; employee retention; managerial execution; legal and regulatory
        issues; changes in accounting policies or practices; and successful adoption
        of
        our products and services.
  Accordingly,
        you should not place undue reliance on forward-looking statements, which
        speak
        only as of the date of this report. All subsequent written and oral
        forward-looking statements attributable to us or any person acting on our
        behalf
        are expressly qualified in their entirety by the cautionary statements contained
        or referred to in this section. We do not undertake any obligation to release
        publicly any revisions to these forward-looking statements to reflect events
        or
        circumstances after the date of this report or to reflect the occurrence
        of
        unanticipated events.
  
 
 **PART
        I**
 
 **ITEM
        1. DESCRIPTION OF BUSINESS**
 
 **GENERAL**
 
 We
        provide proprietary data, software solutions and services that help automate,
        integrate, manage and quicken the underwriting and claims process. Our
        underwriting solutions (as described below), provide for validation and
        automation of structure replacement costs for quoting residential structure
        replacement costs and insurance premiums in significantly less time than
        is
        common today. These products can provide insurance professionals, appraisers,
        mortgage bankers and lenders greater automation and validation and extend
        premium quoting and policy fulfillment capabilities through automation. Our
        claims solutions deliver paperless claims information to insurance personnel
        and
        directly to the outside service vendors (e.g., contractors, inspectors,
        adjusters, repair professionals, among others) through our integrated software
        solutions. Our claims solutions provide the insurance carrier with the ability
        to electronically track and manage claims. We also develop, market, and sell
        THE
        BLUEBOOK (book) to the insurance, mortgage banking and related industries.
  Bluebook Holding conducts
        virtually all of its business through its wholly owned subsidiary,  Bluebook
        International.
  Our
        mailing address and executive offices are located at 21098 Bake Parkway,
        Suite
        100, Lake Forest, California 92630-2163. Our telephone number is (949) 470-9534.
        Our corporate website is http://www.bluebook.net. Information contained on
        the
        website is not a part of this report.
  **BACKGROUND**
  Bluebook
        Holding was originally incorporated as Gama Computer Corporation in Delaware
        on
        December 18, 1997. Gama Computer Corporation was formed for the purpose of
        selling web site hosting, web site domain name registration and internet
        telecommunications services to Spanish speaking businesses and individuals
        in
        the southwestern United States, Mexico and other Central and South American
        countries.
 
 Gama
        Computer Corporation had not realized any revenue from its initial business
        plan
        and had incurred a substantial working capital deficit. At that time, Gama
        Computer Corporation had nominal business activities and could be considered
        a
“shell company.” On September 24, 2001 Gama Computer Corporation entered into an
        Agreement and Plan of Merger, dated September 24, 2001 (the “Merger Agreement”),
        with Andrew Hromyk, its executive officer and majority stockholder, Bluebook
        Acquisitions Corp., a Nevada corporation and a wholly-owned subsidiary of
        Gama
        Computer Corporation (“Gama Sub”), Bluebook International, Inc., a Nevada
        corporation (“Target”), and Target’s stockholders, Mark A. Josipovich, Daniel T.
        Josipovich, Daniel E. Josipovich and Dorothy E. Josipovich (collectively,
        the
“Target Stockholders”).
 
 Target
        was incorporated in Nevada on December 5, 2000, succeeding operations that
        began
        in 1964 by Daniel E. Josipovich and Dorothy E. Josipovich, its sole proprietors,
        under the trade name “The Bluebook of Cleaning, Reconstruction and Repair
        Costs,” and related names. Daniel E. and Dorothy E. Josipovich had sold all of
        the assets of their business, including the publication known as “The Bluebook
        of Cleaning, Reconstruction and Repair Costs,” a web-based version of the book
        known as “The Bluebook Estimating Systems Technology,” the software technology
        known as “B.E.S.T.Net” and the intellectual property, license agreements and
        goodwill associated with their business to Target on September 15, 2001.
  The
        Merger Agreement provided for Gama Computer Corporation’s purchase from the
        Target Stockholders of all of the issued and outstanding capital stock of
        Target
        in exchange for the issuance of an aggregate of 32,700,000 shares of Gama
        Computer Corporation’s authorized but unissued common stock. As a result of the
        merger, Target merged with and into Gama Sub. Gama Sub survived the merger
        and
        changed its name to The Bluebook
        International, Inc., the entity we refer to in this report as “Bluebook
        International.” Target’s Stockholders acquired an aggregate of 32,700,000 shares
        of Gama Computer Corporation’s common stock in exchange for all of the
        outstanding common stock of Target and Mr. Hromyk returned to treasury
        19,200,000 shares of Gama Computer Corporation’s common stock. The shares of
        Gama Computer Corporation’s common stock acquired by the Target Stockholders
        represented approximately 84.4% of Gama Computer Corporation’s common stock
        issued and outstanding after the consummation of the exchange. The closing
        of
        the transaction was effective on October 1, 2001.
 
 The
        merger allowed Target to become a wholly-owned subsidiary of Gama Computer
        Corporation, a publicly held shell company, without having to pursue the
        traditional registration process. From and after the closing of the merger,
        our
        principal asset became, and has continued to be, Bluebook International.
        On
        November 6, 2001, Gama Computer Corporation changed its name to The Bluebook
        International Holding Company.
 
 **PRODUCTS
        AND SERVICES**
 
 The
        principal business of the Company has been developing and selling THE BLUEBOOK
        (The Bluebook of Cleaning, Reconstruction and Repair Costs) and B.E.S.T.
        (Bluebook Estimating Software Technology). THE BLUEBOOK is a book and is
        published in both desk and pocket sized formats. It contains average unit
        cost
        pricing information for residential structures and is utilized within the
        insurance, construction and related industries. In 1982, we introduced our
        estimating software program B.E.S.T., which is a software format of THE BLUEBOOK
        and allows subscribers the option to retrieve unit cost pricing information
        to
        calculate repair and replacement cost estimates and to deliver claims
        electronically.
  
 
 The
        Company is currently developing B.E.S.T.Net and B.E.S.T.Central, which are
        web-based cost estimation and claims management software solutions that are
        designed to assist in the facilitation of insurance claims information in
        a near
        paperless environment. Although the development of the Company’s B.E.S.T.Net
        Solution is substantially complete, the Company is currently working on the
        completion of B.E.S.T.Central and constructing a tie-in or interface between
        B.E.S.T.Net and B.E.S.T.Central, as well as the integration of B.E.S.T.8
        (as
        described below) into B.E.S.T.Central.
 
 We
        believe our software solutions will help insurers mitigate losses and assist
        in
        the direct delivery of information to the required participants (e.g.,
        adjusters, contractors, inspectors, attorneys, independent experts, etc.).
        Our
        solutions were designed to more accurately price, process and manage the
        underwriting and claims process.
 
 Insurance
        underwriting and claims processing involves the collection, management,
        compliance, maintenance and storage of enormous volumes of information from
        a
        large number of internal and external sources across disconnected systems
        and
        lines of insurance (e.g. property, automotive, workers compensation,
        etc.)
 
 Information
        today must be, among other things, facilitated and physically reviewed,
        processed, copied and filed by many persons and entered into many systems
        requiring redundant, unnecessary tasks that contribute to inefficiencies
        and
        inaccuracies.
 
 Insurance
        companies have many systems controlling insurance data in each of the many
        insurance lines that have, over the years, been technologically “bridged
        together.” Trying to install a solution that integrates through each of these
        systems, each designed for a specific work flow, and governed by a particular
        programming language, including outdated programming languages such as Cobal
        and
        Fortran, is a difficult task. Our solutions do not “install” inside this maze.
        Rather, we connect at the beginning where information starts and use the
        Internet to bypass internal workflow stoppages and technological break points.
        The Company presents solutions that are “ready” and packaged with standards that
        are already used and accepted by the insurance industry, including its
        proprietary database, and will allow us to deliver information with
        significantly reduced time and costs. Bluebook’s products were also designed for
        vendors and suppliers that participate in the claims process (e.g. contractors,
        inspectors, adjusters, attorneys, sub-contractors, call centers, agents,
        etc.).
        Existing systems still move data to and from point to point; however, with
        Bluebook’s software solutions, data and information are now highly accessible,
        delivered without significant delay, and managed throughout an entire process.
 
 We
        believe that the future market for underwriting and claims management solutions
        will be lead by the providers of products that simplify the management of
        this
        process and significantly reduce risk associated with carrier non-compliance
        and
        underinsurance. Therefore, our initiatives are aimed at making it easier
        for
        among others, insurers, policyholders, adjusters and contractors to communicate
        and do business in a near-paperless environment.
 
 We
        believe our principal software solutions will expand the size and scope of
        our
        target markets and enhance our revenue potential. Prior to our principal
        software solutions, THE BLUEBOOK (book) was the principal source of revenue
        for
        the Company. Unlike THE BLUEBOOK, our software solutions automate the delivery
        of claims estimates and other insurance claims information via the Internet.
        The
        expansion of our services from providing data in the form of a published
        book to
        providing data via our software products expands our target markets and
        opportunities to also sell to those clients that require an automated data
        delivery and claims information system either as an installed or a remotely
        accessed (via the Internet) software solution.
 
 Users
        of
        our software solutions will need a standard Microsoft Windows operating software
        in order to be able to operate our software solutions. Our InsureBASE,
        B.E.S.T.7.5, B.E.S.T.8, B.E.S.T.Central and B.E.S.T.Net software solutions,
        each
        as discussed below, require, at a minimum, the standard Microsoft Windows
        98 SE
        (second edition) operating system (or a more updated version of this program)
        in
        order to operate. Each of these software solutions also requires access to
        the
        Internet and either Microsoft Internet Explorer 5.1 or Netscape version 4.0
        (or
        a more updated version of either of these programs) in order to operate.
  *THE
        BLUEBOOK*
  Since
        1964, THE BLUEBOOK has been a reference for the insurance, cleaning,
        construction, reconstruction, repair, and service industries. THE BLUEBOOK
        contains average unit costs pricing for residential structures that is utilized
        specifically within the insurance, construction and related industries. It
        is
        printed in both a desktop and pocket sized format. THE BLUEBOOK is utilized
        by
        professionals in the insurance repair and related industries that create
        cost
        estimates for residential structures and light commercial structures. Light
        commercial structures are those structures that use many of the same materials
        that are used in residential construction, such as stores that make up a
        strip
        mall. THE BLUEBOOK is an annual publication that is updated annually in the
        paper format. We have printed approximately ten thousand copies of THE BLUEBOOK
        during each of the past four years. The retail cost of the desk edition 8.5” x
        11” version is $89.95 and the retail cost of the pocket edition is $42.95. Both
        products are discounted for volume purchases of greater than 5 books.
 
 *B.E.S.T.7.5*
 
 B.E.S.T.7.5
        is a stand alone, residential and light commercial estimating software solution
        for use on desktops, laptops, pen-based units and the Tablet PCs. B.E.S.T.7.5
        is
        scalable for multi-user environments and contains Bluebook’s proprietary
        database, training tutorial and estimating engine. B.E.S.T.7.5 provides the
        estimator with automated industry specific tools, such as board feet
        calculators, roofing calculators, and automated time and material calculators,
        to estimate repair cost of damage for various residential structures and
        light
        commercial structures. Light commercial structures are those structures that
        use
        many of the same materials that are used in residential construction, such
        as
        stores that make up a strip mall. The cost of our B.E.S.T.7.5 software solution
        can range from $995 to $2,495 per license with a 20% maintenance fee due
        annually. The Company released its B.E.S.T.7.5 software solution in the quarter
        ended June 30, 2005, and is currently marketing and selling this software
        solution. As of December 31, 2005, 87 licenses have been sold.
  
 
 *B.E.S.T.8*
 
 The
        B.E.S.T.8 product is the Company’s Internet integrated release. B.E.S.T.8 is a
        stand alone estimating software solution that will be web enabled. B.E.S.T.8
        users will have the capability to access the Internet for updates and upgrades
        and integration with the Company’s B.E.S.T.Net and B.E.S.T.Central software
        solutions, as described below. We plan to complete this product in two phases.
        The first phase release will include enhancements of the estimating features
        of
        B.E.S.T.7.5, and it will allow for claims estimates and data to be delivered
        via
        the Internet using almost any email program without having the software
        installed. The first phase is expected to be released in the first quarter
        of
        2006. The second phase release is being designed to include an enhanced and
        integrated web-based access and delivery system where vendors (e.g.,
        contractors, estimators, independent adjustors, etc.) can access the solution
        via the Internet without having to install the solution on a local hard drive.
        B.E.S.T.8 will also use synchronization technology to upload the estimate
        information for extraction into our software solutions B.E.S.T.Central or
        B.E.S.T.Net (described below). B.E.S.T.Central and B.E.S.T.Net are hosted
        on a
        server such that vendors with access to the Internet and valid access to
        these
        software solutions via a license through an insurance carrier, can access
        the
        estimates provided by B.E.S.T.8. Upon completion of the second phase, users
        of
        our B.E.S.T.8 software solution can choose to either use this integrated
        system,
        together with our B.E.S.T.Central and B.E.S.T.Net software solutions, or
        to
        install B.E.S.T.8 on their local hard drive and use it as a stand alone
        estimating software solution.
 
 Like
        our
        B.E.S.T.7 software solution, the cost of our B.E.S.T.8 software solution
        can
        range from $995 to $2,495 per license with a 20% maintenance fee due annually.
 
 With
        respect to both our B.E.S.T.7.5 and B.E.S.T.8 products, our customers purchase
        licenses to use our B.E.S.T.7.5 and/or B.E.S.T.8 software for one year from
        the
        date of purchase. Each year, our customers have the option to subscribe to
        a
        support contract whereby the Company provides product upgrades and pricing
        updates, including providing the customer access to certain technology updates
        to keep current with new Microsoft Windows required drivers. In addition
        to THE
        BLUEBOOK, B.E.S.T.7.5 and B.E.S.T.8, we offer the principal software solutions
        described below:
 
 *Labor
        and Materials Database*
  Bluebook
        has built a labor, material and equipment database for the cleaning, repair
        and
        replacement of residential structures to include probable depreciation for
        many
        thousands of types of materials. This database is built into our software
        solutions and is used to estimate the cost of cleaning, repair and replacement
        of a residential structure including, in most cases, the average material
        depreciation.
  *B.E.S.T.Net
        and B.E.S.T.Central*
 
 B.E.S.T.Net
        and B.E.S.T.Central are web-based claims management software solutions that
        are
        designed to assist in the facilitation of insurance claims information in
        a near
        paperless environment. The Company has substantially completed its development
        of B.E.S.T.Net and is currently working on the completion of B.E.S.T.Central
        and
        constructing a tie-in or interface between B.E.S.T.Net and B.E.S.T.Central
        as
        well as the integration of B.E.S.T.8 into B.E.S.T.Central. The Company is
        also
        currently constructing an enhanced interface between B.E.S.T.Central and
        the
        tie-in with B.E.S.T.7.5. The Company has not yet begun sales of B.E.S.T.Net
        or
        B.E.S.T.Central.
 
 B.E.S.T.Net
        delivers insurance claims electronically to adjusters and insurer selected
        claims professionals. It centralizes claims information for easy access via
        the
        web in a standard file format that can be utilized across multiple platforms.
        B.E.S.T.Net integrates with B.E.S.T.Central and delivers and manages claims
        information electronically via the web to claims professionals who are
        authorized to do the work and finalize the claim. B.E.S.T.Net and
        B.E.S.T.Central were designed to provide the insurer and the vendor (e.g.,
        contractor, subcontractor, estimator, independent adjuster, etc.) with the
        ability to access, edit and assign insurance claims electronically in order
        to
        reduce the amount of paper intensive processing and delays in the delivery
        of
        information to required participants in the claims process.
 
 B.E.S.T.Net,
        and B.E.S.T.Central will each be sold on a case by case basis and priced
        based
        on a number factors, including the following: volume, term of commitment,
        service levels required or purchased, amount of information purchased, number
        of
        features or modules purchased, area of the country where support would be
        administered, training requirements, costs of selected maintenance level
        agreement, deployment and setup costs.
  *InsureBASE*
  As
        of
        December 31, 2005, the Company had completed its development and was in the
        process of selling its Internet based software solution for business,
        InsureBASE.
  InsureBASE
        is an automated residential property information solution that can provide
        a
        replacement cost for a residence within minutes, along with its current market
        valuation, property characteristics, and an array of neighborhood and other
        underwriting information . InsureBASE is different from other general appraisal
        software because it can provide information in an automated format in the
        following four categories: replacement cost calculation, assessment and
        financing history, current market value and information on comparable
        neighboring properties. The information untilized by InsureBASE is compiled
        using THE BLUEBOOK database to estimate the replacement cost of a residential
        structure less the cost of the land to help insurers and homeowners calculate
        the replacement cost of a single family structure. The Company has been
        compiling THE BLUEBOOK database for over forty years from various external
        data
        providers and through feedback from the users of THE BLUEBOOK. In addition,
        we
        have automated much of our data aggregation process through the development
        of
        DataCentral, which is the automated data collection hub of our InsureBASE
        software solution. DataCentral allows us to significantly reduce the amount
        of
        manual effort and costs typically associated with collecting and maintaining
        the
        property replacement database by automating many of the processes.
  
 
 The
        information utilized by InsureBASE can also access the public data records
        of
        First American Real Estate Solutions Company (NYSE: FAF) or “First American,”
with whom we have signed a Joint License & Revenue Share Program. For a
        discussion of our agreement with First American Real Estate Solutions Company
        see the discussion under the caption “Management’s Discussion and Analysis of
        Financial Condition and Results of Operations - Commitments and Contingencies
        -
        Joint License & Revenue Share Program.” The public data records of First
        American Real Estate Solutions Company includes financing history, assessment,
        current market value and neighborhood comparables. We combine the information
        provided through First American’s public data records with our replacement cost
        data from the THE BLUEBOOK database to produce a replacement cost calculation
        for a residential structure excluding the land. This replacement cost
        calculation is used by insurers, appraisers, lenders, agents, adjuster and
        others in the insurance industry to valuate a residential structures replacement
        cost for insurance purposes.
 
 By
        automating the entry of data fields (e.g., number of bedrooms, bathrooms,
        square
        feet, number of stories, etc.) this system can expedite the calculation process
        by reducing the amount of entries required by the user. InsureBASE is delivered
        via the Internet to insurers, adjusters, insurance agents, appraisers, mortgage
        lenders and other related market professionals involved in the underwriting
        and
        risk mortgage process. We believe that this product can minimize underinsurance
        and reduce liability by estimating appropriate insurance replacement cost
        coverage for the insured in the event of a total loss.
 
 ERC
        reports and LeadBASE reports are the output reports for the InsureBASE software
        solution. An ERC value is a field contained in the ERC report. Each report
        provides the estimated replacement cost of a residential structure less the
        land
        value. Each
        report provides the estimated replacement cost of a residential structure
        less
        the land value. Both reports contain information regarding the characteristics
        of the residential structure (such as roof type, square foot, number of stories,
        bedrooms and bathrooms) when such information is available from the Bluebook
        or
        First American database or when such information is provided by the user.
        A
        LeadBASE report and an ERC report contain the same information. An ERC report
        is
        utilized as one of the contributing factors in helping develop a proper
        structure insurance coverage on certain residential property. A LeadBASE
        report
        is provided to insurers through the Company’s Insure to Value software solution
        at insuretovalue.net on behalf of customers looking to receive a residential
        property insurance coverage report or quote .
        The
        minimum transaction fee for an ERC value is $1.00. The minimum transaction
        fee
        for a LeadBASE report is $5.50. The Company completed development of InsureBASE
        in November of 2004 and is currently marketing and selling the solution.
        InsureBASE is sold on a case by case basis and priced based on the same factors
        discussed above under B.E.S.T.Net and B.E.S.T.Central.
 
 *Insure
        To Value*
  As
        of
        December 31, 2005, the Company completed development of its Internet based
        consumer software solution, “Insure to Value”.
 
 Insure
        to
        Value uses the same software and database as InsureBASE, however, it does
        not
        include the automation of data fields. Insure to Value can generate a
        replacement cost. However, the general property information (e.g., number
        of
        bedrooms, bathrooms, square feet, number of stories, etc.) has to be entered
        manually by the user. We began marketing and delivery of the Insure to Value
        software solution in the third quarter of 2005. Every time a customer uses
        Insure to Value, they incur a transaction fee that can range from $15.95
        to
        $19.95.
  *B.E.S.T.
        HIU (Home Inspection Underwriting)*
  B.E.S.T.
        HIU is a comprehensive, automated solution that was developed to incorporate
        the
        functionality required by insurers to easily dispatch and deliver electronic
        inspection information and to monitor and manage, through the use of generic
        mobile devices (such as the Tablet PC), the inspection process in the field
        from
        the office, as well as the underwriting process in the office (including
        the
        automated Replacement Cost Calculations delivered from InsureBASE) from the
        field. B.E.S.T.HIU is the technology that allows InsureBASE to deliver an
        assignment electronically to various generic mobile devices and in this manner
        extends the capabilities of InsureBASE. B.E.S.T.HIU is complete and currently
        being marketed. B.E.S.T. HIU is sold on a case by case basis and priced on
        the
        same factors discussed above under B.E.S.T.Net and B.E.S.T.Central.
  
  **STRATEGIC
        PARTNERS**
 
 We
        work
        with the industry-leading companies described below to facilitate the
        development and marketing strategy of our technologies, products and services.
        To our knowledge, with respect to each of our partners, we are currently
        the
        only partner they have that provides software solutions for estimating
        residential replacement cost reports. Other than with Microsoft, First American,
        Kroll Factual Data, and ACI , we have
        not entered into any formal written agreements with our authorized partners.
 
 *Microsoft*
 
 We
        are
        part of a Microsoft initiative in the financial services industry called
        the
        Insurance Value Chain, or IVC. We are also a Microsoft Certified Gold Partner
        which requires us to have qualified personnel with certain credentials from
        Microsoft in the installation, use and training of their solutions. The IVC
        is
        being marketed and promoted through Microsoft and its community of partners
        that
        work today with the insurance industry. The IVC was developed by Microsoft
        as
        part of a plan to deliver integrated insurance solutions to the insurance
        industry. The IVC technologies intend to deliver scalable, enterprise-level,
        ready software solutions that significantly reduce the time it takes to
        implement solutions in the insurance industry thereby producing faster return
        on
        insurer investment and provide alternative solutions for existing in-place
        technology which often limit modernization. Other partners of the value chain
        include: EDS, Hewlett Packard and other Microsoft partners and invited
        participants that play an active role in the deployment, implementation,
        integration and support of IVC partner products and services. We are the
        only
        company in the IVC to provide software solutions for underwriting, claims
        facilitation, management, auditing and estimating. We entered into a royalty
        license and distribution agreement with Microsoft pursuant to which we may
        integrate and redistribute Microsoft products with our solutions. We are
        not
        required to and do not pay any fees to Microsoft in order to participate
        in the
        IVC.
 
 *First
        American Real Estate Solutions Company*
 
 Basis100
        Corporation (acquired by the First American Real Estate Solutions, L.P.)
        and
        Bluebook jointly launched the original version InsureBASE in late 2003, a
        software solution that integrates with Bluebook’s replacement cost calculator
        and Basis100’s automated property valuation technology, or AVM. After the
        acquisition of Basis100 Corporation by First American, the original InsureBASE
        software solution had to be updated to incorporate the policies and data
        structures of the First American database of which the Basis 100 database
        was a
        subset. We entered into a new joint license and revenue share agreement with
        First American. For a discussion of the terms of our agreement with First
        Real
        Estate Solutions Company see the discussion under the caption “Management’s
        Discussion and Analysis of Financial Condition and Results of Operation -
        Commitments and Contingencies - Joint License & Revenue Share
        Program.”
 
 **SERVER
        CAPACITY**
 
 Our
        software solutions are mostly internet based and provide customers with the
        ability to access and process information over the internet. In order to
        ensure
        that our server capacity is sufficient to handle the flow of traffic generated
        by the sales of our software solutions, prior to deployment of any new client
        contracts, we analyze the necessary bandwidth and hardware needed to properly
        deploy the new client and its user base. If necessary, we add the appropriate
        amount of hardware and bandwidth for each new customer prior to deploying.
        In
        this way, we have the proper amount of equipment and bandwidth for successful
        deployments.
 
 **SECURITY
        MEASURES**
 
 Several
        of our software solutions are designed to maintain and manage customers’
information so that it is accessible over the Internet. The Company has taken
        the safety measures described below to ensure that customers’ information is
        kept secure and is not accessible by non-related parties:
  —
            We
                have 128 bit encryption of our customer information and other
                data.  —
            Firewalls
                have been set in place to help prevent unauthorized access to customer
                information and other data.  —
            Our
                data sits on a separate server than the application accessed by our
                customers to retrieve data.  —
            No
                downloads from our server that are over 1 megabyte are
                permitted.  —
            At
                any one time, only two persons have access to our data with a sign
                in and
                sign out sheet including a log-in security
                password.  **DISTRIBUTION**
  We
        market
        and sell THE BLUEBOOK and B.E.S.T.7.5 products primarily through the mail,
        conventions and the Internet using the interactive sales tool on Microsoft’s
        terminal services solution. We market and sell to vendors in the insurance,
        residential real estate, construction and related markets (e.g., independent
        adjusters, appraisers, inspectors, lenders and repair service providers)
        and
        others that may be involved in the restoration, repair, insurance validation
        or
        replacement of a residential structure, including, contents replacement,
        additional living expenses and temporary housing. We target these clients
        via
        mail lists purchased by the Company or provided by insurance carriers, our partners, clients and customers. Microsoft’s terminal services solution, the
        Windows Terminal Server, enhances our ability to demonstrate the capabilities
        of
        our software solutions without actual installation of the software solutions.
        When users run an application on the Windows Terminal Server, the application
        execution takes place on our server, and only keyboard, mouse and display
        information is transmitted over the network.
  
  B.E.S.T.Central
        and B.E.S.T.Net will be sold by direct, on-site demonstrations or by authorized
        partners and resellers, such as Consulting Groups and VAR. Permission for
        on-site demonstrations comes with an invitation from the potential client
        either
        by phone or on-site. If the client grants permission for an on-site
        demonstration or a live demonstration via the internet, the sales representative
        provides a web site address where the potential client can view the software.
        The process for the delivery of these software solutions usually requires
        a
        demonstration and a response to a Request for Proposal. A Request for Proposal
        is a questionnaire that a potential client or managing organization provides
        to
        a select group of vendors questioning each vendor as to the specific
        capabilities of such vendor’s solutions and whether such solutions provide the
        capabilities the client requires. Potential clients may also require a Proof
        of
        Concept, which entails the use of the software solution by a much smaller
        group
        of potential client users such that the users can test the software solution
        and
        validate its capabilities or shortfalls.
  Independent
        vendors such as policyholders, contractors and sub-contractors who desire
        to
        utilize B.E.S.T.Central and B.E.S.T.Net to electronically receive assignments,
        will be able to purchase a compatible license to B.E.S.T.Central or use a
        portal
        connection or an integrated version of the installed B.E.S.T.8 software.
        Customers of B.E.S.T.Central and B.E.S.T.Net may also elect to send assignments
        via email to independent vendors who do not purchase a compatible license
        to use
        the software. While customers of B.E.S.T.Net and B.E.S.T.Central can receive
        assignments via the Internet, those who do not purchase a compatible license
        will not be able to directly participate or be knowledgeable of the claims
        process on a real time basis.
  Currently,
        users of our B.E.S.T.7.5 software that have an Internet connection receive
        software updates and upgrades over the Internet using an “automatic update”
feature included in the software. Users who do not have an Internet connection,
        or do not wish to receive updates via the Internet, receive updates quarterly
        by
        delivery of a compact diskette or DVD as long as they remain on the upgrade
        plan. We plan to continue to sell and deliver software updates and upgrades
        using the Internet or by delivery of a compact diskette or DVD. Even though
        our
        BE.S.T.Net and B.E.S.T.Central software solutions are web based, these software
        solutions will also require updates and upgrades because they are distributed
        to
        our customers via a separate install on the Company’s local servers. Users of
        these software solutions can choose to receive updates and upgrades over
        the
        Internet. However, a customer may not wish to have the upgrades installed
        for
        purposes of maintaining consistency and control.
 
 THE
        BLUEBOOK and our software solutions are sold throughout the United States
        and
        Canada. The Company has built thousands of variance tables that cover most
        cities across the United States and Canada and identify differences in labor,
        material and equipment costs. Each such variance table contains a multitude
        of
        data elements that have been researched over the past forty years. Data elements
        are factors that affect the labor, material and equipment costs in the variance
        tables. Through the use of these variance tables, we are able to extract
        pricing
        information that accounts for the locality differences in repair and supply
        cost.
  **CUSTOMERS**
  Our
        existing base of users of THE BLUEBOOK includes thousands of insurance
        companies, contractors and service providers. We continue to sell THE BLUEBOOK
        and also have several hundred installations of our B.E.S.T.7 and new 7.5
        version
        estimating software solution. We have four partner distributors of our
        InsureBASE solutions and expect to demonstrate, test and sell B.E.S.T.Net
        and
        B.E.S.T.Central to our existing and new client base through direct sales
        and our
        strategic partners.
  We
        are in
        discussions or have signed proof of concept agreements with several resellers
        and providers for the use of InsureBASE and B.E.S.T.7.5 products. Although
        our
        revenues are currently not concentrated among a relatively small number of
        customers, we expect that a significant portion of our future revenues coming
        from sales of our new products, Insure to Value, InsureBASE, B.E.S.T.Net
        and
        B.E.S.T.Central, will come from a relatively smaller number of customers.
        Therefore, in the future, the loss of any one significant customer, or a
        decrease in the level of sales to any one significant customer, could harm
        our
        financial condition and results of operations.
  **DEVELOPMENT
        OF PRODUCTS**
  The
        industry in which we compete is subject to rapid technological developments,
        evolving industry standards, changes in customer requirements and new product
        introductions. As a result, our success depends, in part, on our ability
        to
        continue to enhance our existing software solutions and to develop and introduce
        new software solutions that improve performance and reduce total cost associated
        with the insurance claim process. We have invested significantly in product
        development. We continue to enhance and extend our products and to increase
        the
        efficiency, performance and management capabilities of our data, estimating,
        underwriting and claims management solutions.
 
 The
        Company has built thousands of variance tables that cover most cities across
        the
        United States and Canada containing a multitude of data elements that have
        been
        researched over the past forty years. The Company has automated access to
        many
        of the data elements. Information for other data elements are gathered from
        phone research and feedback from our users.
 
 For
        the
        years ended December 31, 2005 and December 31, 2004, we spent approximately
        $117,000 and $554,000 in development of our products, respectively. Of this
        amount, $375,923 for the year ended December 31, 2004 was expensed as the
        products had not reached technological feasibility as required by S.F.A.S.
        No.
        86. Funds for these investments came from revenues from operations, loans
        from
        officers and investors and a private placement of our common stock. These
        costs
        were primarily for the development of our B.E.S.T.7, B.E.S.T.8, B.E.S.T.Net,
        B.E.S.T.Central and InsureBASE products. We expect to continue in the
        maintenance and development of products. Once the development of B.E.S.T.Net
        and
        B.E.S.T.Central is complete, we expect our development costs to decrease.
  
 
 **COMPETITION**
  We
        believe our primary competition for our software solutions is from Xactware,
        Inc., Marshall & Swift and Simsol Software, Inc. Our primary competition for
        THE BLUEBOOK is from RS Means Engineering and the Craftsman Book Company.
  As
        the
        market for our products evolves, additional technologies may become available
        for estimating, underwriting, and claims management and processing. Software
        companies, insurance companies or other companies may develop competitive
        products. To the extent that these products provide the ability to integrate
        information from, among other participants, the agent, insurer, administrator,
        vendor and supplier into the end-to-end process, they may compete with our
        current and future products. We believe the competitive factors in this market
        include product performance and features, product reliability, price, ability
        to
        meet delivery schedules, customer support and technical support.
  Although
        we believe we have an advantage over our competitors by having access to
        our
        proprietary data and processes, some of our competitors have significantly
        greater human and financial resources. As a result, these competitors could
        adopt more aggressive pricing policies and devote greater resources to the
        development, promotion and sale of their products. These advantages could
        allow
        them to respond more quickly to changes in customer and market requirements.
        In
        addition, some of our competitors may be able to leverage their existing
        relationships to discourage these customers from purchasing additional products
        from us. These competitors may also be able to persuade our customers to
        replace
        our products with their products. Increased competition may result in reduced
        product prices, lower gross margins, reduced profitability and reduced market
        share. There can also be no assurance that we will be able to compete
        successfully against current or future competitors or that current or future
        competitive pressures will not materially harm our business. See “Risk
        Factors.”
 
 **INTELLECTUAL
        PROPERTY AND ROYALTIES**
 
 We
        rely
        on a combination of trademarks, copyrights and trade secrets that we have
        used,
        in some cases, for over forty years. We also rely on confidentiality agreements
        and other contractual restrictions with employees and third parties to establish
        and protect our proprietary rights. Despite these precautions, the measures
        we
        undertake may not prevent infringement of our proprietary technology and
        data.
        These measures may not preclude competitors from independently developing
        products with functionality or features similar to our products. We currently
        do
        not hold any patents for our software products.
  We
        may
        receive in the future notice of claims of infringement of other parties’
proprietary rights. Infringement or other claims could be asserted against
        us in
        the future, and it is possible that past or future assertions could harm
        our
        operations and financial condition. Any such claims, with or without merit,
        could be time-consuming, result in costly litigation and diversion of technical
        and management personnel, cause delays in the development and release of
        our
        products, or require us to develop non-infringing technology or enter into
        royalty or licensing arrangements. Such royalty or licensing arrangements
        may
        require us to license back our technology or may not be available on terms
        acceptable to us, or at all. For these reasons, infringement claims could
        materially harm our business. See “Risk Factors.”
 
 As
        part
        of the Amended and Restated Asset Purchase and Sale Agreement, dated September
        15, 2001, we are obligated to pay a royalty to Daniel E. Josipovich and Dorothy
        E. Josipovich, co-founders of our business, in the amount of 6% of Net revenue,
        defined as the aggregate of all gross revenues, sales, and receipts of whatever
        nature or kind received by us, less any returns, rebates, discounts,
        allowances , rejections and credits, and less the actual out-of-pocket costs and expenses
        incurred, other than depreciation, reserves, taxes, interest and extraordinary
        expenses. The royalty is to be paid in perpetuity. As of December 31, 2005,
        under the above definition, we had negative net revenue, therefore no royalty
        expenses were accrued.
 
 Bluebook
        for Adjusters & Contractors, DeeJay Adjusting and Bluebook of Cleaning,
        Reconstruction and Repair Costs (including logos) are our trademarks. We
        further
        claim trademarks for B.E.S.T., B.E.S.T.Net, Insure to Value, InsureBASE,
        DataCentral and B.E.S.T.Central. We also own the following copyrights:
 
 —
              Adjuster/Contractor
                  Bluebook Southern California Edition, (C) 1979;
 
 —
              “New”
                  Bluebook for Adjusters & Contractors, (C) 1981;
 
 —
              The
                  Bluebook for Agents, Adjusters and Contractors, (C) 1981, 1984;
 
 —
              Bluebook
                  Estimating Systems Technology, (C) 1982;
 
 —
              The
                  Bluebook of Cleaning, Reconstruction and Repair Costs, (C) 1989,
                  1997,
                  1999; and
 
 —
              The
                  Bluebook of Cleaning, Reconstruction and Repair Costs, Pocket Editions,
                  (C) 1989, 1999, 2000, 2001, 2002, 2003, 2004 and 2005.
  
 
 **EMPLOYEES**
 
 As
        of
        June 7, 2006, we had nine (9) full-time employees and no part-time employees.
        We
        have not experienced any work stoppages and consider our relations with
        employees to be good. Competition for technical employees in the software
        industry continues to be significant. We believe that our success depends,
        in
        part, on our ability to hire, assimilate and retain qualified personnel.
        We
        cannot assure you that we will continue to be successful at hiring, assimilating
        and retaining employees in the future.
 
 **RISK
        FACTORS**
 
 An
        investment in our common stock involves a very
        high
        degree of risk. You should carefully consider the risks described below,
        as well
        as other information contained in this report, before investing in our common
        stock. All material risks and uncertainties presently known to us are described
        below. If any of these risks occur, our business could suffer, the market
        price
        of our common stock could decline and you could lose all or part of your
        investment in our common stock.
 
 **Risks
        Related to Our Business**
 
 ***We
        have incurred losses from operations since inception and anticipate future
        losses. If we cannot achieve or sustain profitability for an interim period,
        we
        may not be able to fund our expected cash needs or continue our operations.***
 
 We
        have
        incurred net losses since inception. We anticipate that we will continue
        to
        incur additional operating losses in the near term. These losses have resulted
        principally from expenses incurred in research and development, sales and
        marketing and general and administrative expenses. Even though we expect
        to
        achieve profitability, we may not be able to sustain or increase profitability
        on a quarterly or annual basis. If we cannot achieve or sustain profitability
        for an interim period, we may not be able to fund our expected cash needs
        or
        continue our operations.
  ***Our
        independent auditors have raised substantial doubt about our ability to continue
        as a going concern.***
  We
        have
        experienced losses since inception, incurred negative cash flows from operations
        since 2001, and, as of December 31, 2005, had an accumulated deficit of $11.7
        million. Cash used in operations for the years ended December 31, 2001, 2002,
        2003,2004, and 2005 were $689,645, $173,249, $ 1,120,154, $831,050,
        and $1,639,417, respectively. We expect that we will continue to incur negative
        cash flows and require additional cash to fund our operations and implement
        our
        business plan. The continued development of our technology and products will
        require significant additional capital investment. Our financial statements
        have
        been prepared assuming that we will continue as a going concern. The auditor’s
        reports on our financial statements state that there is substantial doubt
        about
        our ability to continue as a going concern.
 
 ***We
        need additional capital in order to continue as a going concern and any required
        capital may not be available on acceptable terms or at all. If adequate funds
        are not available, we may be required to curtail our operations and reduce
        spending, or obtain funds on unfavorable terms.***
  Our
        cash
        balance as of July 31, 2006 was approximately $76,000.
  We
        plan
        to actively seek additional funding in order to continue as a going concern.
        Our
        cash requirements for the next twelve months are expected to be approximately
        $3
        million. Approximately $2.5 million is required to eliminate the working
        capital
        deficit while $.5 million would be required to fund negative cash flow from
        operations until sufficient collections from revenues are achieved to fund
        operations. We intend to seek outside debt and/or equity financing to supplement
        anticipated cash from operations.
 
 In
        addition, we may be required to consider raising additional funds through
        one or
        more of the following: (1) sale of various Company assets, including our
        proprietary databases ;  and
        (2)
        licensing of our technology on unfavorable terms. The sale of all or part
        of our
        proprietary databases or the licensing of our technology on unfavorable terms
        will result in the Company either losing revenue generating assets through
        the
        sale of those assets or the Company being dependent on the ability of licensees
        of those assets to adequately market the information or technology on our
        behalf
        at reduced margins from those the Company may be able to attain if it were
        able
        to license those assets on more favorable terms. Licensing of the assets
        generates two streams of revenue, a one time fee and an ongoing fee for use
        based on the sales generated by the licensee. We would become dependent upon
        the
        abilities of the licensee to market the information or technology and would
        be
        receiving reduced ongoing revenue streams resulting from the unfavorable
        licensing terms. The remaining assets of the Company that would be available
        for
        sale would be nominal surplus furniture and equipment with little liquidation
        value. If we cannot raise the additional funds through these options on
        acceptable terms or with the necessary timing, management could also reduce
        operating expenses through reductions in sales and development personnel
        to
        decrease our cash expenditures.
 
 Additional
        capital may not be available on acceptable terms, if at all. The public markets
        may remain unreceptive to equity financings, and we may not be able to obtain
        additional private equity financing. Furthermore, any additional equity
        financing would likely be dilutive to stockholders, and additional debt
        financing, if available, may include restrictive covenants which may limit
        our
        currently planned operations and strategies. If adequate funds are not
        available, we may be required to curtail our operations significantly and
        reduce
        operating expenses through reductions in sales and development personnel,
        or to
        obtain funds by entering into collaborative agreements or other arrangements
        on
        unfavorable terms.
  
 
 ***The
        market price of our common stock , which is traded on the OTC Pink Sheets,
        has
        been and is likely to continue to be highly volatile, which may limit our
        ability to raise capital in the future or cause investment losses for our
        stockholders and result in stockholder litigation with substantial costs,
        economic loss and diversion of our resources.***
  The
        securities markets have experienced significant price and volume fluctuations
        and the market prices of securities of many public technology companies have
        in
        the past been, and can in the future be expected to be, especially volatile.
        For
        example, in 2003 our closing stock price ranged from a low of $0.20 to a
        high of
        $22.00, in 2004 our closing stock price ranged from a low of $0.80 to a high
        of
        $8.00, and in 2005 our closing stock price ranged from a low of $0.27 to
        a high
        of $5.01 These stock prices have been retroactively presented to
        reflect the one-for-twenty reverse stock split declared on November 17, 2004.
        Fluctuations in the trading price or liquidity of our common stock may harm
        our
        ability to raise capital through future equity financings. Factors that may
        have
        a significant impact on the market price and marketability of our common
        stock
        include:
  —
            announcements
                of technological innovations or new products by us or by our competitors;  —
            our
                operating results;  —
            developments
                in our relationships with strategic partners;  —
            litigation;  —
            economic
                and other external factors; and  —
            general
                market conditions.  In
        the
        past, following periods of volatility in the market price of a company’s
        securities, securities class action litigation has often been instituted.
        If a
        securities class action suit is filed against us, we would incur substantial
        legal fees and our management’s attention and resources would be diverted from
        operating our business in order to respond to the litigation.
 
 ***Our
        disclosure controls and procedures are not effective.***
 
 In
        March
        of 2005, the Company reviewed its capitalized Program Development Cost related
        to its B.E.S.T.Net and B.E.S.T.Central software products that were capitalized
        during 2002 to 2004. The Company determined that some of these costs previously
        capitalized did not meet the requirements for capitalization as they were
        incurred before the software product had reached technological feasibility
        as
        required by S.F.A.S. No. 86, as the prototype was not tested until February
        2003. This fact was not known at the time of capitalization, and upon a closer
        review, the changes have been accounted for as a restatement of the prior
        periods.
 
 The
        Company’s management, under the supervision and with the participation of our
        chief executive officer and principal financial officer, have reconsidered
        the
        effect on the adequacy of the Company’s disclosure controls and procedures (as
        defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act
        of
        1934) as of the end of the fiscal year ended December 31, 2004 in light of
        the
        error in the capitalization of software development costs. Management has
        determined that the following control deficiencies exist with regard to the
        preparation of our financial statements:
 
 —
            inadequate
                staffing and supervision leading to the untimely identification and
                resolution of certain accounting matters;  —
            failure
                to perform timely reviews; and  —
            inadequate
                preparation and insufficient review and analysis of certain operational
                financial statement account reconciliations.  —
            untimely
                reporting of capital stock transactions.  We
        continue to improve and refine our internal controls and we are committed
        to
        remediating the deficiencies in disclosure controls as expeditiously as
        possible. Lack of certain disclosure controls and procedures, could result
        in a
        misstatement of our financial statements. As of December 31, 2005 our internal
        controls were ineffective.
 
 ***We
        depend on two key personnel for our future success. If we lose our two key
        personnel or are unable to attract and retain additional personnel, we may
        be
        unable to achieve our goals.***
 
 Our
        future success is substantially dependent on the efforts of our management
        team,
        particularly Mark A. Josipovich, our Chairman of the Board, Chief Executive
        Officer, President and Treasurer, and Daniel T. Josipovich, our Chief Operating
        Officer and Director. Mark A. Josipovich has been the entrepreneurial driver
        of
        Bluebook’s strategic initiatives for the past 17 years and Daniel T . Josipovich has designed, directed and managed development of Bluebook’s products
        for the past 23 years. Mark A. Josipovich and Daniel T. Josipovich may terminate
        their employment at any time. The loss of the services of members of our
        management may significantly delay or prevent the achievement of product
        development and other business objectives.
  
 
 ***We
        have limited resources to devote to software development and commercialization.
        If we are not able to devote adequate resources to software development and
        commercialization, we may not be able to develop our software solutions.***
 
 Our
        strategy is to develop software solutions addressing underwriting and claims
        management. We believe that our revenue growth and profitability, if any,
        will
        substantially depend upon our ability to:
 
 —
            improve
                market acceptance of our current software solutions; 
 —
            complete
                development of new software solutions; and 
 —
            successfully
                introduce and commercialize new software solutions.  We
        have
        introduced some of our software solutions only recently and some of our software
        solutions are still under phased deployment and development. Among our recently
        introduced solutions are InsureBASE and Insured to Value. Although development
        of our B.E.S.T.Net and B.E.S.T.Central solutions are substantially complete,
        we
        are still in the process of developing an interface between B.E.S.T.Net,
        B.E.S.T.Central and B.E.S.T.8. Because we have limited cash to devote to
        product
        development and commercialization, any delay in the development of one solution
        or reallocation of resources to development efforts that prove unsuccessful
        may
        delay or jeopardize the development of our other product candidates. If we
        fail
        to develop new products and bring them to market, our ability to generate
        additional revenue will decrease. Our future operating results could be harmed
        as a result of increased expense for our product development.
  In
        addition, our solutions may not achieve satisfactory market acceptance, and
        we
        may not be able to successfully commercialize them on a timely basis, or
        at all.
        If our products do not achieve a significant level of market acceptance,
        demand
        for our products will not develop as expected.
  ***We
        may be unable to successfully market and distribute our products and implement
        our distribution strategy, which could limit our ability to sell our products
        and reduce our revenues.***
 
 The
        market for claims management, estimating and underwriting solutions are highly
        fragmented. We market and sell THE BLUEBOOK and B.E.S.T.7.5 products primarily
        through the mail, conventions and the Internet using the interactive sales
        tool
        on Microsoft’s terminal services solution. Our software solutions,
        B.E.S.T.Central and B.E.S.T.Net are to be sold by direct, on-site demonstrations
        and by authorized partners and resellers. We may not be able to successfully
        develop and maintain our marketing, distribution or sales capabilities. If our
        marketing and distribution strategy is unsuccessful, or if we do not maintain
        or
        expand our relationships with our existing user base and strategic partners,
        our
        ability to sell our products will be limited and our revenues will decrease.
        In
        addition, our future operating results could be harmed as a result of increased
        expenses for marketing.
  ***We
        may face costly intellectual property disputes, which may result in substantial
        expense to us and significant diversion of the efforts of our technical and
        management personnel.***
  Although
        we do not expect to be subject to any intellectual property disputes, we
        may be
        subject to such claims. Our ability to compete effectively will depend in
        part
        on our ability to develop and maintain proprietary aspects of our technology
        and
        either to operate without infringing the proprietary rights of others or
        to
        obtain rights to technology owned by third parties. We rely on proprietary
        information and techniques to develop and maintain our competitive position.
        Others may independently develop substantially equivalent proprietary
        information and techniques or otherwise gain access to our trade secrets.
        We
        currently do not hold any patents for our software products.
  The
        defense of intellectual property suits, proceedings, and related legal and
        administrative proceedings are costly, time-consuming and distracting. We
        may
        also need to pursue litigation to protect trade secrets or know-how owned
        by us,
        or to determine the enforceability, scope and validity of the proprietary
        rights
        of others. Any litigation will result in substantial expense to us and
        significant diversion of the efforts of our technical and management personnel.
        Any adverse determination in litigation could subject us to significant
        liabilities to third parties. Further, as a result of litigation or other
        proceedings, we may be required to seek licenses from third parties that
        may not
        be available on commercially reasonable terms, if at all.
 
 ***Our
        principal stockholders have substantial control over our affairs, which could
        delay, defer or prevent a change of control or impede a merger or consolidation,
        or other business combination which our stockholders may otherwise view
        favorably and which may decrease the price of our common stock.***
  The
        Josipovich family, collectively, beneficially owns 5,100,049 shares of common
        stock, which is 54.7% of the total number of shares of common stock currently
        issued and outstanding, not taking into account shares of common stock
        underlying outstanding warrants. The Josipovich family has the ability to
        exert
        substantial influence over all matters submitted to a vote of the stockholders
        of Bluebook, including the election and removal of directors and any merger,
        majority control over the board of directors, consolidation or sale of all
        or
        substantially all of our assets. In addition, they can dictate the management
        of
        our business and affairs. This concentration of ownership could have the
        effect
        of delaying, deferring or preventing a change in control or impeding a merger
        or
        consolidation, takeover or other business combination which you, as a
        stockholder, may otherwise view favorably and which may decrease the price
        of
        our common stock.
  
 
 ***Future
        sales of our common stock that are eligible for sale by our stockholders
        may
        decrease the price of our common stock.***
  We
        had
        8,760,221 shares of common stock outstanding on December 31, 2005. Of these
        shares, 1,550,605 are held by directors, executive officers and other affiliates
        and will be subject to volume limitations under Rule 144 under the Securities
        Act. In addition, there were outstanding warrants to purchase 846,688 shares
        of
        our common stock. If our stockholders sell a large number of shares of common
        stock or if we issue a large number of shares in connection with future
        acquisitions or financings, the market price of our common stock could decline
        significantly. In addition, the perception in the public market that our
        stockholders might sell a large number of shares of common stock could cause
        a
        decline in the market price of our common stock.
 
 **ITEM
        2. DESCRIPTION OF PROPERTY**
 
 Our
        principal administrative, sales and marketing, customer support, and research
        and development facilities are located in approximately 3,732 square feet
        of
        leased office space in Lake Forest, California. We lease this office space
        from
        Cal-West Industrial Properties, LLC, a California limited liability company.
        In
        September 2004, we entered into a lease agreement for this office space.
        The
        lease was extended in September 2005 for a one year term. The monthly base
        rent
        for our current facility is $4,665 and we must pay as additional rent, our
        proportionate share of expenses, taxes and utilities estimated to be $2,508
        per
        month.
  We
        do not
        have any policies with respect to investments in real estate or interests
        in
        real estate, real estate mortgages or securities of or interests in persons
        primarily engaged in real estate activities.
 
 **ITEM
        3. LEGAL PROCEEDINGS**
 
 On
        June
        23, 2005, Bluebook was named a defendant in Eric Allison v. Christopher Albrick,
        The Bluebook International Holding Company and Mark Josipovich - Placer County
        Superior Court Case No. SCV18138. Plaintiff Allison filed this action for
        Breach
        of a Written Contract and Foreclosure of Security Interest. The action arises
        from a written promissory note (“Note”) from Defendant Albrick as borrower in
        favor of Plaintiff dated August 11, 2004 in the face amount of $450,000.
        This
        Note is secured by 418,074 shares of stock in Bluebook owned by Albrick as
        a
        result of Albrick converting a loan by him to Bluebook to equity in Bluebook
        (the “Bluebook Stock”). The causes of action in the original Complaint allege
        liability on the part of Bluebook based on allegations that Bluebook is the
        “alter ego” of Albrick.
  Bluebook
        has cross-complained against Albrick for indemnity in that Albrick is the
        obligor under the Note, not Bluebook. Albrick secured his Note in favor of
        Plaintiff Allison with his Bluebook Stock. Plaintiff has made demand on Albrick
        to deliver the Bluebook Stock to him under the terms of the Note and collateral
        agreement.
  Defendant
        Albrick has cross-complained against Bluebook for breach of oral agreement
        and
        fraud contending that the Bluebook Stock delivered to Albrick in November
        2004
        would be registered in December 2004. Albrick contends that he has been unable
        to sell his Bluebook Stock, which in turn has prevented him from being able
        to
        pay the $450,000 due Plaintiff Allison under the Note. Albrick further alleges
        a
        cause of action for Interference with Prospective Economic Advantage, claiming
        that his inability to sell the Bluebook Stock has damaged further economic
        activity between himself and Plaintiff Allison, with unknown damages to him.
        Finally, Albrick alleges Bluebook is in breach of a consulting agreement
        between
        himself and Bluebook, and that Bluebook owes him $71,000 for “consulting
        services”.
  Bluebook
        plans to vigorously defend this action by Plaintiff and Albrick. Bluebook
        was
        not a party to the Note and has no responsibility for the obligation of Albrick
        who borrowed the funds under the Note from Plaintiff. Moreover, Bluebook
        as a
        publicly traded company, contends it certainly is not the “alter ego” of
        Albrick. As regards to the
        Cross-Complaint of Albrick, Bluebook intends to show there was no agreement
        to
        register the Bluebook Stock in December 2004, and Albrick has been paid in
        full
        for his past consulting services.
  As
        a
        general matter, we are subject to various legal proceedings, claims, and
        litigation that arise in the normal course of our business. While the outcome
        of
        these matters is currently not determinable, we do not expect that the ultimate
        costs to resolve these matters will have a material adverse effect on our
        financial position, results of operations, or cash flows.
  **** **ITEM
        4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.**
 
 No
        matters were submitted to a vote of security holders during the fourth quarter
        of fiscal year 2005.
  
  **PART
        II**
 
 **ITEM
        5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS**
 
 *Common
        Stock Prices*
  Our
        common stock is quoted on the OTC Bulletin Board under the symbol “BBKH.” The
        following table sets forth the high and low bid information of the common
        stock
        for the quarters indicated as quoted on the OTC Bulletin Board.
  **2004(1)**
              
              **2005****High**
              
              **Low**
              
              **High**
              
              **Low**First
                  Quarter
              
              $
              8.00
              
              $
              2.20
              
              $
              5.01
              
              $
              1.20Second
                  Quarter
              
              $
              5.00
              
              $
              2.40
              
              $
              2.00
              
              $
              0.51Third
                  Quarter
              
              $
              6.00
              
              $
              1.00
              
              $
              1.00
              
              $
              0.40Fourth
                  Quarter
              
              $
              5.01
              
              $
              0.80
              
              $
              0.75
              
              $
              0.27
 
 (1)  Trading
        under ticker symbol BBIC through November 22, 2004 and under ticker symbol
        BBKH
        thereafter.
  The
        source of the above high and low bid information is the Yahoo! Finance website
        at http://finance.yahoo.com. The above quotations represent prices between
        dealers without adjustments for retail markups, markdowns or commissions
        and may
        not represent actual transactions. The stock prices above have been
        retroactively stated to reflect the 1 for 20 reverse stock split declared
        on
        November 17, 2004.
  According
        to the records of our transfer agent, we had 167 stockholders of record of
        our
        common stock at July_1, 2006.
  *Dividend
        Policy*
 
 We
        have
        never declared or paid any cash dividends on our capital stock and do not
        anticipate paying any cash dividends on our common stock in the foreseeable
        future. We currently expect to retain future cash flows to finance our
        operations and fund the growth of our business. Any payment of future dividends
        will be at the discretion of our Board of Directors and will depend upon,
        among
        other things, our earnings, financial condition, capital requirements, level
        of
        indebtedness, contractual restrictions in respect to the payment of dividends
        and other factors that our Board of Directors deems relevant.
 
 *Recent
        Sales of Unregistered Securities*
 
 We
        have
        issued the following unregistered securities during the period covered by
        this
        report.
 
 On
        March
        31, 2004, we entered into a loan agreement with Keith Klein for $120,000,
        of
        which $115,000 was outstanding as of December 31, 2005. The loan bears interest
        at the rate of 10% per annum and was originally due
        June
        30, 2005. On
        November 23, 2005, the Company issued 30,000 shares of common stock to Mr.
        Klein
        in consideration for an extension of the maturity
        date of the loan to September 15, 2006. The
        common stock price on the date of issuance was $0.50 per share. The
        Company is currently subject to a penalty under the loan agreement in the
        amount
        of $7,500 for non-payment of amounts that were due to Mr. Klein by July 15,
        2006. The loan is
        secured by the Company’s accounts receivables, tax refunds, deposit accounts,
        and cash and cash equivalents. If the collateral securing the loan is
        insufficient, the loan is also secured by the shares of the Company’s common
        stock held by Mark A. Josipovich, our Chairman of the Board, Chief Executive
        Officer, President, and Treasurer. The loan requires that the Company comply
        with certain covenants, including preserving its corporate existence,
        maintaining all rights and permits, complying with all applicable laws, and
        maintaining its properties used or useful in its business. The Company was
        in
        compliance with these covenants as of July
        31,
        2006.
  On
        November 25, 2005 the company issued 50,000 shares of common stock to Mr. Klein as
        part of a one year consulting agreement. The common stock price on the date
        of
        issuance was $0.50 per share.
 
 On
        January 18, 2005 the Company issued a warrant to Scott Liolios, a consultant
        to
        the Company, as part of a one year consulting agreement. The warrant would
        allow
        Mr. Liolis to purchase up to 160,000 shares of common
        stock at a
        price of $1.40. The warrant was immediately exercisable on issuance and expires
        three years from the date of issuance. The warrant is not reliant upon any
        future conditions.
  During
        the period of April 21, 2006 through July 6, 2006
        the Company issued 576,109 shares of the Company’s common stock to an employee
        and certain consultants to the Company.
  These
        common stock issuances were issued in reliance upon the exemptions from
        registration provided by section 4(2) of the Securities Act of 1933 as the
        securities were offered in private transactions which did not involve any
        public
        offering. The recipients of securities in each such transaction were not
        solicited through any form of general solicitation or advertising, represented
        their level of sophistication and their intention to acquire the securities
        for
        investment only and not with a view to or for sale in connection with any
        distribution thereof and appropriate legends were affixed to the share
        certificates and other instruments issued in such transactions. All recipients
        either received adequate information about us or had access, through employment
        or other relationships, to such information.
 
 
 **ITEM
        6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**
 
 The
        following discussion and analysis of our financial condition and results
        of
        operations should be read in conjunction with the Consolidated Financial
        Statements and supplementary data referred to in this prospectus. This
        discussion contains forward-looking statements that involve risks and
        uncertainties. Such statements, which include statements concerning future
        revenue sources and concentration, selling, general and administrative expenses,
        research and development expenses, capital resources and additional financings,
        are subject to risks and uncertainties, including, but not limited to, those
        discussed in this prospectus under “Risk Factors,” that could cause actual
        results to differ materially from those projected. The forward-looking
        statements set forth are as of July 31, 2006 , and
        we
        undertake no duty to update this information.
 
 **OVERVIEW**
 
 We
        provide proprietary data, software solutions and services that help automate,
        integrate, manage and quicken the underwriting and claims process. Our
        underwriting solutions (as described below), provide for validation and
        automation of structure replacement costs for quoting residential structure
        replacement costs and insurance premiums in significantly less time than
        is
        common today. These products give insurance, appraisers, mortgage bankers
        and
        lenders greater automation and validation and extend premium quoting and
        policy
        fulfillment capabilities through automation. Our claims solutions deliver
        paperless claims information to insurance personnel and directly to the outside
        service vendors (e.g., contractors, inspectors, adjusters, repair professionals,
        among others) through our integrated software solutions. Our claims solutions
        provide the insurance carrier with the ability to electronically track and
        manage claims from the first report through its completion.
  Our
        claims solutions will deliver paperless claims information to insurance
        personnel and directly to the outside service vendors (e.g., contractors,
        inspectors, adjusters, repair professionals, among others) through our
        integrated software solutions. Our claims solutions provide the insurance
        carrier with the ability to electronically track and manage claims from the
        first report through its completion.
  The
        Company’s independent auditors have raised doubts regarding the ability of the
        Company to remain as a going concern. The Company has a net loss from operations
        of $2,669,014 **** and
        a
        negative cash flow from operations of $1,639,417 for the year ended December
        31,
        2005, and has a working capital deficiency of $2,653,260 and a shareholders’
deficiency of $1,884,599 as of December 31, 2005. These factors raise
        substantial doubt about the Company’s ability to continue as a going concern.
        Without realization of additional capital, it would be unlikely for the Company
        to continue as a going concern.
 
 The
        Company’s operating cash flows for the twelve months ended December 31, 2005
        were funded primarily through cash existing at December 31, 2004, revenues
        from
        operations and loans from related parties. The Company believes it has
        sufficient cash to meet its immediate working capital requirements while
        additional operations and development funds will be sought from loans from
        officers or principal stockholders of the Company and third party
        financing.
 
 The
        Company has recently taken steps to improve liquidity, including seeking
        additional funding and deferment of a portion of the salaries of Mark A.
        Josipovich, the Company’s Chief Executive Officer, Daniel T. Josipovich, the
        Company’s Chief Operating Officer, and their sister, Michela Josipovich, and the
        consulting fees of Daniel E. Josipovich, the father of the Company’s executive
        officers Mark A. Josipovich and Daniel T. Josipovich. Such deferment is made
        on
        an informal basis based on available working capital for operating expenses.
        As
        of December 31, 2005, the total amount of the deferred balance was approximately
        $429,416. Deferred balances do not earn interest and no interest will be
        paid
        related to the deferrals noted above. If the Company is not successful in
        raising additional capital, it will further reduce operating expenses through
        headcount reductions and modify its business model and strategy to accommodate
        licensing of its software solutions and databases on unfavorable terms. Further,
        the Company will continue sales of THE BLUEBOOK and delivery of the B.E.S.T.
        7.5
        software solution and newer InsureBASE and Insured to Value software solutions.
        The Company does not expect any significant impact on its sales of THE BLUEBOOK,
        B.E.S.T. 7.5 and InsureBASE software solutions from such restructurings;
        however, they may adversely affect the development of any new software
        solutions. The Company believes the change in product focus, from delivery
        of
        software solutions on disk to the delivery of web-based software solutions,
        will
        result in future increases in sales over those of prior years.
 
 The
        Company has recently accepted a loan of up to $1,250,000 at an annualized
        interest rate of 12% due in six months, unless otherwise extended, from the
        final date of the final closing of the loan which accrues interest. As of
        December 31, 2005 the Company was advanced of $50,000 from the facility.
        This
        loan is secured by all of the assets of the Company up to the amount owed.
 
 **SOURCES
        OF REVENUE**
 
 We
        generate revenue by sales of THE BLUEBOOK handbook and software estimating
        solutions. We also generate revenue each time a claim or underwriting (premium
        replacement cost) transaction is processed through our Insure to Value and
        InsureBASE software solutions. We provide our own replacement cost data and
        also
        integrate data provided by vendors in order to provide additional services
        or
        automation that is often requested as part of the underwriting process (e.g.,
        homeowner related hazard data, credit, general public data). When outside
        data
        sources are utilized, we are obligated to share our revenues with these
        providers as well as with our larger distribution channel partners, which
        reduces the percentage of revenues we recognize from each data record delivered.
        Currently we have entered into one such arrangement with First American,
        which
        is on an ongoing basis and began in the third quarter of 2005. First American
        receives 40% of the gross sales revenues when the Company sells our InsureBASE
        product, which utilizes First American’s database. Alternatively, the Company
        receives 40% of the gross sales revenues when First American makes a sale
        of any
        of their products that utilizes THE BLUEBOOK database elements. We plan to
        increase the number of transactions that are processed through similar
        agreements that integrate our software solutions into large distribution
        channels and insurance carrier and agency management systems. In addition,
        the
        Company expects to generate revenue from the delivery of its B.E.S.T.Net
        and
        B.E.S.T.Central software solutions, once they become marketable.
  
 
 **OUTLOOK
        FOR OUR BUSINESS**
 
 Our
        revenue growth has been and will continue to be dependent on our ability
        to
        increase the number of licenses that are delivered and transactions that
        are
        processed through our software solutions and our ability to expand the data
        services we provide to the insurance and related industries. We have recently
        signed agreements with several new distributors and partners, signed recent
        contracts with insurance, mortgage banking, appraisal and lenders and completed
        a joint revenue and share agreement for InsureBASE with the First American
        Real
        Estate Solutions Company (FAF:NYSE). We believe these efforts will increase
        the
        number of transactions that are processed through our software solutions.
        Our
        ability to continue this growth will depend on our ability to sell our
        technologies and data to insurance, mortgage banking and related services
        providers including larger distribution networks that will deliver our software
        data solutions.
  In
        addition, we have automated much of our data aggregation process through
        the
        development of DataCentral, which is the automated data collection hub of
        our
        InsureBASE software solution. Data Central allows us to significantly reduce
        the
        amount of manual effort and costs typically associated with collecting and
        maintaining the property replacement database by automating many of the
        processes. We enhanced the size of the InsureBASE property database to nearly
        70
        million accessible records by combining Bluebook data with access to external
        data providers through Data Central. We continue to work with several other
        national data providers for joint distribution opportunities within the
        insurance, mortgage and banking industries.
  We
        believe this strategy of centralizing, automating and bringing online the
        full
        capabilities of our data and integrating it with our InsureBASE, Insure to
        Value
        and claims solutions, B.E.S.T.Net and B.E.S.T.Central, will expand our markets
        and increase utilization of our software solutions. Our target market and
        opportunities will be expanded to include those clients that require an
        automated delivery and claims information system. We believe our Internet
        deliverable and accessible solutions will allow customers easier and more
        immediate access to replacement cost information.
  **OPERATING
        EXPENSES**
 
 Our
        personnel expenses are our largest expense and consist of salaries, commissions,
        benefit plans and other payroll related costs. Our consultants and personnel
        increased from 11 to 21 during the first quarter of 2005. We have since reduced
        this number to a total of 10 consultants and full time personnel as of December
        31, 2005. We intend to hire additional personnel primarily in the areas of
        sales
        and marketing, administrative and software solution development when our
        anticipated revenue growth warrants it.
 
 **SOFTWARE
        SOLUTIONS AND DEVELOPMENT COSTS**
 
 Software
        Solutions and development costs consist of salaries and other costs of
        employment of our software solutions development staff as well as outside
        consultants. We plan to increase the number of personnel and consultants
        who are
        working to enhance and fully integrate in order to provide increased
        deliverability and simplified access to our current software data solutions.
        We
        expect this increase in personnel and consultants will result in an increase
        in
        our research and development expenses. We estimate that we will generate
        meaningful revenue from our research and development efforts relating to
        our
        claims and underwriting software solutions in the second half of 2005.
  **RECENT
        EVENTS**
  During
        2005 the company received an advance of $50,000 from Bathgate Capital Partners
        that was unsecured, bore interest at a rate of 12% per annum, with no formal
        terms of repayment. This advance was outstanding at December 31, 2005, and
        was
        made in anticipation of the Company and Bathgate entering into a formal
        agreement.
 
 Subsequent
        to December 31, 2005, the Company received further advances from Bathgate
        of
        $944,000. On July 23, 2006 the Company and Bathgate formalized a note agreement
        relating to these advances that allows the company borrowings up to $1,250,000.
        Advances under the financing bear interest at a rate of 12% per annum, and
        are
        due six months from the final date of the closing of the loan. This loan
        is
        secured by all of the assets of the Company up to the amount owed. As of
        August
        16, 2006 the Company was obligated to issue Bathgate Capital Partners, a
        warrant
        to purchase up to 1,250,000 shares of common stock at $1.05 dollars per share
        as
        a debt placement fee.
 
 On
        April
        4,2006, Paul Sheriff resigned from the board of directors due to conflicts
        in
        his schedule. The Company has plans to replace this vacant position.
 
 On
        May 4,
        2006 and Pursuant to Rule 477(a) promulgated under the Securities Act of
        1933,
        as amended (the "Securities Act"), The Bluebook International Holding Company
        (the "Company") applied for an order granting the immediate withdrawal of
        its
        Registration Statement on Form SB-2 originally filed on January 19, 2005,
        as
        amended by Amendment No. 1 thereto filed on April 24, 2005, as further amended
        by Amendment No. 2 thereto filed on September 7, 2005, and as further amended
        by
        Amendment No. 3 thereto filed on January 19, 2006, together with all exhibits
        thereto, Commission File No. 333-121882 (collectively, the "Registration
        Statement"). The Company and the Selling Stockholders under the Registration
        Statement have agreed at this time to request for withdrawal of the resale
        offering of shares of the Company's common stock and warrants contemplated
        in
        the Registration Statement. No shares of the Company's common stock or warrants
        have been sold under the Registration Statement.
  
  On
        June
        8, 2006, Mr. Klein extended the termination of his note until September 15,
        2006, in consideration of immediate payment upon execution of this agreement
        of
        $15,000 from the Company to Mr. Klein via wire issuance of the common shares
        currently due to Mr. Klein by the Company, including 18,000 additional shares
        of
        common stock.
        The agreement specified a penalty of $7,500 for non-payment of the total
        due Mr.
        Klein by July 15, 2006, except if payment of an additional $10,000 is made
        by
        July 15, 2006, in which case the non-payment penalty assessed on July 15,
        2006
        will be in the amount of $5,000. The additional payment of $10,000 was not
        made
        on July 15, 2006 and  the
        Company is
        liable
        to Mr. Klein for an additional $7,500. An additional penalty of $7,500 and
        15,000 shares of the Company’s common stock is due in the case Mr. Klein is not
        repaid in full by the extended termination deadline of September 15, 2006.
  As
        of
        March 15, 2006, Bathgate Capital Partners executed
        and filed a
        UCC - 1 against all of
        the Company’s assets.
 
 As
        of
        March 15, 2006, Daniel & Dorothy Josipovich executed and
        filed
        a Form UCC-1 against all of the
        Company ’s assets.
 
 As
        of
        April 23, 2006, the Company was not timely in its filings .
 
 As
        of
        July 14, 2006, the Company became a Gold Certified Partner of MS.
  Subsequent
        to December 31, 2005, Mr. Daniel E. Josipovich advanced $30,000 to the Company
        on January 16, 2006 and an additional $50,000 on the January 17, 2006. In
        addition, Mr. Josipovich extended the maturity of all notes due him from
        the
        Company to August 30, 2006.
 
 During
        the period of April 21, 2006 through July 6, 2006 the Company issued 576,109
        shares of the Company’s common stock valued at an aggreagate amount of $288,055
        to an employee and certain consultants to the Company.
 
 **RESULTS
        OF OPERATION**
 
 **Comparison
        of year ended December 31, 2005 to year ended December 31,
        2004**
 
 *Revenues* .
        Our
        revenues are derived primarily from sales of our B.E.S.T. software solutions,
        the Bluebook handbook and our InsureBASE software solution. Net revenues
        for the
        twelve months ended December 31, 2005 increased by $50,233, or 9%, to $619,747
        compared with net revenues of $569,514 for the twelve months ended December
        30,
        2004. The increase in revenue was related to the revenue from the sales of
        InsureBASE software solution. The Company is continuing its focus on the
        sale of
        InsureBASE software solution.
 
 *Operating
        Expenses* .
        Selling, general and administrative expenses increased by $1,206,664, or
        63%, to
        $3,122,432 for the twelve months ended December 31, 2005 compared to $1,915,768
        for the twelve months ended December 31, 2004. The increase is related to
        increased professional service and consulting fees the Company has incurred
        in
        the preparation of a stock registration covering unregistered common stock
        currently outstanding, high expenses in the first quarter of this year for
        costs
        associated with new hires and infrastructure costs, and liquidated damages
        related to the failure of the Company to file an effective registration
        statement for the stock sold in November of 2004.
 
 Software
        solution development costs were zero for the twelve months ended December
        31,
        2005, compared to $375,923 for the twelve months ended December 31, 2004.
        The
        company is not currently in the process of developing new software solutions,
        but is focused on bringing to market the Insure to Value and B.E.S.T.Net
        software solutions .
 
 Depreciation
        and amortization expense was $166,329 for the twelve months ended December
        31,
        2005, an increase of $25,627, or 18%, from $140,702 for the twelve months
        ended
        December 31, 2004. The increase was primarily due to amortization of our
        software solutions InsureBASE and Insure to Value, which began depreciating
        in
        the second and third quarter of 2005, respectively.
 
 *Interest
        Expense.* Interest
        expense was $41,459 for the twelve months ended December 31, 2005, or a decrease
        of $80,047 from interest expense of $121,506 for the twelve months ended
        December 31, 2004. The decline is the result of lower average balances for
        loans
        to related parties for the twelve months ended December 31, 2005 as related
        to
        the same period for 2004.
 
 *Net
        Loss* .
        For the
        twelve months ended December 31, 2005, we had a net loss of $2,711,273 or
        $0.31
        per share, compared with a net loss of $1,985,185, or $0.84 per share, for
        the
        twelve months ended December 31, 2004. The increase in net loss for the twelve
        months ended December 31, 2005 is primarily attributable to increased selling,
        general and administrative expenses .
  
  **LIQUIDITY
        AND CAPITAL RESOURCES**
 
 As
        of
        December 31, 2005, we had cash of $28,340, a net working capital deficiency
        of
        $2,653,260 and a shareholders’ deficiency of $ 1,884,599. We have
        no material commitments for capital expenditures as of December 31, 2005.
        Our
        cash requirements for the next twelve months are expected to be approximately
        $3,000,000.
  We
        plan
        to actively seek additional funding in order to meet our business plan. Our
        cash
        requirements for the next twelve months are expected to be
        approximately  **$** 3 **** million
        to fund negative cash flow from operations until the sufficient collections
        from
        revenues are achieved to fund operations. We intend to seek outside debt
        and/or
        equity financing to supplement anticipated cash from operations. We do not
        currently have any commitments for such financing and there is no assurance
        that
        we will be successful in obtaining such funds. Any funds received will primarily
        be utilized for selling, general and administrative expenses and required
        hardware infrastructure in connection with new customer acquisition. We plan
        to
        continue to invest in the development of our software solutions in the normal
        course of business including the integration of Microsoft's latest BizTalk
        release and SQL 2005 with our InsureBASE and B.E.S.T.Central software solutions.
        We expect the cost of this integration to be $120,000 **** and
        the
        timeframe for implementation to last through early to mid 2007. Upon further
        adequate funding, the Company also plans to hire three additional experienced
        sales and administrative executives, a senior sales management executive
        and a
        financial management executive in the last half of quarter four. We also
        plan to
        reduce some company debt obligations.
 
 As
        of
        July 7, 2006, cash balances were approximately $76,000 and our total
        indebtedness was approximately $2.2 million .
 
 Our
        2005
        operations and investment activities have been funded primarily through sales,
        loans from related and non-related parties and cash existing at December
        31,
        2004. Our 2004 operations and investment activities were funded primarily
        through sales, loans from related and non-related parties and the private
        placement of common stock to accredited investors. We have no material
        commitments for capital expenditures as of December 31, 2005.
  Net
        cash
        used from operating activities during the years ended December 31, 2005 and
        2004
        were $1,639,417 and $831,050, respectively. This increase in net cash used
        in
        operating activities was primarily due to an increase in selling, general
        and
        administrative expenses.
  Net
        cash
        used in investing activities was $119,369 for the year ended December 31,
        2005
        and $187,753 for the same period in 2004. The decrease in cash used for
        investing activities was primarily due to the completion of software solutions
        and the reduction in development of new software solutions.
  Net
        cash
        provided from financing activities was $252,813 for the year ended December
        31,
        2005 and $2,508,285 for the same period in 2004. The decrease in cash provided
        from financing activities was primarily due to the issuance of stocks, net
        of
        commissions of $1,902,585 at the end of 2004 used to fund most of the 2005
        loss
        from operations. The remaining amount of funds required for 2005 came from
        loans
        from a related party, an advance on receivables from a factor and advances
        from
        a bridge loan made in anticipation of a private placement of either debt
        or
        equity to be made sometime in 2006.
 
 We
        had a
        net loss of $2,711,273 **** and
        negative cash flow from operations of $1,639,417 for the twelve months ended
        December 31, 2005 and a net working capital deficiency of $2,653,260 and
        shareholders’ deficiency of $1,884,599 **** as
        of
        December 31, 2005. In addition,the Company had a net loss from operations
        of
        $1,985,185 and a negative cash flow from operations of $831,050 for the year
        ended December 31, 2004, and had a working capital deficiency of $92,850
        and an
        accumulated deficit of $8,995,867 as of December 31, 2004. These factors
        raise
        substantial doubt about the Company’s ability to continue as a going concern.
        Without realization of additional capital, it would be unlikely for the Company
        to continue as a going concern.
 
 The
        Company will incur additional software solution development costs associated
        with implementation and deployment of its software and additional improvements
        and enhancements to its software solutions during the course of its business.
 
 Although
        we expect the customer to reimburse costs associated with the delivery of
        our
        software solutions, in some cases, the terms of reimbursement may be included
        as
        part of the product per transaction fee, periodic payments, with terms extended
        up to 120 days, or may be included as part of the sale of the software. With
        respect to our B.E.S.T.Central, B.E.S.T.Net and InsureBASE software solutions,
        we expect customers to reimburse costs associated with integration of these
        software solutions with the customer’s current hardware installed, software
        customization, deployment of architecture plans, and outside third party
        consulting services provided. In addition, we expect our customers to reimburse
        integration and setup fees associated with a large scale deployment of
        B.E.S.T.7.5.
 
  If
        we
        exceed our current development and sales efforts of InsureBASE, B.E.S.T.Net
        and
        B.E.S.T.Central, and if we receive anticipated funds from either the sale
        of
        stock or from increased borrowings, we believe we will have sufficient working
        capital from these sales and funding to fund operations going forward. However,
        if these sales are delayed or fall short of our expectations or if we do
        not
        receive such funding, or timely payments owed to Company, we may need to
        reduce
        operating expenses through reductions in sales and development personnel
        and
        take other steps to restructure our operations. Although we do not expect
        to
        incur a significant adverse impact on sales and development of THE BLUEBOOK
        and
        estimating software solutions, our development of additional products and
        other
        services would likely be adversely affected or suspended altogether from
        such
        cost reductions.
 
 Our
        primary short-term needs for capital are our software solution development
        efforts, our sales, marketing and administrative activities, working capital
        associated with increased sales of our software solutions, and capital
        expenditures relating to maintaining and developing our operations. Our future
        liquidity and capital requirements will depend on numerous factors, including
        the extent to which our present and future software solutions gain market
        acceptance, the extent to which software solutions under development are
        successfully developed, the costs and timing of expansion of sales of software
        solutions, marketing, procurement and enforcement of intellectual property
        rights important to our business and the results of competition.
 
 **CONTRACTUAL
        ARRANGEMENTS AND OFF-BALANCE SHEET ARRANGEMENTS** ****
 
 The
        following summarizes our contractual obligations at December 31, 2005 and
        the
        effects such obligations are expected to have on liquidity and cash flow
        in
        future periods:
 Payments
          Due by Period
 Total
              
              Less
                  Than 1
                Year
              
              1
                  to 3
                Years
              
              4
                  to 5
                Years
              
              After
                  5
                YearsAdvances
                  from factor
              
              $
              51,003
              
              $
              51,003
              
              $
              -
              
              $
              -
              
              $
              -Notes
                  payable
              
              
              332,000
              
              
              332,000
              
              
              -
              
              
              -
              
              
              -Interest
                  payable on notes and advances
              
              
              20,346
              
              
              20,346
              
              
              -
              
              
              -
              
              
              -Employment
                  agreements
              
              
              1,613,362
              
              
              533,362
              
              
              360,000
              
              
              360,000
              
              
              360,000Legal
                  fee payable
              
              
              359,000
              
              
              60,000
              
              
              60,000
              
              
              60,000
              
              
              179,000Capital
                  leases
              
              
              27,225
              
              
              25,131
              
              
              2,094
              
              
              -
              
              
              -Operating
                  leases
              
              
              54,980
              
              
              54,980
              
              
              -
              
              
              -
              
              
              -Total
              
              $
              2,457,916
              
              $
              1,076,822
              
              $
              422,094
              
              $
              420,000
              
              $
              539,000
  Except
        for the items noted above, the Company does not have any off-balance sheet
        arrangements that have or are reasonably likely to have a current or future
        effect on the Company’s financial condition, changes in financial condition,
        revenues or expenses, results of operations, liquidity, capital expenditures
        or
        capital resources that are material to its investors.
  **CRITICAL
        ACCOUNTING POLICIES** ****
  Our
        discussion and analysis of financial condition and results of operations
        is
        based upon our financial statements, which have been prepared in accordance
        with
        accounting principles generally accepted in the United States of America.
        The
        preparation of these Consolidated Financial Statements and related disclosures
        requires us to make estimates and judgments that affect the reported amounts
        of
        assets, liabilities, revenues and expenses, and related disclosures of
        contingent assets and liabilities. We evaluate, on an on-going basis, our
        estimates and judgments, including those related to the useful life of the
        assets and deferred revenue. We base our estimates on historical experience
        and
        assumptions that we believe to be reasonable under the circumstances, the
        results of which form the basis for making judgments about the carrying values
        of assets and liabilities that are not readily apparent from other sources.
        Actual results may differ from these estimates.
 
 The
        methods, estimates and judgments we use in applying our most critical accounting
        policies have a significant impact on the results that we report in our
        Consolidated Financial Statements. The SEC considers an entity’s most critical
        accounting policies to be those policies that are both most important to
        the
        portrayal of a company’s financial condition and results of operations and those
        that require management’s most difficult, subjective or complex judgments, often
        as a result of the need to make estimates about matters that are inherently
        uncertain at the time of estimation. We believe the following critical
        accounting policies, among others, require significant judgments and estimates
        used in the preparation of our Consolidated Financial Statements:
  
  *Revenue
        Recognition*
 
 Our
        revenues are from the sale of books, and the delivery of software and Internet
        based solutions. The book is a codification of the Company’s most recent
        information database. Revenue is recorded when the book is shipped.
 
 The
        Company licenses its software solutions, used in making cost estimates for
        residential and light construction. The Company recognizes software revenue
        when
        an agreement has been signed by both parties or other persuasive evidence
        of an
        arrangement exists, the software has been shipped or electronically delivered,
        the fees are fixed or determinable, collection of the resulting receivable
        is
        probable and no other significant obligations remain undelivered.
 
 For
        multiple element arrangements where vendor-specific objective evidence of
        fair
        value exists for all undelivered elements, we account for the delivered elements
        in accordance with the “residual method” prescribed by Statement of Position
        98-9. Vendor-specific objective evidence of fair value is based on the price
        a
        customer is required to pay when the element is delivered separately. The
        Company enters into arrangements with end users, which may include the sale
        of
        licenses of software, maintenance and services under the arrangement or various
        combinations of each element, including the delivery of such elements
        separately.
  For
        multiple element arrangements, each element of the arrangement is analyzed
        and
        the Company allocates a portion of the total fee under the arrangement to
        the
        undelivered elements, primarily services and maintenance, using vendor-specific
        objective evidence of fair value of the element and the remaining portion
        of the
        fee is allocated to the delivered elements (i.e., generally the software
        solution license), regardless of any separate prices stated within the contract
        for each element, under the residual method prescribed by SOP 98-9.
        Vendor-specific objective evidence of fair value is based on the price the
        customer is required to pay when the element is delivered separately (i.e.,
        hourly rates charged for consulting services when delivered separately from
        a
        software license and the renewal rate for maintenance arrangements). Each
        license agreement offers additional maintenance renewal periods at a stated
        price. If vendor-specific objective evidence of fair value does not exist
        for
        the undelivered elements, all revenue is deferred and recognized ratably
        over
        the service period if the undelivered element is services, or over the period
        the maintenance is provided if the undelivered element is maintenance, or
        until
        sufficient objective evidence exists or all elements have been delivered.
  *License
        Revenues:* Amounts
        allocated to license revenues under the residual method are recognized at
        the
        time of delivery of the software when vendor specific objective evidence
        of fair
        value exists for the undelivered elements, if any, and all the other revenue
        recognition criteria discussed above have been met. For software versions
        prior
        to B.E.S.T 7.5 insufficient vendor specific objective evidence of the portion
        attributable to license revenue existed. The Company estimated that 20% to
        25%
        of the initial purchase price was allocated to maintenance; the remaining
        purchase price of the software inclusive of licensing was deferred and amortized
        over the expected life of the version. As of June 30, 2005 ,
        there
        was approximately three months of amortization remaining for these
        revenues.
 
 The
        estimation of the life of the B.E.S.T. software solutions for revenue
        recognition purposes prior to B.E.S.T. 7.5 were based on the expectation
        of time
        between releases of a software solution. The Company based its period for
        revenue recognition on historical trends related to the development of
        underlying operating systems and changes in computing platforms that would
        effect the time between releases. These estimates were, in retrospect,
        conservative as changes in underlying operating systems occurred with greater
        frequency than expected when the estimates were established. The result was
        a
        change from initial amortization periods of 24 months to a period of 12 months.
        The Company has determined with the release of B.E.S.T. 7.5 that sufficient
        vendor specific evidence exists to establish the fair market value of delivered
        elements which are delivered separately thus establishing a residual value
        for
        licensing revenue which is recognized upon delivery of the software solution.
        The result is a firm amortization period for delivered elements based on
        contractual terms, which, in most cases, is 12 months.
  *Services
        Revenues:* Revenues
        from services are comprised of consulting and implementation services and,
        to a
        limited extent, training. Services are generally charged on a time-and-materials
        or fixed fee basis and include a range of services including installation
        of
        off-the-shelf software, data conversion and building non-complex interfaces
        to
        allow the software solutions to operate in customized environments. Services
        are
        generally separable from the other elements under the arrangement since the
        performance of the services is not essential to the functionality (i.e.,
        do not
        involve significant production, modification or customization of the software
        or
        building complex interfaces) of any other element of the transaction and
        are
        described in the contract such that the total price of the arrangement would
        be
        expected to vary as the result of the inclusion or exclusion of the services.
        Revenues for services are recognized as the services are performed.
  *Maintenance
        Revenues:* Maintenance
        revenues consist primarily of fees for providing unspecified software upgrades
        on a when-and-if-available basis and technical support over a specified term,
        which is typically twelve months. Maintenance revenues are typically paid
        in
        advance and are recognized on a straight-line basis over the term of the
        contract.
  
 
 *Internet
        based services:* Revenue
        from the delivery of access to data records are recognized on a per record
        basis
        based on the total number of records searches provided to a customer over
        a
        specific period of time. Total contract price is divided by total maximum
        searches available under the contract to derive a per search price to recognize
        as the customer utilizes searches. At the end of the contract term the customer
        forfeits all remaining searches and the balance of the deferred revenue is
        recognized.
  The
        Company may incur significant revenue dilution from returns on sales, or
        through
        discounts. New product versions released for software solutions in the B.E.S.T.
        line of software solutions prior to release 7.5 were included as an upgrade
        under the software license and depending on the timing of the release would
        result in additional deferral of revenue. Beginning with B.E.S.T. 7.5 license
        fees were no longer deferred and no deferral of revenues will occur due to
        introduction of a new release in the product line. Volume discounts are offered
        on the bulk sale of data under the InsureBASE software solution. Discounts
        are
        applied to the per unit price and recognized as data is provided. The Bluebook
        book is sold based on a calendar year release date. Unsold inventory at the
        end
        of a calendar year may be sold at a discount to schools that teach claim
        adjusting. The inventory value for unsold books is written off at the end
        of
        each year.
  *Software
        Solutions Development Costs*
 
 Software
        solution development costs consist of costs to refine and test software masters,
        user documentation and training manuals for software products to be sold.
        These
        development costs encompass most of our software solutions but the most
        significant costs unamortized at December 31, 2005 are for new Internet based
        products. Our design costs have been expensed. The Company hired outside
        consultants to do much of the coding and testing in the products development.
        Capitalized costs include only (1) external direct costs of material and
        services to test and refine the software masters, and (2) payroll and
        payroll-related costs for employees who are directly associated with and
        who
        devote time to the completion of the projects coding, testing and preparation
        of
        user information. Capitalization of such costs ceases no later than the point
        at
        which the project is available for general release to customer. The Company
        began amortizing its new software solutions in 2005.
  Software
        solution development costs are amortized using the straight-line method over
        the
        expected life of the product (which ranges from three to five years). The
        Company believes this method will best reflect the matching of amortization
        with
        revenues. Reliable estimates of total revenue have not been made. However,
        the
        Company expects to determine a more reliable estimate of revenue as sales
        begin
        and will use the greater of the straight-line method or the estimated sales
        method for amortization.
  The
        estimation of the useful life of the B.E.S.T. software solution development
        costs was established based on the Company’s estimate of the period of time the
        software solution would be marketable. This period was established as 84
        months
        for the original release resulting in completion of amortization in September
        2005. Software solution development costs that met the criteria under FAS
        86
        were deferred and amortized based on the period of time remaining through
        September 2005. The Company has not been able to establish an estimate of
        annual
        sales and total sales volumes as an alternative calculation for the amortization
        of deferred costs and as such continues to utilize straight-line amortization.
        The estimate of useful life has remained accurate. As the Company moves to
        the
        delivery of solutions through the Internet with the introduction of InsureBASE
        the expectation is that the B.E.S.T. software solutions will become less
        marketable.
  The
        Company has established a 60-month life for the InsureBASE software solution.
        The Company believes the shorter period is warranted given the speed of
        technological change. There is a possibility that the estimate of useful
        life
        for InsureBASE will change as the Company achieves a greater understanding
        of
        the market for the product.
  Research
        and development costs, and other computer software maintenance and improvement
        costs related to software development are expensed as incurred.
  The
        carrying value of software and software solutions development costs is reviewed
        regularly by the Company to determine if there has been an impairment loss
        that
        needs to be recognized.
 
 **RECENT
        ACCOUNTING PRONOUNCEMENTS**
  In
        December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share Based
        Payment” (“SFAS 123R”), a revision to SFAS No. 123, “Accounting for Stock-Based
        Compensation”. SFAS 123R supercedes Accounting Principles Board Opinion No. 25,
“Accounting for Stock Issued to Employees”, and amends SFAS No. 95, “Statement
        of Cash Flows”. SFAS 123R requires that the Company measure the cost of employee
        services received in exchange for equity awards based on the grant date fair
        value of the awards. The cost will be recognized as compensation expense
        over
        the vesting period of the awards. The Company is required to adopt SFAS 123R
        no
        later than the beginning of the first quarter of 2006.
        Under this method, the Company will begin recognizing compensation cost for
        equity-based compensation for all new or modified grants after the date of
        adoption. In addition, the Company will recognize the unvested portion of
        the
        grant date fair value of awards issued prior to adoption based on the fair
        values previously calculated for disclosure purposes over the remaining vesting
        period of the outstanding options and warrants. The Company is currently
        evaluating the potential effect that the adoption of SFAS 123R will have
        on the
        Company’s financial statement presentation and disclosures.
  In
        November 2004, the FASB issued Statement of Financial Accounting Standards
        No.
        151, "Inventory Costs". This statement amends the guidance in ARB No. 43
        Chapter
        4”Inventory Pricing”, to require items such as idle facility costs, excessive
        spoilage, double freight and re-handling costs to be expenses in the current
        period, regardless if they are abnormal amounts or not. This Statement will
        become effective for the Company in the first quarter of 2006. The Company
        is
        primarily a service provider and as such the adoption of SFAS 151 is not
        expected to have a significant effect on the Company's financial
        statements.
  In
        December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets,
        an amendment to APB Opinion No. 29” (“SFAS 153”). SFAS 153 amends Accounting
        Principles Board Opinion No. 29, “Accounting for Nonmonetary Transactions”, to
        require that exchanges of nonmonetary assets be measured and accounted for
        at
        fair value, rather than at carryover basis, of the assets exchanged. Nonmonetary
        exchanges that lack commercial substance are exempt from this requirement.
        SFAS
        153 is effective for nonmonetary exchanges entered into in fiscal periods
        beginning after June 15, 2005. The Company does not routinely enter into
        nonmonetary exchanges. Accordingly, the Company does not expect that the
        adoption of SFAS 153 will have a significant effect on the Company’s financial
        statement presentation or disclosures.
  In
        May
        2005, the FASB issued Statement No. 154 (" SFAS 154") "Accounting Changes
        and
        Error Corrections - a replacement of APB Opinion No. 20 and FASB Statement
        No.
        3." SFAS 154 changes the requirements for the accounting for and reporting
        of a
        change in accounting principle. APB Opinion 20 previously
        required that most voluntary changes in accounting principle be recognized
        by
        including in net income of the period of the change the cumulative effect
        of
        changing to the new accounting principle. SFAS 154 requires retrospective
        application to prior periods' financial statements of changes in accounting
        principle, unless it is impracticable to determine the period-specific effects
        of the cumulative effect of the change. In the event of such impracticality,
        SFAS 154 provides for other means of application. In the event the Company
        changes accounting principles, it will evaluate the impact of SFAS
        154.
  
  **ITEM
        7. FINANCIAL STATEMENTS**
 
 **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 The
        Board
        of Directors
 The
        Bluebook International Holding Company, Inc
  We
        have
        audited the accompanying consolidated balance sheet of The Bluebook
        International Holding Company, Inc. and subsidiary (the "Company"), as of
        December 31, 2005, and the consolidated statements of operations, stockholders'
        deficiency and cash flows for the years ended December 31, 2005 and 2004.
        These
        consolidated financial statements are the responsibility of the Company's
        management. Our responsibility is to express an opinion on these consolidated
        financial statements based on our audits.
  We
        conducted our audits in accordance with standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audits to obtain reasonable assurance about whether the
        consolidated financial statements are free of material misstatement. An audit
        includes examining, on a test basis, evidence supporting the amounts and
        disclosures in the financial statements. An audit also includes assessing
        the
        accounting principles used and significant estimates made by management,
        as well
        as evaluating the overall consolidated financial statement presentation.
        We
        believe that our audits provide a reasonable basis for our opinion.
  In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the consolidated financial position of The Bluebook
        International Holding Company, Inc. and subsidiary as of December 31, 2005,
        and
        the results of their operations and their cash flows for the years then ended,
        in conformity with accounting principles generally accepted in the United
        States
        of America.
 
 The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern. As discussed in Note 1 to the consolidated
        financial statements, the Company had a net loss of $2,711,273 and a negative
        cash flow from operations of $1,639,417 during the year ended December 31,
        2005,
        and had a working capital deficiency of $2,653,260 and a stockholders’
deficiency of $1,884,599 at December 31, 2005. These factors raise substantial
        doubt about the Company's ability to continue as a going concern. Management's
        plans in regard to these matters are also described in Note 1. The consolidated
        financial statements do not include any adjustments that might result from
        the
        outcome of this uncertainty.
 
 Weinberg
        & Company, P.A.
 
 Los
        Angeles, Ca.
 August
        24, 2006
  
 
 **THE
        BLUEBOOK INTERNATIONAL HOLDING COMPANY AND SUBSIDIARY**
 **CONSOLIDATED
        BALANCE SHEET**
 **AS
        OF DECEMBER 31, 2005**
  DECEMBER
                  31, 2005ASSETSCURRENT
                  ASSETSCash
                  and cash equivalents
              
              $
              28,340Accounts
                  receivable, net of allowance for doubtful accounts of $10,567
              
              
              42,548Inventory
              
              
              268Prepaid
                  expenses and other
              
              
              47,276Total
                  current assets
              
              
              118,432PROPERTY
                  AND EQUIPMENT, net of accumulated depreciation of $230,014
              
              
              67,440OTHER
                  ASSETSSoftware
                  solution development costs, net of accumulatedamortization
                  of$633,045
              
              
              687,722Intangible
                  assets, net of accumulated amortization of $36,114
              
              
              8,608Other
                  assets
              
              
              6,938Total
                  other assets
              
              
              703,268TOTAL
                  ASSETS
              
              $
              889,140LIABILITES
                  AND STOCKHOLDERS' DEFICIENCYCURRENT
                  LIABILITIESAccounts
                  payable and accrued expenses
              
              $
              1,425,261Legal
                  fee payable
              
              
              359,000Advances
                  from factor
              
              
              51,003Obligation
                  under capital lease - current portion
              
              
              21,363Due
                  to stockholders and related parties
              
              
              429,416Deferred
                  revenue
              
              
              153,649Note
                  payable, related party
              
              
              167,000Notes
                  payable
              
              
              115,000Notes
                  payable - bridge financing
              
              
              50,000Total
                  current liabilities
              
              
              2,771,692LONG
                  TERM LIABILITIESObligation
                  under capital lease, less current portion
              
              
              2,047TOTAL
                  LIABILITIES
              
              
              2,773,739COMMITMENTS
                  & CONTINGENCIESSTOCKHOLDERS'
                  DEFICIENCYSeries
                  B Convertible Preferred Stock, $.0001 par value; 5,000,000 shares
                  authorized;no shares issued and outstanding
              
              
              -Common
                  Stock, $.0001 par value; 150,000,000 shares authorized; 8,760,221shares
                  issued and outstanding
              
              
              875Additional
                  paid in capital
              
              
              9,747,728Common
                  Stock to be issued ( 125,250 shares)
              
              
              73,938Accumulated
                  deficit
              
              
              (11,707,140
              )Total
                  stockholders' deficiency
              
              
              (1,884,599
              )TOTAL
                  LIABILITIES AND STOCKHOLDERS' DEFICIENCY
              
              $
              889,140
  See
        accompanying Notes to Consolidated Financial Statements
  
 
 **THE
        BLUEBOOK INTERNATIONAL HOLDING COMPANY AND SUBSIDIARY**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS**
 **YEARS
        ENDED DECEMBER 31, 2005 AND 2004**
  Year
                  Ended December 31,2005
              
              2004SALES,
                  net
              
              $
              619,747
              
              $
              569,514OPERATING
                  EXPENSESSelling,
                  general and administrative expenses
              
              
              3,122,432
              
              
              1,915,768Program
                  and development costs
              
              
              -
              
              
              375,923Depreciation
                  and amortization expenses
              
              
              166,329
              
              
              140,702Total
                  Operating Expenses
              
              
              3,288,761
              
              
              2,432,393LOSS
                  FROM OPERATIONS
              
              
              (2,669,014
              )
              
              (1,862,879
              )OTHER
                  EXPENSEInterest
                  expense
              
              
              (41,459
              )
              
              (121,506
              )LOSS
                  BEFORE INCOME TAXES
              
              
              (2,710,473
              )
              
              (1,984,385
              )INCOME
                  TAX EXPENSE
              
              
              800
              
              
              800NET
                  LOSS
              
              $
              (2,711,273
              )
              $
              (1,985,185
              )Weighted
                  average number of shares of common stock outstanding, basic and
                  diluted
              
              
              8,760,221
              
              
              2,354,830Loss
                  per share, basic and diluted
              
              $
              (0.31
              )
              $
              (0.84
              )
 
 See
        accompanying notes to Consolidated Financial Statements
  
  **THE
        BLUEBOOK INTERNATIONAL HOLDING COMPANY AND SUBSIDIARY**
 **CONSOLIDATED
        STATEMENTS OF STOCKHOLDERS' DEFICIENCY**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
 **Common
                        Stock**
                    
                    **Preferred
                        Stock**
                    
                    **Additional
                        Paid in**
                    
                    **Common**
                      **Stock
                        to**
                    
                    **Accumulated****Shares**
                    
                    **Amount**
                    
                    **Shares**
                    
                    **Amount**
                    
                    **Capital**
                    
                    **be
                        Issued**
                    
                    **Deficit**
                    
                    **Total**Balance,
                        January 1, 2004
                    
                    
                    1,436,671
                    
                    $
                    144
                    
                    
                    2,050
                    
                    $
                    -
                    
                    $
                    599,466
                    
                    $
                    -
                    
                    $
                    (6,326,349
                    )
                    $
                    (5,726,739
                    )Conversion
                        of Series C Preferred Stock
                    
                    
                    265,835
                    
                    
                    26
                    
                    
                    -
                    
                    
                    -
                    
                    
                    4,544,653
                    
                    
                    -
                    
                    
                    -
                    
                    
                    4,544,679Issuance
                        of stock in settlement accounts and notes payable
                    
                    
                    1,883,682
                    
                    
                    188
                    
                    
                    -
                    
                    
                    -
                    
                    
                    1,946,048
                    
                    
                    -
                    
                    
                    -
                    
                    
                    1,946,236Conversion
                        of Series B Preferred Stock
                    
                    
                    2,733,333
                    
                    
                    273
                    
                    
                    (2,050
                    )
                    
                    -
                    
                    
                    (273
                    )
                    
                    -
                    
                    
                    -
                    
                    
                    -Issuance
                        of stock for consulting services
                    
                    
                    306,667
                    
                    
                    31
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (31
                    )
                    
                    -
                    
                    
                    -
                    
                    
                    -Issuance
                        of stock in private in private placement
                    
                    
                    2,131,033
                    
                    
                    213
                    
                    
                    -
                    
                    
                    -
                    
                    
                    1,902,372
                    
                    
                    -
                    
                    
                    -
                    
                    
                    1,902,585Issuance
                        of stock for legal settlement
                    
                    
                    3,000
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    3,000
                    
                    
                    -
                    
                    
                    -
                    
                    
                    3,000Dividend
                        distribution on preferred stock
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    684,333
                    
                    
                    -
                    
                    
                    (684,333
                    )
                    
                    -Net
                        loss for the year ended December 31, 2004
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (1,985,185
                    )
                    
                    (1,985,185
                    )Balance,
                        December 31, 2004
                    
                    
                    8,760,221
                    
                    
                    875
                    
                    
                    -
                    
                    
                    -
                    
                    
                    9,679,568
                    
                    
                    -
                    
                    
                    (8,995,867
                    )
                    
                    684,576Stock
                        to be issued to extend note payable
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    15,000
                    
                    
                    -
                    
                    
                    15,000Stock
                        to be issued for consulting fees
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    58,938
                    
                    
                    -
                    
                    
                    58,938Fair
                        value of warrants issued for consulting fees
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    68,160
                    
                    
                    -
                    
                    
                    -
                    
                    
                    68,160Net
                        loss for the year ended December 31, 2005
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (2,711,273
                    )
                    
                    (2,711,273
                    )Balance,
                        December 31, 2005
                    
                    
                    8,760,221
                    
                    $
                    875
                    
                    
                    -
                    
                    $
                    -
                    
                    $
                    9,747,728
                    
                    $
                    73,938
                    
                    $
                    (11,707,140
                    )
                    $
                    (1,884,599
                    )
 
 See
        accompanying Notes to Consolidated Financial Statements
  
  **THE
        BLUEBOOK INTERNATIONAL HOLDING COMPANY AND SUBSIDIARY**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
  Year
                  Ended December 31,2005
              
              2004CASH
                  FLOWS FROM OPERATING ACTIVITIESNet
                  loss
              
              $
              (2,711,273
              )
              $
              (1,985,185
              )Adjustment
                  to reconcile net loss to net cash used in operating
                  activitiesDepreciation
                  and amortization
              
              
              166,329
              
              
              140,702Amortization
                  of warrant issued for consulting fees
              
              
              64,799
              
              
              -Issuance
                  of stock in settlement of litigation
              
              
              -
              
              
              3,000Stock
                  to be Issued for payment of consulting fees
              
              
              33,938
              
              
              -Changes
                  in operating assets and liabilities:(Increase)
                  Decrease in Accounts receivable
              
              
              (36,131
              )
              
              20,381(Increase)
                  in Inventory
              
              
              (268
              )
              
              -Decrease
                  (Increase) in Prepaid expenses and other
              
              
              30,585
              
              
              (24,500
              )(Increase)
                  in other assets
              
              
              (1,642
              )
              
              (279
              )Increase
                  in Accounts payable and accrued expenses
              
              
              770,508
              
              
              371,448(Decrease)
                  in Legal fee payable
              
              
              (56,000
              )
              
              -Increase
                  in Due to stockholders and related party
              
              
              111,348
              
              
              719,208(Decrease)
                  in Deferred revenue
              
              
              (11,610
              )
              
              (75,825
              )NET
                  CASH USED IN OPERATING ACTIVITIES
              
              
              (1,639,417
              )
              
              (831,050
              )CASH
                  FLOWS FROM INVESTING ACTIVITIESPurchase
                  of property and equipment
              
              
              (2,537
              )
              
              (9,708
              )Software
                  solution development costs
              
              
              (116,832
              )
              
              (178,045
              )NET
                  CASH USED IN INVESTING ACTIVITIES
              
              
              (119,369
              )
              
              (187,753
              )CASH
                  FLOWS FROM FINANCING ACTIVITIESProceeds
                  from issuance of common stock
              
              
              -
              
              
              1,902,585Note
                  payable
              
              
              -
              
              
              542,500Note
                  payable due to related party
              
              
              167,000
              
              
              63,200Advance
                  due to factor
              
              
              51,003
              
              
              -Bridge
                  loan
              
              
              50,000
              
              
              -Payments
                  made under a capital lease
              
              
              (15,190
              )
              
              -NET
                  CASH PROVIDED BY FINANCING ACTIVITIES
              
              
              252,813
              
              
              2,508,285NET
                  (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
              
              
              (1,505,973
              )
              
              1,489,482CASH
                  AND CASH EQUIVALENTS, BEGINNING OF THE YEAR
              
              
              1,534,313
              
              
              44,831CASH
                  AND CASH EQUIVALENTS, END OF THE YEAR
              
              $
              28,340
              
              $
              1,534,313
 
 See
        accompanying Notes to Consolidated Financial Statements
  
  **THE
        BLUEBOOK INTERNATIONAL HOLDING COMPANY AND SUBSIDIARY**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
 ( **Continued)**
 
 Year
                  Ended December 31,SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION:
              
              **2005**
              
              **2004**Cash
                  paid during the period for:Interest
              
              $
              7,738
              
              $
              33,086Taxes
              
              $
              7,781
              
              $
              2,734Non-cash
                  Investing and Financing ActivityAcquisition
                  of equipment through capital lease obligation
              
              $
              38,600
              
              $
              -Conversion
                  of series C preferred stock to common stock
              
              $
              -
              
              $
              4,554,679Issuance
                  of stock in settlement of due to related parties
              
              $
              -
              
              $
              1,106,516Issuance
                  of stock in settlement of accounts payable
              
              $
              -
              
              $
              247,020Issuance
                  of stock in settlement of notes payable
              
              $
              -
              
              $
              427,500Issuance
                  of stock in settlement of notes payable related parties
              
              $
              -
              
              $
              165,200Reclassification
                  of accrued expenses due to stockholders
              
              $
              -
              
              $
              117,688Common
                  Stock to be issued in settlement of note extensions fees
              
              $
              15,000
              
              $
              -Common
                  Stock to be issued for payment of consulting fees
              
              $
              58,438
              
              $
              -Issuance
                  of warrant for consulting fees
              
              $
              68,160
              
              $
              -Issuance
                  of stock dividend
              
              $
              -
              
              $
              684,433
  See
        accompanying Notes to Consolidated Financial Statements
  
  **THE
        BLUEBOOK INTERNATIONAL HOLDING COMPANY, INC. AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2005 AND 2004**
 
 **NOTE
        1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS ACTIVITY**
 
 **Background
        of the Company**
 
 The
        Bluebook International Holding Company (the “Company”) was incorporated as Gama
        Computer Corporation in Delaware on December 17, 1997. On January 9, 1998,
        the
        Company merged with Gama, Inc., a Colorado corporation, and Gama Computer
        Corporation became the surviving company. On September 24, 2001, Gama Computer
        Corporation entered into a certain Agreement and Plan of Merger (the
“Agreement”) with (a) The Bluebook International, Inc., a Nevada corporation
        (“Bluebook International”); (b) Bluebook Acquisition Corp., a Nevada
        corporation, wholly owned by the Company (“Acquisitions”); (c) each of Mark A.
        Josipovich, Daniel T. Josipovich, Daniel E. Josipovich and Dorothy E. Josipovich
        (each, a “Bluebook Stockholder”); and (d) Andrew Hromyk. Among other things, the
        Agreement provided for the Company’s purchase from the Bluebook Stockholders of
        all of the issued and outstanding capital stock of Bluebook International
        in
        exchange for the issuance of an aggregate of 32,700,000 shares of the Company’s
        authorized but unissued Common Stock (the “Exchange”).
 
 Effective
        October 1, 2001, the Company underwent a change of control in connection
        with
        the consummation of the Exchange in which (i) Andrew Hromyk, the Company’s only
        executive officer, resigned his position, and the Board of Directors appointed
        Mark A. Josipovich to serve as the Company’s President, Chief Executive Officer,
        Chief Financial Officer and Secretary and Daniel T. Josipovich to serve as
        the
        Company’s Chief Operations Officer; (ii) the Company’s majority stockholder
        surrendered and subsequently cancelled 19,200,000 shares and (iii) the Bluebook
        Stockholders became the holders of an aggregate of 32,700,000 shares of the
        Company’s Common Stock, or approximately 84.4% of the Company’s Common Stock
        issued and outstanding after the consummation of the Exchange. In addition,
        effective October 1, 2001, Daniel E. Josipovich and Dorothy E. Josipovich
        were
        jointly issued 1,000 shares of Series A Convertible Preferred Stock with
        voting
        rights in exchange for the cancellation of a related party note of $1,000,000.
        Upon consummation of the Exchange, Mr. Hromyk resigned as the then-sole member
        of the Company’s Board of Directors.
 
 At
        consummation of the Exchange on October 1, 2001, the Company acquired all
        of the
        7,083,332 issued and outstanding capital shares of Bluebook International,
        and
        issued a total of 32,700,000 shares of Common Stock to the Bluebook
        Stockholders. Immediately following the Exchange, the Company had a total
        of
        38,733,411 shares of Common Stock issued and outstanding. As a result of
        the
        Exchange, Bluebook International became a wholly owned subsidiary of the
        Company. Immediately following the Exchange, the Company caused Acquisitions
        and
        Bluebook International to be merged pursuant to a Certificate of Merger filed
        with the California Secretary of State on October 4, 2001 (the “Merger”).
        Acquisitions survived the Merger, and concurrently Acquisitions changed its
        name
        to the Bluebook International, Inc. (the “Surviving Subsidiary”). On November 6,
        2001, the Company changed its name from GAMA Computer Corporation to The
        Bluebook International Holding Company. The Company intends to continue to
        hold
        the surviving subsidiary as a wholly owned subsidiary of the Company and
        intends
        to cause the surviving subsidiary to continue the operations of Bluebook
        International, as more fully described below.
 
 Bluebook
        International was incorporated on December 5, 2000 under the laws of the
        State
        of Nevada. On September 15, 2001, the Company purchased all of the business
        assets owned by Daniel E. Josipovich and Dorothy E. Josipovich, husband and
        wife
        (the “Sole Proprietorship”), used in the business of creating, developing and
        distributing products and services related to The Bluebook of Cleaning,
        Reconstruction and Repair Cost (the “Bluebook”) and Bluebook Estimating Software
        Technology (“B.E.S.T.”) for over 38 years.
 
 **Basis
        of presentation**
 
 For
        accounting purposes, the transaction has been treated as a purchase acquisition
        of the Company by Bluebook International and as a recapitalization of Bluebook
        International. The historical financial statements prior to the acquisition
        are
        those of sole proprietorship and became those of Bluebook International.
        In the
        recapitalization, historical stockholders’ equity of Bluebook International
        prior to the merger were retroactively presented  for
        the
        equivalent number of shares received in the merger with an offset to paid-in
        capital. Accumulated deficit of the Company is reversed to paid-in capital.
        Basic earnings (loss) per share prior to the merger were retroactively
        presented  to
        reflect the number of equivalent shares issued to Bluebook International
        stockholders. This transaction has been included in these financial statements
        as if the transaction was effective as of January 1, 2000.
  
  **THE
        BLUEBOOK INTERNATIONAL HOLDING COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
 
 The
        consolidated financial statements include the accounts of The Bluebook
        International Holding Company and its wholly owned subsidiary. Intercompany
        transactions and balances have been eliminated.
 
 **Business
        activity**
 
 Until
        September 15, 2001, the Company was in a development stage. After September
        15,
        2001 when it was acquired, the principal business of the Company has been
        developing and selling The Bluebook and B.E.S.T. The Bluebook is a book in
        the
        form of both a desk and pocket size book containing the information of the
        average unit costs attendant to the cleaning, reconstruction and repair
        industries. B.E.S.T. is a software format of The Bluebook which allows
        subscribers the option to retrieve The Bluebook data and calculate the cost
        to
        clean, reconstruct or repair, then file claims electronically. Currently
        the
        Company is developing B.E.S.T. Net TM and B.E.S.T. Central TM, web-based cost
        estimation and claims management software.
 
 **Going
        Concern**
 
 The
        accompanying financial statements have been prepared in conformity with
        accounting principles generally accepted in the United States of America,
        which
        contemplate continuation of the Company as a going concern. However, the
        Company
        had a net loss of $2,711,273 and a negative cash flow from operations of
        $1,639,417 for the year ended December 31, 2005, and had a working capital
        deficiency of $2,653,260 and a stockholders’ deficiency of $1,884,559 as of
        December 31, 2005. These factors raise substantial doubt about the Company’s
        ability to continue as a going concern. Without realization of additional
        capital, it would be unlikely for the Company to continue as a going concern.
        These financial statements do not include any adjustments relating to the
        recoverability and classification of recorded asset amounts, or amounts and
        classification of liabilities that might result from this uncertainty.
 
 The
        Company will incur additional software development costs associated with
        implementation and deployment of its software and additional improvements
        and
        enhancements to its technology during the course of its business. Although
        we
        expect the customer to reimburse costs associated with the delivery of our
        software solutions, in some cases, the terms of reimbursement may be included
        as
        part of the product per transaction fee, monthly payment, at terms extended
        up
        to 120 days or may be included as part of the sale of the software. With
        respect
        to our B.E.S.T.Central, B.E.S.T.Net and InsureBASE software solutions, we
        expect
        customers to reimburse costs associated with integration of these software
        solutions with the customer’s current hardware installed, software
        customization, deployment of architecture plans, and outside third party
        consulting services provided. In addition, we expect our customers to reimburse
        integration and setup fees associated with a large scale deployment of
        B.E.S.T.7.5. Even if we exceed our current development and sales efforts
        of
        InsureBASE, B.E.S.T.Net and B.E.S.T.Central, or if we meet our projected
        sales
        targets of B.E.S.T. and Insure to Value, we believe we will have to raise
        additional capital to meet this shortfall. If we are not successful in raising
        sufficient additional working capital, we may need to reduce operating expenses
        through reductions in sales and development personnel and take other steps
        to
        restructure our operations and/or sell assets to raise additional funds.
        Although we do not expect to incur a significant adverse impact on sales
        and
        development of THE BLUEBOOK and estimating software solutions, current products
        and services, our development of additional products and other services would
        likely be adversely affected or suspended altogether from such cost reductions.
 
 **Use
        of estimates**
 
 The
        preparation of financial statements in conformity with generally accepted
        accounting principles requires management to make estimates and assumptions
        that
        affect the reported amount of assets and liabilities, disclosure of contingent
        assets and liabilities at the date of the financial statements, and the reported
        amounts of revenues and expenses during the reported period. Actual results
        could differ from those estimates.
 
 The
        estimation of the useful life of the B.E.S.T. software solution development
        costs was established based on the Company’s estimate of the period of time the
        software solution would be marketable. This period was established as 84
        months
        for the original release resulting in completion of amortization in for the
        B.E.S.T 6 software solution in September 2006 and the completion of the B.E.S.T.
        7 software solution in July of 2007. Software solution development costs
        that
        met the criteria under FAS 86 were deferred and amortized based on the period
        of
        time remaining through September 2006. The Company has not been able to
        establish an estimate of annual sales and total sales volumes as an alternative
        calculation for the amortization of deferred costs and as such continues
        to
        utilize straight-line amortization. The estimate of useful life has remained
        accurate. As the Company moves to the delivery of solutions through the Internet
        with the introduction of InsureBASE the expectation is that the B.E.S.T.
        software solutions will become less marketable.
 
 The
        Company has established a 60-month life for the InsureBASE software solution.
        The Company believes the shorter period is warranted given the speed of
        technological change. There is a possibility that the estimate of useful
        life
        for InsureBASE will change as the Company achieves a greater understanding
        of
        the market for the product.
  
 
 **THE
        BLUEBOOK INTERNATIONAL HOLDING COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
 
 **Change
        in accounting estimate**
 
 The
        Company changed its revenue life estimate during the year to reflect the
        shift
        in the software usage environment to now reflect the multi deliverable revenue
        estimate or relative value approach. The prior estimates were based on life
        versus relative value due to the size of the universe of sales and the lack
        of
        maturity of the product. The change to this more precise accounting is regarded
        as a change in estimate and it results in minimal changes in revenue and
        leaves
        earnings per share unchanged .
 
 **Fair
        value of financial instruments**
 
 Statement
        of Financial Accounting Standards No. 107 “Disclosure about Fair Value of
        Financial Instruments” requires disclosures of information about the fair value
        of certain financial instruments for which it is practicable to estimate
        the
        value. For purposes of this disclosure, the fair value of a financial instrument
        is the amount at which the instrument could be exchanged in a current
        transaction between willing parties other than in a forced sale of liquidation.
        The Company believes that the carrying value of its cash and cash equivalents,
        receivables, accounts payable and accrued liabilities, factor advances, related
        party payables and notes payable as of December 31, 2005 approximates their
        respective fair values due to the demand or short-term nature of those
        instruments.
 
 **Cash**
 
 Cash
        in
        bank and securities with maturities of less than 30 days are recorded as
        cash
        balances.
 
 **Trade
        Receivables**
 
 Trade
        receivables are recorded at net realizable value consisting of the carrying
        amount less an allowance for uncollectible accounts, as needed.
  The
        Company uses the allowance method to account for uncollectible trade receivable
        balances. Under the allowance method, if needed, an estimate of uncollectible
        customer balances is made based upon specific account balances that are
        considered uncollectible. Factors used to establish an allowance include
        the
        credit quality of the customer and whether the balance is significant. At
        December 31, 2005 trade receivables had a net balance in the amount of $42,548
        net of an allowance of $10,567.
 
 **Inventory**
 
 Inventories
        consist of books held for resale. Inventories are recorded at the lower of
        cost
        or market. Since the books are reprinted on an annual release dates, the
        Company
        establishes a reserve to reduce the recorded value of the inventory to market
        at
        each year end.
 
 **Property
        and equipment**
 
 Property
        and equipment are stated at cost. Depreciation is computed using the
        straight-line method of depreciation over estimated useful lives of the related
        assets ranging from 3 to 7 years.
 
 **Impairment
        of Long-Lived Assets**
 
 Long-lived
        assets are reviewed for impairment whenever events or changes in circumstances
        indicate that the related carrying amount may not be recoverable. Recovery
        of
        assets to be held and used is measured by a comparison of the carrying amount
        of
        the assets to the future net cash flows expected to be generated by the asset.
        If such assets are considered to be impaired, the impairment to be recognized
        is
        measured by the
 amount
        by
        which the carrying amount of the assets exceeds the fair value of the assets.
        Assets to be disposed of are reported at the lower of the carrying amount
        or
        fair value less the cost to sell.
 
 **Software
        solution development costs**
 
 Software
        solution development costs consists of costs to refine and test software
        masters, user documentation and training manuals for software products to
        be
        sold. These development costs encompass most of our products but the most
        significant costs unamortized at December 31, 2005 are for new Internet based
        products. Our design costs have been expensed. The Company hired outside
        consultants to do much of the coding and testing in the products development.
        Capitalized costs include only (1) external direct costs of material and
        services to test and refine the software masters, and (2) payroll and
        payroll-related costs for employees who are directly associated with and
        who
        devote time to the completion of the projects coding, testing and preparation
        of
        user information. Capitalization of such costs ceases no later than the point
        at
        which the project is available for general release to customer. The Company
        began amortizing the InsureBASE and Insure to Value products in 2005 and
        expects
        to begin amortizing the B.E.S.T.Net product in 2006.
  
  **THE
        BLUEBOOK INTERNATIONAL HOLDING COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
 
 Software
        solution development costs are amortized using the straight-line method over
        the
        expected life of the product (which ranges from two to seven years) the Company
        believes this method will best reflect the matching of amortization with
        revenues. Reliable estimates of total revenue have not been made. However,
        the
        Company expects to determine a more reliable estimate of revenue as sales
        begin
        and will use the greater of the straight-line method or the estimated sales
        method for amortization.
 
 Research
        and development costs and other computer software maintenance and improvement
        costs related to software development are expensed as incurred.
 
 The
        carrying value of software and software solution development costs is reviewed
        regularly by the Company to determine if there has been an impairment loss
        that
        needs to be recognized.
 
 **Intangible
        assets**
 
 Intangible
        assets consist of customer list, graphic arts and other. Graphic arts and
        other
        are amortized over the estimated useful life of 5 years. Customer list is
        amortized over the estimated useful life of 10 years.
 
 **Loss
        per common share**
  Basic
        loss per share is calculated by dividing net loss available to common
        stockholders by the weighted average number of common shares outstanding
        during
        the year. Diluted loss per share is calculated by not including the issuance
        of
        common shares resulting from the exercise of stock options and warrants because
        such result would be anti-dilutive. As of December 31, 2005 the Company had
        warrants outstanding that were immediately exercisable to purchase 756,689
        shares at prices ranging from $1.15 to $1.40 per share. As the Company has
        a
        loss, basic and diluted loss per share amounts are the same.
 
 **Revenue
        recognition**
  Our
        revenues are from the sale of books, and the delivery of software, and Internet
        based solutions. The book is a codification of the Company’s most recent
        information database. Revenue is recorded when the book is shipped.
 
 The
        Company licenses its software solutions, used in making cost estimates for
        residential and light construction. The Company recognizes software revenue
        when
        an agreement has been signed by both parties or other persuasive evidence
        of an
        arrangement exists, the software has been shipped or electronically delivered,
        the fees are fixed or determinable, collection of the resulting receivable
        is
        probable and no other significant obligations remain undelivered.
 
 For
        multiple element arrangements where vendor-specific objective evidence of
        fair
        value exists for all undelivered elements, we account for the delivered elements
        in accordance with the “residual method” prescribed by Statement of Position
        98-9. Vendor-specific objective evidence of fair value is based on the price
        a
        customer is required to pay when the element is delivered separately. The
        Company enters into arrangements with end users, which may include the sale
        of
        licenses of software, maintenance and services under the arrangement or various
        combinations of each element, including the delivery of such elements
        separately.
  For
        multiple element arrangements, each element of the arrangement is analyzed
        and
        the Company allocates a portion of the total fee under the arrangement to
        the
        undelivered elements, primarily services and maintenance, using vendor-specific
        objective evidence of fair value of the element and the remaining portion
        of the
        fee is allocated to the delivered elements (i.e., generally the software
        solution license), regardless of any separate prices stated within the contract
        for each element, under the residual method prescribed by SOP 98-9.
        Vendor-specific objective evidence of fair value is based on the price the
        customer is required to pay when the element is delivered separately (i.e.,
        hourly rates charged for consulting services when delivered separately from
        a
        software license and the renewal rate for maintenance arrangements). Each
        license agreement offers additional maintenance renewal periods at a stated
        price. If vendor-specific objective
        evidence of fair value does not exist for the undelivered elements, all revenue
        is deferred and recognized ratably over the service period if the undelivered
        element is services, or over the period the maintenance is provided if the
        undelivered element is maintenance, or until sufficient objective evidence
        exists or all elements have been delivered.
 
 *License
        Revenues:* Amounts
        allocated to license revenues under the residual method are recognized at
        the
        time of delivery of the software when vendor specific objective evidence
        of fair
        value exists for the undelivered elements, if any, and all the other revenue
        recognition criteria discussed above have been met. For software versions
        prior
        to B.E.S.T 7.5 insufficient vendor specific objective evidence of the portion
        attributable to license revenue existed. The Company estimated that 20% to
        25%
        of the initial purchase price was allocated to maintenance; the remaining
        purchase price of the software inclusive of licensing was deferred and amortized
        over the expected life of the version. As of June 30, 2005 there was
        approximately three months of amortization remaining for these
        revenues.
  *Services
        Revenues:* Revenues
        from services are comprised of consulting and implementation services and,
        to a
        limited extent, training. Services are generally charged on a time-and-materials
        or fixed fee basis and include a range of services including installation
        of
        off-the-shelf software, data conversion and building non-complex interfaces
        to
        allow the software solutions to operate in customized environments. Services
        are
        generally separable from the other elements under the arrangement since the
        performance of the services is not essential to the functionality (i.e.,
        do not
        involve significant production, modification or customization of the software
        or
        building complex interfaces) of any other element of the transaction and
        are
        described in the contract such that the total price of the arrangement would
        be
        expected to vary as the result of the inclusion or exclusion of the services.
        Revenues for services are recognized as the services are
        performed.
  
 
 **THE
        BLUEBOOK INTERNATIONAL HOLDING COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
  *Maintenance
        Revenues:* Maintenance
        revenues consist primarily of fees for providing unspecified software upgrades
        on a when-and-if-available basis and technical support over a specified term,
        which is typically twelve months. Maintenance revenues are typically paid
        in
        advance and are recognized on a straight-line basis over the term of the
        contract.
  *Internet
        based services:* Revenue
        from the delivery of access to data records are recognized on a per record
        basis
        based on the total number of records searches provided to a customer over
        a
        specific period of time. Total contract price is divided by total maximum
        searches available under the contract to derive a per search price to recognize
        as the customer utilizes searches. At the end of the contract term the customer
        forfeits all remaining searches and the balance of the deferred revenue is
        recognized.
 
 The
        Company accounts for all revenue it earns through delivery of software solutions
        to its customers as principal on a gross basis when, consistent with the
        guidance established in EITF 99-19, the Company is the primary obligor for
        the
        fulfillment of the order; establishes the selling price; delivers the data
        from
        its database; and has credit risk for its customers. The portion of any sale
        due
        to the major channel partner is accounted for as a cost of sale. The Company
        accounts for any revenue earned through the delivery of its data by a major
        channel partner on a net basis.
 
 The
        Company does incur revenue dilution from returns on sales, or through discounts.
        New product versions released for software solutions in the B.E.S.T. line
        of
        software solutions prior to release 7.5 were included as an upgrade under
        the
        software license and depending on the timing of the release, it would result
        in
        additional discount and deferral of revenue. Beginning with B.E.S.T. 7.5
        license
        fees were no longer deferred and no deferral of revenues will occur due to
        introduction of a new release in the product line. Unused Transactions for
        the
        InsureBASE software under certain agreements may be returned for credit or
        refunds. Volume discounts are offered on the bulk sale of data under the
        InsureBASE software solution. Discounts are applied to the per unit price
        and
        recognized as data is provided. The Blue Book is sold based on a calendar
        year
        release date. Unsold inventory at the end of a calendar year may be sold
        at a
        discount to schools that teach claim adjusting with some inventory exchanged
        for
        current year inventory. The inventory value for unsold or unexchanges books
        are
        written off at the end of each year.
 
 **Stock-based
        Compensation**
 
 In
        December 2002 the FASB issued SFAS No. 148 “Accounting for Stock-Based
        Compensation - Transition and Disclosure.” SFAS No. 148 amends SFAS No. 123,
“Accounting for Stock-Based Compensation.” SFAS No. 148 provides alternative
        methods of transition for a voluntary change to the fair value based method
        of
        accounting for stock based employee compensation. In addition, SFAS No. 148
        amends the disclosure requirements of SFAS No. 123 to require more prominent
        and
        more frequent disclosure in financial statements about the effects of stock
        based compensation. SFAS No. 123 established accounting and disclosure
        requirement using a fair value based method of accounting for the stock based
        employee compensation plans. In December 2004 the FASB issued SFAS No. 123(R)
        which revised SFAS No. 123 to require a public entity to measure the cost
        of
        employee services received in exchange for an award of equity instruments
        based
        on the grant-date fair value of the award (with limited exceptions). That
        cost
        will be recognized over the period during which an employee is required to
        provide service in exchange for the award--the requisite service period (usually
        the vesting period). No compensation cost is recognized for equity instruments
        for which employees do not render the requisite service. Employee share purchase
        plans will not result in recognition of compensation cost if certain conditions
        are met; those conditions are much the same as the related conditions in
        Statement 123. A public entity will initially measure the cost of employee
        services received in exchange for an award of liability instruments based
        on its
        current fair value; the fair value of that award will be re- measured
        subsequently at each reporting date through the settlement date. Changes
        in fair
        value during
 the
        requisite service period will be recognized as compensation cost over that
        period. A nonpublic entity may elect to measure its liability awards at their
        intrinsic value through the date of settlement. The statement is not effective
        for small business issuers until the first annual reporting period beginning
        after December 15, 2005. The Company will adopt the requirements of SFAS
        No.
        123(R) beginning fiscal 2006.As allowed by SFAS No. 123, the Company has
        elected
        to apply the intrinsic value-based method of accounting and has adopted only
        the
        disclosure requirements of SFAS No.123 for employee issued options. No stock
        option based employee compensation costs are reflected in the Company's net
        loss
        for the twelve month period ended December 31, 2005 as no stock options or
        other
        stock based compensation had been awarded. As such, no additional disclosures
        are required.
 
 Stock-based
        payments to persons or entities other than employees are recorded at either
        the
        fair value of the goods or services received or the fair value of the equity
        instruments delivered in exchange for those goods or services as of the earlier
        date of commitment to perform or when performance is completed when no
        performance commitment exists.
  
 
 **THE
        BLUEBOOK INTERNATIONAL HOLDING COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
 
 **Income
        taxes**
 
 The
        Company accounts for income taxes using the asset and liability method whereby
        deferred income taxes are recognized for the tax consequences of temporary
        differences by applying statutory tax rates applicable to future years to
        difference between the financial statement carrying amounts and the tax bases
        of
        certain assets and liabilities. Changes in deferred tax assets and liabilities
        include the impact of any tax rate changes enacted during the year.
 
 **Recent
        financial accounting standards**
 
 In
        November 2004, the FASB issued Statement of Financial Accounting Standards
        No.
        151, "Inventory Costs". This statement amends the guidance in ARB No. 43
        Chapter
        4 “Inventory Pricing”, to require items such as idle facility costs, excessive
        spoilage, double freight and re-handling costs to be expenses in the current
        period, regardless if they are abnormal amounts or not. This Statement will
        become effective for the Company in the first quarter of 2006. The Company
        is
        primarily a service provider and as such the adoption of SFAS 151 is not
        expected to have a significant effect on the Company's financial
        statements.
 
 In
        December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share Based
        Payment” (“SFAS 123R”), a revision to SFAS No. 123, “Accounting for Stock-Based
        Compensation”. SFAS 123R supercedes Accounting Principles Board Opinion No. 25,
“Accounting for Stock Issued to Employees”, and amends SFAS No. 95, “Statement
        of Cash Flows”. SFAS 123R requires that the Company measure the cost of employee
        services received in exchange for equity awards based on the grant date fair
        value of the awards. The cost will be recognized as compensation expense
        over
        the vesting period of the awards. The Company is required to adopt SFAS 123R
        for
        reporting periods beginning after December 15, 2005. Under this method, the
        Company will begin recognizing compensation cost for equity-based compensation
        for all new or modified grants after the date of adoption. In addition, the
        Company will recognize the unvested portion of the grant date fair value
        of
        awards issued prior to adoption based on the fair values previously calculated
        for disclosure purposes over the remaining vesting period of the outstanding
        options and warrants. The Company is currently evaluating the potential effect
        that the adoption of SFAS 123R will have on the Company’s financial statement
        presentation and disclosures.
 
 In
        December 2004, the FASB issued SFAS No. 153, “Exchanges of Non-monetary Assets,
        an amendment to APB Opinion No. 29” (“SFAS 153”). SFAS 153 amends Accounting
        Principles Board Opinion No. 29, “Accounting for Non-monetary Transactions”, to
        require that exchanges of non-monetary assets be measured and accounted for
        at
        fair value, rather than at carryover basis, of the assets exchanged.
        Non-monetary exchanges that lack commercial substance are exempt from this
        requirement. SFAS 153 is effective for non-monetary exchanges entered into
        in
        fiscal periods beginning after June 15, 2005. The Company does not routinely
        enter into non-monetary exchanges. Accordingly, the Company does not expect
        that
        the adoption of SFAS 153 will have a significant effect on the Company’s
        financial statement presentation or disclosures.
  In
        May
        2005, the FASB issued Statement No. 154 (" SFAS 154") "Accounting Changes
        and
        Error Corrections - a replacement of APB Opinion No. 20 and FASB Statement
        No.
        3." SFAS 154 changes the requirements for the accounting for and reporting
        of a
        change in accounting principle. APB Opinion 20 previously required that most
        voluntary changes in accounting principle be recognized by including in net
        income of the period of the change the cumulative effect of changing to the
        new
        accounting principle. SFAS 154 requires retrospective application to prior
        periods' financial statements of changes in accounting principle, unless
        it is
        impracticable to determine the period-specific effects of the cumulative
        effect
        of the change. In the event of such impracticality, SFAS 154 provides for
        other
        means of application. In the event the Company changes accounting principles,
        it
        will evaluate the impact of SFAS 154.
 
 **Dependency
        on key management**
 
 The
        future success or failure of the Company is dependent primarily upon the
        efforts
        of Mark A. Josipovich and Daniel T. Josipovich, two of the Company’s principal
        founders. The Company does not have insurance covering such officers’ liability
        and term life insurance. The Company has entered into two-year employment
        contracts with the key officers of the Company (see note 10).
 
 **Concentration
        of credit risk**
 
 The
        Company’s financial instruments that are exposed to concentrations of credit
        risk consist principally of cash and receivables. The Company places its
        cash in
        what it believes to be credit-worthy financial institutions. However, cash
        balances have exceeded FDIC insured levels at various times during the year.
        The
        Company has not experienced any losses in such accounts and believes it is
        not
        exposed to any significant risk in cash. The Company’s trade receivables are due
        from a broad customer base and each individual receivable amount constitutes
        a
        relatively small value.
  
 
 **THE
        BLUEBOOK INTERNATIONAL HOLDING COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
 
 **Reclassifications**
 
 Certain
        amounts from the prior years have been reclassified to conform with current
        year
        presentation.
 
 **NOTE
        2. PROPERTY AND EQUIPMENT**
 
 Property
        and equipment consists of the following as of December 31, 2005:
 
 Furniture
              
              $
              45,494Office
                  equipment
              
              
              251,960297,454Less
                  accumulated depreciation
              
              
              (230,014$
              67,440
  Depreciation
        expense charged to operations in 2005 and 2004 was $39,606 and $41,280,
        respectively.
 
 Included
        in equipment is $38,600 of equipment under capital lease at December 31,
        2005.
        Included in accumulated depreciation and amortization is accumulated
        amortization of assets under capital lease of $7,077 at December 31,
        2005.
 
 **NOTE** **3.** **SOFTWARE SOLUTION DEVELOPMENT COSTS**
 
 Software
        solution development costs consist of the following as of December 31, 2005:
 
 Developed
                  software
              
              $
              1,114,032Software
                  in development
              
              
              206,7351,320,767Less
                  accumulated amortization
              
              
              (633,045$
              687,722
  
 
 **THE
        BLUEBOOK INTERNATIONAL HOLDING COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
 
 Amortization
        of software solution development costs charged to operations in 2005 and
        2004
        was $119,687 and $89,599, respectively. In 2004 the estimated useful life
        of the
        B.E.S.T. 7 software was changed from 24 months for both capitalized data
        base
        and technology costs to 30 months for the capitalized data base costs and
        15
        months for the capitalized technology costs. The change in estimate for the
        useful lives of the B.E.S.T. 7 components resulted in a decrease in amortization
        of $98,127 for the year ended December 31, 2004. As of December 31, 2005,
        software solution development costs consist primarily of the Company’s
        investments in B.E.S.T.7, B.E.S.T.Net , InsureBASE and Insure to Value.
        B.E.S.T.Net is expected to be placed in service during 2006. The following
        is a
        schedule by years of future minimum amortization of programming costs as
        of
        December 31, 2005:
 
 **Year
                    Ending December 31,**
                
                **Amount**2006
                
                $
                179,0722007
                
                
                159,2232008
                
                
                140,0842009
                
                
                140,0842010
                
                
                69,259Total
                
                $
                687,722
 
 **NOTE****4.****INTANGIBLE ASSETS**
 
 Intangible
        assets consist of the following as of December 31, 2005:
 **2005**Graphic
                    arts & other
                
                $
                39,712Customer
                    list
                
                
                5,01044,722Less
                    accumulated amortization
                
                
                36,114$
                8,608
  Amortization
        of intangibles charged to operations in 2005 and 2004 was $7,036 and $9,241,
        respectively. The following is a schedule by years of future minimum
        amortization of intangible assets as of December 31, 2005:
 **Year
                    Ending December 31,**
                
                **Amount**2006
                
                $
                5,5482007
                
                
                1,0982008
                
                
                5012009
                
                
                5012010
                    and after
                
                
                960Total
                
                $
                8,608
 
 **NOTE** **5.** **CAPITAL STOCK TRANSACTIONS**
 
 On
        April
        24, 2003, Cotelligent, Inc. filed a demand for arbitration against Bluebook
        in
        Case No. 731310018503 ARC, asserting a claim for breach of contract arising
        out
        of a consulting services agreement between Cotelligent and Bluebook. Bluebook
        filed cross-claims on May 29, 2003. Effective as of May 3, 2004, Bluebook
        and
        Cotelligent agreed to a mutual settlement of the entire arbitration pursuant
        to
        a Settlement Agreement. Under the terms of the Settlement Agreement, Cotelligent
        converted all of its approximately 5.3 million shares of Bluebook Series
        C
        Preferred Stock into shares of Bluebook common stock on a one-for-one basis.
        These shares represent 265,835 shares of the Company’s common stock, which
        amount has been retroactively presented to
        reflect the 1 for 20 reverse stock split declared on November 17, 2004.
 
 In
        September 2004, the Company issued 57,775 shares
        of
        the Company’s common stock as settlement of $83,930 debt to certain consultants
        and employees. In September 2004 the Company issued 10,000 shares
        of
        the Company’s common stock as a partial payment to a $30,000 loan from a related
        party. The Company also issued 3,000  shares
        of
        common stock in connection with the settlement of outstanding litigation.
 
 In
        October 2004, the Company increased its number of authorized shares of common
        stock from 50,000,000 to 150,000,000 shares.
  
 
 **THE
        BLUEBOOK INTERNATIONAL HOLDING COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
 
 During
        2004, the Company issued 2,773,333 shares of common stock upon conversion
        of
        2,050 shares of Series B Convertible Preferred Stock, being all of the
        outstanding shares of Series B Convertible Preferred Stock. The preferred
        shares
        were converted to common stock at a discount of 25% of the market price at
        the
        date of conversion, resulting in a $684,333 beneficial conversion feature,
        which, based on guidance in EITF 98-5, has been reflected as a dividend
        distribution in the accompanying financial statements and was calculated
        by
        taking the differential between the conversion price pursuant to the conversion
        certificate and the market price of the common stock on the date of the
        conversion, a difference of $0.25, and
        multiplying it by the number of shares issued. (see Note 9)
 
 During
        2004, the Company also settled $1,040,874 of debts owed to certain members
        of
        the Company’s management and stockholders through the issuance of 1,387,833
        shares common
        stock. The shares were issued at a discount of 25% of the market price at
        the
        date of conversion, resulting in an additional compensation expense of $364,953,
        which has been reflected in selling, general and administrative expenses
        the
        accompanying financial statements.
 
 On
        November 17, 2004, the Company effected a one-for-twenty reverse stock split.
        All share and per share amounts have been retroactively
        presented as if
        the reverse split occurred as of the beginning of the period.
 
 On
        November 19, 2004, the Company issued to accredited investors, pursuant to
        a
        Securities Purchase Agreement, 2,131,033 shares of common stock of the Company
        and warrants to purchase an aggregate of 426,206 shares of common stock for
        an
        aggregate consideration of $1,902,585. As part of the offering the Company
        agreed to register the common stock issued within a specified time period
        or pay
        a penalty for each month the stock remained unregistered. The Company was
        unable
        to register the stock in the time frame required and ultimatey withdrew the
        registration filing. The shareholders agreed to a maximum penalty in the
        aggregate of $213,101. This amount was recorded in selling, general, and
        administratve expenses in 2005. A discussion of the warrants is noted
        below.
 
 Following
        this sale, the Company issued a total of 418,074 shares of common stock to
        a
        creditor of the Company in settlement of debts totaling $438,978 pursuant
        to a
        Convertible Promissory Note issued by the Company in August 2004; issued
        a total
        of 10,000 shares of common stock to another creditor of the Company in
        settlement of debts totaling $10,000 pursuant to a Share Purchase Agreement
        dated November 8, 2004; and issued a total of 306,667 shares of common stock
        to
        a consultant to the Company for consulting services rendered.
 
 On
        November 23, 2005, the Company agreed to issue 30,000 shares of common stock
        to
        a debtor for extension of a note that was due. The stock to be issued had
        a
        market value of $0.50 per share on the date of the transaction and the economic
        value of the transaction was recorded as $15,000 of prepaid interest expense
        to
        be amortized over the period of the extension of the note. On November 25,
        2005,
        the Company agreed to issue 50,000 shares of common stock to a consultant
        as
        payment of a one year consulting contract. The stock to be issued had a market
        value of $0.50 per share on the date of the transaction and the economic
        value
        of the transaction was recorded as $25,000 of prepaid consulting fees to
        be
        amortized over the one year period of the contract. On July 1, 2005, the
        Company
        recognized the economic value of 45,250 shares of common stock to be issued
        at a
        market price as of that date of $0.75 per share of common stock as consulting
        expense for shares to be issued to a consultant to the company for past
        services.
  **Warrants**
 
 As
        noted
        above, on November 19, 2004 the Company issued 426,206 warrants as part of
        a
        private placement of the Company’s stock. The warrants issued to the accredited
        investors have an exercise price of $1.31 per share and are exercisable
        immediately. In addition, the Company issued a warrant to purchase 170,483
        shares of common stock to the placement agent for the transactions contemplated
        by the Securities Purchase Agreement. The warrant issued to the placement
        agent
        has a term of five years and an exercise price of $1.15 per share and is
        exercisable immediately. If the underlying shares for the warrants are
        registered at the time of exercise the shares will be settled by cash
        settlement. If the underlying shares for the warrants are not registered
        at the
        time of exercise the warrant holder may elect to settle the shares on a cashless
        basis and receive the number of shares determined by multiplying the number
        of
        warrant shares by the ratio of the average closing price for the five days
        immediately prior to the exercise less the exercise price to the closing
        price
        for the five days immediately prior to the exercise date. The value of the
        warrants was included in Paid in Capital as of the date of issuance because,
        based on guidance in SFAS 133 and EITF 00-19, the settlement of the warrants
        will be made in shares of unregistered common stock; there are sufficient
        authorized unissued shares to settle the warrants; there is a specific number
        of
        shares subject to the warrants; cash payments are not required to the warrant
        holders for failure to make timely SEC filings; there are no make whole
        provisions to compensate the warrant holder after the holder sells the shares
        issued in the market at a price below some defined threshold value; requirements
        for net cash settlement, which is delivery of immediately available funds
        is
        similar for existing shareholders; the warrant holders have no rights greater
        than those of existing shareholders; and there is no requirement to post
        collateral related to the warrants. As of December 31, 2005 none of these
        warrants were exercised. If, in the future, all of the warrants are exercised
        for cash, the Company will issue 596,689 shares for $754,385 and the cash
        would
        be available for operations and investment by the Company. If, in the future,
        all warrants are settled on a cashless basis the Company will receive no
        additional money and the number of shares issued would be dependent upon
        the
        market price of the Company’s common stock for the five days preceding the
        exercise date.
  
 
 **THE
        BLUEBOOK INTERNATIONAL HOLDING COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
 
 On
        January 18, 2005 the Company issued a warrant to purchase 160,000 shares
        of the
        common stock of the company at a price of $1.40 per share to a consultant
        to the
        Company as part of a one year consulting agreement. The warrants were accounted
        for in accordance with EITF 96-18 and are being revalued at the end of each
        reporting period. The fair market value of the warrants, based on a calculation
        using the Black-Scholes Option Pricing Model, was determined to be $68,160
        as of
        December 31, 2005 of which $64,799 was amortized as consulting expense during
        the year ended December 31, 2005.
 
 The
        activity related to the issuance, exercise and cancellation of warrants is
        as
        follows:
 
 Warrants
              
              Range
                  of Exercise PricesWarrants,
                  January 1, 2004
              
              
              -
              
              
              -Warrants
                  issued 2004
              
              
              596,689
              
              $
              1.15
                  - $1.31Warrants
                  exercised 2004
              
              
              -
              
              
              -Warrants
                  cancelled 2004
              
              
              -
              
              
              -Warrants,
                  December 31, 2004
              
              
              596,689
              
              $
              1.15
                  - $1.31Warrants
                  issued 2005
              
              
              160,000
              
              $
              1.40Warrants
                  exercised 2005
              
              
              -
              
              
              -Warrants
                  cancelled 2005
              
              
              -
              
              
              -Warrants,
                  December 31, 2005
              
              
              756,689
              
              $
              1.15
                  - $1.40
  **NOTE** **6.** **** **LOAN AGREEMENTS**
 
 On
        March
        31, 2004, we entered into a loan agreement for $120,000, of which $115,000
        was
        outstanding as of December 31, 2005. The loan bears interest at the rate
        of 10%
        per annum. The maturity date of the loan has been extended to September 15,
        2006
        and is subject to penalties of $7,500 at July 15, 2006 unless an additional
        $10,000 has been paid at that time whereas the penalty would be reduced to
        $5,000. The additional $10,000 was not paid on July 15, 2006 and the Company
        is
        liable for an additional $7,500 dollars in penalties. The Company has further
        extended 40,000 shares
        to be granted as further compensation for the extension of the note. The
        loan is
        due in full on September 15, 2006 and is secured by the Company’s accounts
        receivable, tax refunds, deposit accounts, and cash and cash equivalents.
        If the
        collateral securing the loan is insufficient, the loan is also secured by
        the
        shares of the Company’s common stock held by Mark A. Josipovich, our Chairman of
        the Board, Chief Executive Officer, President, and Treasurer. The loan requires
        that the Company comply with certain
        covenants, including preserving its corporate existence, maintaining all
        rights
        and permits, complying with all applicable laws, and maintaining its properties
        used or useful in its business.
 
 On
        November 10, 2005, the Company entered into an accounts receivable factoring
        agreement. The agreement allowed the Company to receive advances from the
        Factor
        for certain receivables at a 10% discount from invoice amount. If the
        receivables were collected and the advances from the factor were paid off
        within
        30 days the Company received 5% back from the factor. If, however, the
        receivable went 60 days past due, the factor was entitled to the full 10%.
        As of
        December 31, 2005, the Company had advances totaling $51,003 due to the
        factor.
 
 During
        2005 the company received an advance of $50,000 from Bathgate Capital Partners
        that was unsecured, bore interest at a rate of 12% per annum, with no formal
        terms of repayment. This advance was outstanding at December 31, 2005, and
        was
        made in anticipation of the Company and Bathgate entering into a formal
        agreement.
 
 Subsequent
        to December 31, 2005, the Company received further advances from Bathgate
        of
        $944,000. On July 23, 2006 the Company and Bathgate formalized a note agreement
        relating to these advances that allows the company borrowings up to $1,250,000.
        Advances under the financing bear interest at a rate of 12% per annum, and
        are
        due six months from the final date of the closing of the loan. This loan
        is
        secured by all of the assets of the Company up to the amount owed. As of
        August
        16, 2006 the Company was obligated to issue Bathgate Capital Partners, a
        warrant
        to purchase up to 1,250,000 shares of common stock at $1.05 dollars per share
        as
        a debt placement fee.
 
 **NOTE** **** **7.** **** **INCOME TAXES**
 
 As
        of
        December 31, 2005, the Company had Federal net operating loss carry forwards
        of
        approximately $7,516,000 expiring in various years through 2025, which can
        be
        used to offset future taxable income, if any. No deferred tax asset benefit
        for
        these operating losses has been recognized in the financial statements due
        to
        the uncertainty as to their realizability in future periods.
 
 Due
        to
        the restrictions imposed by the Internal Revenue Code regarding substantial
        changes in ownership of companies with loss carry forwards, the utilization
        of a
        portion of the Company’s federal net operating loss carry forwards may be
        limited as a result of changes in stock ownership in prior fiscal years.
  
 
 **THE
        BLUEBOOK INTERNATIONAL HOLDING COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
 
 The
        Company’s net deferred tax assets (using a federal corporate income rate of 34%)
        consist of the following at December 31, 2005:
 **2005**Benefit
                    of operating loss carry forward
                
                $
                2,555,000Increase
                    in valuation allowance
                
                
                (2,555,000
                )Net
                    deferred tax asset
                
                $
                —
 
 As
        a
        result of the Company’s significant operating loss carry forward and the
        corresponding valuation allowance, no income tax expense (benefit) has been
        recorded at December 31, 2005 and 2004. The provision for income taxes using
        the
        statutory federal income tax rate as compared to the Company’s effective tax
        rate is summarized below:
 
 **December
                  31,****2005**
              
              **2004**Tax
                  expense (benefit) at statutory rate
              
              
              (34
              %)
              
              (34
              %)Adjustments
                  to change in valuation allowance
              
              
              34
              %
              
              34
              %—
              
              
              —
 
 **NOTE** **** **8.** **RELATED PARTY TRANSACTIONS**
 
 The
        amount due to stockholders and related parties was $429,416 as of December
        31,
        2005. The amount due to stockholders as of December 31, 2005 consists of
        accrued
        salaries payable to our President and Chief Executive Officer, Mark A. Josipovich,
        our Chief Operating Officer, Daniel
        T. Josipovich, accrued consulting fees payable to the father of the President
        and
        Chief Operating Officer of the Company and salary due to a sales person who
        is
        the sister of the President and Chief Operating Officer of the Company.
 
 On
        June
        10, 2005, the Company entered into a note payable with Daniel E. Josipovich,
        the
        father of the Company’s President and Chief Executive Officer, in the amount of
        $110,000 due and payable on September 15, 2005. The note bears an interest
        rate
        of ten percent (10%) per annum and the one time payment of a five percent
        (5%)
        loan fee equal to $5,500. The note was extended to September 10, 2006, in
        addition, Mr. Daniel E. Josipovich advanced additional sums of $10,000 September
        21, 2005; $20,000 on September 30,2005; $15,000 on October 14, 2005 and $12,000
        on October17, 2005 under the same terms as the original note. The total amount
        due under the note to Mr. Daniel E. Josipovich as of December 31, 2005 was
        $167,000. Subsequent to December 31, 2005, Mr. Daniel E. Josipovich advanced
        $30,000 to the Company on January 16, 2006 and an additional $50,000 on the
        January 17, 2006. In addition, Mr. Josipovich extended the maturity of all
        notes
        due him from the Company to August 30, 2006
 
 Effective
        as of January 1, 2002, Bluebook International entered into a consulting
        agreement with Daniel E. Josipovich, father of the Company’s executive officers
        Mark A. Josipovich and Daniel T. Josipovich, for a term of two years with
        an
        automatic extension of successive two-year periods. Aggregate fees paid or
        payable to Daniel E. Josipovich, for consulting services and related expenses
        during the years ended December 31, 2005 and 2004 were $150,000 and $150,000,
        respectively.
 
 As
        part
        of the Amended and Restated Asset Purchase and Sale Agreement, dated September
        15, 2001, the Company is obligated to pay a royalty to Daniel E. and Dorothy
        Josipovich in the amount of 6% of net revenue, defined as the aggregate of
        all
        gross revenues, sales, and receipts of whatever nature or kind received by
        the
        Company, less any returns, rebates, discounts, allowances, rejections and
        credits, and less the actual out-of-pocket costs and expenses incurred, except
        depreciation, reserves, taxes, interest and extraordinary expenses. As of
        December 31, 2005 and 2004, under the above definition, the Company has negative
        net revenue; therefore no royalty expenses were accrued.
 
 During
        2004 the Company issued 2,773,333 shares of common stock upon the conversion
        of
        2,050 shares of Series B Convertible Preferred Stock beneficially owned by
        the
        parents of the Chief Executive officer. The difference between the market
        price
        at the date of the conversion and the conversion price was recorded as a
        dividend distribution. (see Note 6)
 
 During
        2004 the Company settled $1,040,874 of debts owed to certain members of the
        Company’s management and stockholders through the issuance of 1,387,833 shares of common
        stock. The difference between the market price as of the date of the conversion
        and the conversion price for the debt settlement of $364,953 was recorded
        as
        compensation costs in the accompanying statement of operations. (see Note
        6)
 
 **NOTE** **** **9.** **COMMITMENTS AND CONTINGENCIES**
 
 **Operating
        leases**
 
 The
        Company leases office space and certain office equipment under non-cancelable
        operating leases expiring through September 2006. Total rental expense for
        the
        leases for the years ended December 31, 2005 and 2004 was $70,784 and $41,093,
        respectively. The remaining obligation under the lease is $54,980 through
        its
        expiration in September 2006.
  
  **THE
        BLUEBOOK INTERNATIONAL HOLDING COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
 
 **Capital
        Lease**
 
 During
        2005 the Company entered into a capital lease for data processing equipment.
        The
        lease expires in January 2007. Future minimum lease payments as of December
        31,
        2005 were as follows:
 
 Year
                  ending December31,
              
              **Amount**2006
              
              $
              25,1312007
              
              
              2,09427,225Less
                  amount representing interest
              
              
              (3,815
              )Present
                  value of net minimum lease payments
              
              
              23,410Less
                  current portion
              
              
              (21,363
              )$
              2,047
 
 **Employment
        agreements**
  In
        September 2001, Bluebook International entered into employment agreements
        with
        Mark A. Josipovich and Daniel T. Josipovich for a term of two years with
        an
        automatic extension of successive one-year periods. Effective October 1,
        2001
        the Company assumed these agreements and expanded the services to include
        each
        person’s executive position. Under these agreements, Mark A. Josipovich is
        employed as the Chief Executive Officer, President, and Secretary, and Daniel
        T.
        Josipovich is employed as the Chief Operating Officer, each with an annual
        salary of $180,000, plus health insurance benefits, term life insurance benefits
        and the right to participate in any future employee stock option, retirement,
        profit sharing or other benefit plans offered in the future to similarly
        situated employees. The employment agreements also contain indemnification
        and
        confidentiality provisions. The agreements also provide that we should reimburse
        the employee for all reasonable and necessary expenses incurred on our behalf.
        In the event of termination without cause by Mark A. Josipovich or Daniel
        T.
        Josipovich or termination with cause by us, Mark A. Josipovich and Daniel
        T.
        Josipovich are entitled to all accrued and unpaid compensation as of the
        date of
        termination. In the event of termination with cause by Mark A. Josipovich or
        Daniel T. Josipovich or termination without cause by us, Mark A. Josipovich
        or
        Daniel T. Josipovich are entitled to all accrued and unpaid compensation
        as of
        the date of termination and the total amount of annual salary from the date
        of
        termination until the end of the term of the employment agreements .
        The
        agreements have continued to automatically extend.
 
 **Litigation**
  On
        June
        23, 2005,  the
        Company was named a defendant in Eric Allison v. Christopher Albrick, The
        Bluebook International Holding Company and Mark Josipovich - Placer County
        Superior Court Case No. SCV18138. The plaintiff Allison filed this action
        for
        Breach of a Written Contract and Foreclosure of Security Interest. The action
        arises from a written promissory note (“Note”) from Defendant Albrick as
        borrower in favor of Plaintiff dated August 11, 2004 in the face amount of
        $450,000. This Note is secured by 418,074 shares of stock in Bluebook owned
        by
        Albrick as a result of Albrick converting a loan by him to Bluebook to equity
        in
        Bluebook (the “Bluebook Stock”). The causes of action in the original Complaint
        allege liability on the part of Bluebook based on allegations that Bluebook
        is
        the “alter ego” of Albrick.
  Bluebook
        has cross-complained against Albrick for indemnity in that Albrick is the
        obligor under the Note, not Bluebook. Albrick secured his Note in favor of
        Plaintiff Allison with his Bluebook Stock. Plaintiff has made demand on Albrick
        to deliver the Bluebook Stock to him under the terms of the Note and collateral
        agreement.
  Defendant
        Albrick has cross-complained against Bluebook for breach of oral agreement
        and
        fraud contending that the Bluebook Stock delivered to Albrick in November
        2004
        would be registered in December 2004. Albrick contends that he has been unable
        to sell his Bluebook Stock, which in turn has prevented him from being able
        to
        pay the $450,000 due Plaintiff Allison under the Note. Albrick further alleges
        a
        cause of action for Interference with Prospective Economic Advantage, claiming
        that his inability to sell the Bluebook Stock has damaged further economic
        activity between himself and Plaintiff Allison, with unknown damages to him.
        Finally, Albrick alleges Bluebook is in breach of a consulting agreement
        between
        himself and Bluebook, and that Bluebook owes him $71,000 for “consulting
        services”.
  Bluebook
        shall vigorously defend this action by Plaintiff and Albrick. Bluebook was
        not a
        party to the Note and has no responsibility for the obligation of Albrick
        who
        borrowed the funds under the Note from Plaintiff. Moreover, Bluebook as a
        publicly traded company, contends it certainly is not the “alter ego” of
        Albrick. As regards the Cross-Complaint of Albrick, Bluebook intends to show
        there was no agreement to register the Bluebook Stock in December 2004, and
        Albrick has been paid in full for his past consulting services.
  
  **BLUEBOOK
        INTERNATIONAL HOLDING COMPANY AND SUBSIDIARY**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)**
 **FOR
        THE YEARS ENDED DECEMBER 31, 2005 AND 2004**
  On
        February 3, 2003, Bluebook was named a defendant in Morris Diamond, et al.
        v.
        The Bluebook International Holding Company, New York Supreme Court, Monroe
        County Case No. 1204/03. The Diamond case was recently settled by the Company
        and the plaintiffs. In the Diamond case, plaintiffs alleged that Bluebook
        wrongfully withheld the issuance and delivery of plaintiffs’ shares of Bluebook
        common stock, thereby damaging plaintiffs in the loss of the value of their
        Bluebook stock. On November 10, 2004, the Company and the plaintiffs entered
        into a settlement agreement pursuant to which all parties agreed to a general
        release of their claims and the Company agreed to pay $64,120 and issue 3,000
        shares of common stock to certain of the plaintiffs.
  On
        April
        24, 2003, Cotelligent, Inc. filed a demand for arbitration against Bluebook
        in
        Case No. 731310018503 ARC, asserting a claim for breach of contract arising
        out
        of a consulting services agreement between Cotelligent and Bluebook. Bluebook
        filed cross-claims on May 29, 2003. Effective as of May 3, 2004, Bluebook
        and
        Cotelligent agreed to a mutual settlement of the entire arbitration pursuant
        to
        a Settlement Agreement. Under the terms of the Settlement Agreement, Cotelligent
        converted all of its approximately 5.3 million shares of Bluebook Series
        C
        Preferred Stock into shares of Bluebook common stock on a one-for-one basis.
        These shares represent 265,835 shares of the Company’s common stock. In
        addition, Cotelligent agreed to deliver source code developed by Cotelligent
        for
        Bluebook pursuant to the consulting services agreement.
 
 **NOTE
        11. LEGAL FEE PAYABLE**
 
 On
        January 19, 2005, the Company entered into an agreement to settle certain
        outstanding legal costs for $415,000. Upon settlement, the Company paid $50,000,
        with the remainder payable commencing May 19, 2005 in monthly installments
        of
        $5,000 until the obligation has been paid in full. However, upon the next
        equity
        financing event equal to at least $3 million, the Company shall pay $300,000
        within five business days of the closing of the transaction and receipt of
        the
        proceeds. Should the Company raise less than $3 million, the Company shall
        pay
        ten percent of the proceeds of the transactions. As of December 31, 2005,
        the
        balance owing for legal fee payable was $359,000.
 
 **NOTE
        12. SUBSEQUENT EVENTS**
 
 During
        2005 the company received an advance of $50,000 from Bathgate Capital Partners
        that was unsecured, bore interest at a rate of 12% per annum, with no formal
        terms of repayment. This advance was outstanding at December 31, 2005, and
        was
        made in anticipation of the Company and Bathgate entering into a formal
        agreement.
 
 Subsequent
        to December 31, 2005, the Company received further advances from Bathgate
        of
        $944,000. On July 23, 2006 the Company and Bathgate formalized a note agreement
        relating to these advances that allows the company borrowings up to $1,250,000.
        Advances under the financing bear interest at a rate of 12% per annum, and
        are
        due six months from the final date of the closing of the loan. This loan
        is
        secured by all of the assets of the Company up to the amount owed. As of
        August
        16, 2006 the Company was obligated to issue Bathgate Capital Partners, a
        warrant
        to purchase up to 1,250,000 shares of common stock at $1.05 dollars per share
        as
        a debt placement fee.
  On
        April
        4,2006, Paul Sheriff resigned from the board of directors due to conflicts
        in
        his schedule. The Company has plans to replace this vacant position.
  On
        May 4,
        2006 and Pursuant to Rule 477(a) promulgated under the Securities Act of
        1933,
        as amended (the "Securities Act"), The Bluebook International Holding Company
        (the "Company") applied for an order granting the immediate withdrawal of
        its
        Registration Statement on Form SB-2 originally filed on January 19, 2005,
        as
        amended by Amendment No. 1 thereto filed on April 24, 2005, as further amended
        by Amendment No. 2 thereto filed on September 7, 2005, and as further amended
        by
        Amendment No. 3 thereto filed on January 19, 2006, together with all exhibits
        thereto, Commission File No. 333-121882 (collectively, the "Registration
        Statement"). The Company and the Selling Stockholders under the Registration
        Statement have agreed at this time to request for withdrawal of the resale
        offering of shares of the Company's common stock and warrants contemplated
        in
        the Registration Statement. No shares of the Company's common stock or warrants
        have been sold under the Registration Statement.
 
 On
        June
        8, 2006, Mr. Klein extended the termination of his note until September 15,
        2006, in consideration of immediate payment upon execution of this agreement
        of
        $15,000 from the Company to Mr. Klein via wire issuance of the common shares
        currently due to Mr. Klein by the Company, including 18,000 additional shares
        of
        common stock. The agreement specified a penalty of $7,500 for non-payment
        of the
        total due Mr. Klein by July 15, 2006, except if payment of an additional
        $10,000
        is made by July 15, 2006, in which case the non-payment penalty assessed
        on July
        15, 2006 will be in the amount of $5,000. The additional payment of $10,000
        was
        not made on July 15, 2006 and  the
        Company is
        liable
        to Mr. Klein for an additional $7,500. An additional penalty of $7,500 and
        15,000 shares of the Company’s common stock is due in the case Mr. Klein is not
        repaid in full by the extended termination deadline of September 15, 2006.
 
 During
        the period of April 21, 2006 through July 6, 2006 the Company issued 576,109
        shares of the Company’s common stock valued at an aggreagate amount of $288,055
        to an employee and certain consultants to the Company.
 
 Subsequent
        to December 31, 2005, Mr. Daniel E. Josipovich advanced $30,000 to the Company
        on January 16, 2006 and an additional $50,000 on the January 17, 2006. In
        addition, Mr. Josipovich extended the maturity of all notes due him from
        the
        Company to September 5, 2006.
  
  **ITEM
        8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
        DISCLOSURE**
 
 None.
 
 **ITEM
        8A. CONTROLS AND PROCEDURES**
 
 As
        of the
        end of the period covered by this report, we conducted an evaluation, under
        the
        supervision and with the participation of our chief executive officer and
        principal financial officer of our disclosure controls and procedures (as
        defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act
        of
        1934). Based upon this evaluation, our chief executive officer and principal
        financial officer initially concluded that our disclosure controls and
        procedures are not effective to ensure that information required to be disclosed
        by us in the reports that we file or submit under the Exchange Act are recorded,
        processed, summarized and reported, within the time periods specified in
        the
        Securities and Exchange Commission's rules and forms.
 
 The
        Company’s management, under the supervision and with the participation of our
        chief executive officer and principal financial officer, have reconsidered
        the
        effect on the adequacy of the Company’s disclosure controls and procedures (as
        defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act
        of
        1934) as of the end of the fiscal year ended December 31, 2004 in light of
        the
        error in the capitalization of software development costs. Management has
        determined that the following control deficiencies exist with regard to the
        preparation of our financial statements:
 
 ·
            Inadequate
                staffing and supervision leading to the untimely identification and
                resolution of certain accounting matters;  ·
            Failure
                to perform timely reviews; and  ·
            Inadequate
                preparation and insufficient review and analysis of certain operational
                financial statement account
                reconciliations.  ·
            Untimely
                reporting of capital stock transactions 
 We
        continue to improve and refine our internal controls and we are committed
        to
        remediating the deficiencies in disclosure controls as expeditiously as
        possible. Lack of certain disclosure controls and procedures, could result
        in a
        misstatement of our financial statements. **As
        of December 31, 2005, the Company’s internal disclosure controls were
        ineffective.**
 
 There
        have been no significant changes in our internal controls over financial
        reporting during the most recent fiscal quarter or fiscal year that has
        materially affected, or is reasonably likely to materially affect, our internal
        controls over financial reporting.
 
 **ITEM
        8B. OTHER INFORMATION**
 
 None.
  
 
 **PART
        III**
 
 **ITEM
        9. DIRECTOR****S
        AND****,
        EXECUTIVE OFFICERS****,
        PROMOTORS AND CONTROL PERSONS****;
        COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT**
 
 The
        following table sets forth information regarding our directors and executive
        officers as of December 31, 2005:
 
 **Name**
              
              **Age**
              
              **Position**
              
              **Director
                  Since**Mark
                  A. Josipovich
              
              39
              
              Chairman
                  of the Board, Chief Executive Officer, President, and Treasurer
              
              2001Daniel
                  T. Josipovich
              
              40
              
              Chief
                  Operating Officer and Director
              
              2001Peter
                  Johnson
              
              40
              
              Chief
                  Technology Officer
              
              N/ABrian
                  C. Jones
              
              46
              
              Executive
                  Vice President-Insurance Solutions
              
              N/APaul
                  D. Sheriff
              
              41
              
              Director
              
              2001David
                  M. Campatelli
              
              39
              
              Director
              
              2001
 
 There
        are
        no family relationships between any director and executive officer, except
        for
        Mark A. Josipovich and his brother Daniel T. Josipovich. According to our
        bylaws, the term of office for our directors is one year. Directors hold
        office
        until their successors are elected and qualified.
 
 **Mark
        A. Josipovich** ,
        Chairman of the Board, Chief Executive Officer, President and Treasurer,
        has
        been the entrepreneurial driver of Bluebook’s strategic initiatives . .
        Over
        the past 17 years, he has held various positions with Bluebook including
        management of marketing, staffing, day-to-day operations and product
        development. Mark A. Josipovich has been the President and Chief Executive
        Officer of the Company since October 1, 2001. Prior to that, he was the
        Executive Vice President of the Company.
 
 **Daniel
        T. Josipovich** ,
        Chief
        Operating Officer and Director, designed, directed and managed development
        of
        Bluebook’s most innovative products for the past 23 years. He is also directly
        involved in marketing. Daniel has held various positions with Bluebook including
        management of marketing, staffing, day-to-day operations and product
        development. Daniel T. Josipovich has been the Chief Operating Officer of
        the
        Company since October 2001. Prior to that, he was the Director of Technology
        of
        the Company.
 
 **Peter
        Johnson** has
        been
        the Chief Technology Officer of the Company since he was hired in September
        2004. From November 2003 to September 2004, Mr. Johnson was the SharePoint
        2003
        practice leader as well as the project management leader for Neudesic LLC,
        an
        information technology consulting company. SharePoint 2003 is a communication
        software product developed by Microsoft to share information within a company.
        Prior to working with Neudesic, from August 2000 to November 2003, Mr. Johnson
        served as the Director of Technology for Cotelligent Inc . ,
        a
        software consulting company, where he was in charge of development staffs
        throughout the country.
 
 **Brian
        C. Jones** has
        been
        the Executive Vice President - Insurance Solutions of the Company since January
        2002. From 1999 to 2002, Mr. Jones was the Chief Claims Officer for Kemper
        Home
& Automotive. While at Kemper Home & Automotive, Mr. Jones introduced a
        24/7 call center for loss reporting and several claim distribution processes
        that required system integrations. He was also responsible for underwriting
        operations for California, Florida and Pennsylvania and coordinating marketing
        activities.
 
 **Paul
        D. Sheriff** ,
        Director, has over 18 years experience in programming business applications.
        In
        1991, Mr. Sheriff founded PDSA, Inc., a software consulting company specializing
        in high quality custom software. Mr. Sheriff has been the President and Chief
        Executive Officer of PDSA, Inc. since 1991. He specializes in the development,
        design and deployment of business software solutions. Mr. Sheiff is also
        a
        frequent speaker at Microsoft Developer Days, Microsoft Tech Ed, Microsoft
“MSDN
        Presents,” Access/VBA Advisor Developer Conferences, and user groups across the
        country. Mr. Sheriff is a contributing editor to Access/VBA Advisor magazine
        and
        teaches .NET on Microsoft WebCasts and with Blast Through Learning videos
        (www.blastthroughlearning.com). Mr. Sheriff completed his new book “ASP.NET
        Developer’s Jumpstart” with co-author Ken Getz. Mr. Sheriff resigned as a
        director subsequent to the end of the year.
 
 **David
        M. Campatelli** ,
        Director, has been a Spanish and English Instructor at Long Beach Unified
        School
        District in Long Beach, California for the past five years. Mr. Campatelli
        also
        currently serves as a Teacher and Consultant with the California Reading
        and
        Literature Project in San Diego, California, and lectures, teaches and trains
        for primary language institutes throughout the State of California. Mr.
        Campatelli has been a consultant to Toscana Incorporated, an international
        import/export firm, since 1993.
 
 **Audit
        Committee**
 
 During
        the period covered by this report, the Company did not have a separately
        designated standing audit committee in
 place;
        the Company's entire board of directors served, and currently serves, in
        that
        capacity.
  
  **Audit
        Committee Financial Expert**
 
 During
        the period covered by this report, the Company did not have an audit committee
        financial expert on its board of directors which serves as the Company’s audit
        committee. We believe the costs related to seeking and retaining a financial
        expert to serve on the board of directors at this time is prohibitive. This
        is
        due to the Company's negative cash flow from operations and working capital
        deficit and the fact that we expect to continue to incur negative cash flows
        in
        order to implement our business plan.
 
 **Code
        of Ethics**
  The
        Company has adopted a code of ethics that applies to the Company’s Chief
        Executive Officer, President and Treasurer, Chief Operating Officer, Chief
        Technology Officer, and Executive Vice President - Insurance Solutions. The
        text
        of the Company’s code of ethics has been posted on the Company’s corporate
        website at http://www.bluebook.net.
 
 **Section
        16(a) Beneficial Ownership Reporting Compliance**
 
 Section
        16(a) of the Exchange Act, requires our officers and directors, and persons
        who
        own more than 10% of a registered class of our equity securities, to file
        reports of ownership and changes in ownership (Forms 3, 4 and 5) with the
        SEC.
        Officers, directors and greater than 10% stockholders are required to furnish
        us
        with copies of all such forms which they file.
 
 To
        our
        knowledge, based solely on our review of such reports or written representations
        from certain reporting persons, we believe that all of the filing requirements
        applicable to our officers, directors, greater than 10% beneficial owners
        and
        other persons subject to Section 16 of the Exchange Act were complied with
        during the year ended December 31, 2005.
 
 **ITEM
        10. EXECUTIVE COMPENSATION**
 
 The
        following table sets forth compensation information for our Chief Executive
        Officer and other executive officers as of the end of fiscal year 2005, 2004
        and
        2003.
 
 **Summary
        Compensation Table Annual Compensation**
 **Name
                      and Principal Positions**
                  
                  **Fiscal
                      Year**
                  
                  **Salary**
                  
                  **Bonus**
                  
                  **Other
                      Annual**
                    **Compensation**Mark
                      A. Josipovich
                  
                  
                  2005
                  
                  $
                  180,000
                  
                  
                  
                  
                  $
                  16,689President
                      and Chief
                  
                  
                  2004
                  
                  $
                  180,000
                  
                  
                  —
                  
                  $
                  265,879
                  (1)Executive
                      Officer
                  
                  
                  2003
                  
                  $
                  180,000
                  (2)
                  $
                  39,500
                  
                  $
                  19,147
                  (3)Daniel
                      T. Josipovich
                  
                  
                  2005
                  
                  $
                  180,000
                  
                  
                  
                  
                  $
                  16,503Chief
                      Operating Officer
                  
                  
                  2004
                  
                  $
                  180,000
                  
                  
                  —
                  
                  $
                  358,113
                  (4)2003
                  
                  $
                  180,000
                  (5)
                  $
                  35,800
                  
                  $
                  25,576
                  (6)Peter
                      Johnson
                  
                  
                  2005
                  
                  $
                  110,000
                  
                  
                  
                  
                  $
                  11,060Chief
                      Technology Officer
                  
                  
                  2004
                  
                  $
                  27,500
                  (7)
                  
                  —
                  
                  $
                  35,000
                  (8)Brian
                      C. Jones
                  
                  
                  2005
                  
                  $
                  
                  
                  
                  
                  
                  $Executive
                      Vice President
                  
                  
                  2004
                  
                  $
                  139,200
                  
                  
                  —
                  
                  $
                  94,587
                  (9)Insurance
                      Solutions
                  
                  
                  2003
                  
                  $
                  139,200
                  
                  
                  —
                  
                  
                  —
  (1)
        Represents $265,879 of debt in the form of accrued but unpaid compensation,
        which amount was paid off in November of 2004 upon receipt of 345,505 shares
        of
        the Company’s common stock.
 
 (2)
        Includes $160,000 that was deferred at the election of the executive officer,
        which amount was discharged in October 2004 in exchange for shares of the
        Company’s common stock.
 
 (3)
        Includes reimbursement of $9,267 for automobile expenses and $9,880 for health
        insurance.
 
 (4)
        Represents $358,113 of debt in the form of accrued but unpaid compensation,
        which amount was paid off in November of 2004 upon receipt of 477,484 shares
        of
        the Company’s common stock.
  
 
 (5)
        Includes $150,000 that was deferred at the election of the executive officer,
        which amount was discharged in October 2004 in exchange for shares of the
        Company’s common stock.
 
 (6)
        Includes reimbursement of $15,658 for automobile expenses and $9,918 for
        health
        insurance.
 
 (7)
        Peter
        Johnson’s annual salary for fiscal year 2004 was $110,000. Mr. Johnson was hired
        in September of 2004 and received a pro-rata share of his annual salary in
        the
        amount of $27,500 for the fiscal year 2004.
 
 (8)
        Represents accrued consultant fees of $35,000 which amount was paid in September
        2004 upon receipt of 25,000 shares of common stock.
 
 (9)
        Represents $94,587 of debt in the form of unpaid travel expenses which amount
        was paid off in October of 2004 upon receipt of 126,116 shares of common
        stock.
 
 **Employment
        agreements**
 
 In
        September 2001, Bluebook International entered into employment agreements
        with
        Mark A. Josipovich and Daniel T. Josipovich for a term of two years with
        an
        automatic extension of successive one-year periods.
 
 Effective
        October 1, 2001, Bluebook Holding assumed these agreements and expanded the
        services to include each person’s executive position. Under these agreements,
        Mark A. Josipovich is employed as the Chief Executive Officer, President,
        and
        Treasurer, and Daniel T. Josipovich is employed as the Chief Operating Officer,
        each with an annual salary of $180,000, plus health insurance benefits, term
        life insurance benefits and the right to participate in any future employee
        stock option, retirement, profit sharing or other benefit plans offered in
        the
        future to similarly situated employees. The employment agreements also contain
        indemnification and confidentiality provisions. The agreements also provide
        that
        we should reimburse the employee for all reasonable and necessary expenses
        incurred on our behalf. In the event of termination without cause by Mark
        A.
        Josipovich or Daniel T. Josipovich or termination with cause by us, Mark
        A.
        Josipovich and Daniel T. Josipovich are entitled to all accrued and unpaid
        compensation as of the date of termination. In the event of termination with
        cause by Mark A. Josipovich or Daniel T. Josipovich or termination without
        cause
        by us, Mark A. Josipovich or Daniel T. Josipovich are entitled to all accrued
        and unpaid compensation as of the date of termination and the total amount
        of
        annual salary from the date of termination until the end of the term of the
        employment agreements.
 
 **Director
        Compensation**
 
 Our
        directors who are not employees of the Company are not paid annual cash fees,
        and do not receive any fees for attending the Board meetings or Committee
        meetings.
 
 **ITEM
        11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
        STOCKHOLDER MATTERS**
 
 The
        following table sets forth information regarding the beneficial ownership
        of our
        common stock as of December
        31, 2005 as to:
 
 ·
            each
                of the executive officers named in the section “Directors, Executive
                Officers, Promoters and Control Persons” above;  ·
            each
                director and nominee for director;  ·
            each
                person who is known by us to own beneficially more than 5% of our
                outstanding common stock; and  ·
            all
                directors and executive officers as a group. 
 We
        determined beneficial ownership in accordance with Rule 13d-3 of the Securities
        Exchange Act of 1934, and the information is not necessarily indicative of
        beneficial ownership for any other purpose. Under such rule, beneficial
        ownership includes any shares as to which the stockholder has sole or shared
        voting power or investment power and also any shares the selling stockholder
        has
        the right to acquire within 60 days. Percentages are based on a total of
        8,760,221 shares of common stock outstanding on December 31, 2005. Shares
        of
        common stock subject to options and warrants currently exercisable or
        convertible, or exercisable or convertible within 60 days of December 31,
        2005,
        are deemed outstanding for computing the percentage of the stockholder holding
        such option or warrant but are not deemed outstanding for computing the
        percentage of any other stockholder.
  
 
 Unless
        otherwise indicated, the address of each listed stockholder is c/o The Bluebook
        International Holding Company, 21098 Bake Parkway, Suite 100, Lake Forest,
        California 92630-2163.
 
 **Name
                    of Beneficial Owner**
                
                **Common
                    Stock**
                  **Number
                    of Shares of**
                  **Common
                    Stock**
                  **Beneficially
                    Owned (1)**
                
                **Percentage**
                  **Ownership
                    of**
                  **Common
                    Stock****Named
                    Executive Officers and Directors**Mark
                    A. Josipovich
                
                
                638,255
                
                
                7.29
                %Daniel
                    T. Josipovich
                
                
                761,234
                
                
                8.69
                %Peter
                    Johnson
                
                
                25,000
                
                
                0.29
                %Brian
                    C. Jones
                
                
                126,116
                
                
                1.44
                %Paul
                    D. Sheriff
                
                
                0
                
                
                0.00
                %David
                    M. Campatelli
                
                
                0
                
                
                0.00
                %**Five
                    Percent Stockholders of Common Stock**Daniel
                    E. Josipovich
                
                
                3,543,000
                (2)
                
                40.44
                %Dorothy
                    E. Josipovich
                
                
                3,543,000
                (3)
                
                40.44
                %The
                    Freedom Family, LLC
                
                
                2,733,333
                (4)
                
                31.20
                %Roaring
                    Fork Capital SBIC, L.P.
                
                
                840,000
                (5)
                
                9.59
                %Eugene
                    C. McColley
                
                
                840,000
                (6)
                
                9.59
                %Roaring
                    Fork Capital Management LLC
                
                
                840,000
                (7)
                
                9.59
                %Ian
                    P.Ellis
                
                
                834,000
                (8)
                
                9.52
                %MicroCapital
                    LLC
                
                
                834,000
                (9)
                
                9.52
                %MicroCapital
                    Fund L.P.
                
                
                516,000
                (10)
                
                5.89
                %Chris
                    Albrick
                
                
                418,074
                (11)
                
                5.80
                %All
                    Executive Officers and Directors as a Group (6 Persons)
                
                
                1,399,489
                
                
                17.70
                %
 
 
 (1)
        Unless otherwise indicated, all persons named in the table have sole voting
        and
        investment power with respect to the shares of common stock beneficially
        owned
        by them.
 
 (2)
        Daniel E. Josipovich beneficially owns an aggregate of 3,543,000 shares of
        common stock, consisting of 525,917 shares of common stock held in his name,
        283,750 shares of common stock held in the name of Dorothy E. Josipovich
        and
        2,733,333 shares of common stock owned by The Freedom Family, LLC. These
        shares
        collectively constitute 40.44% of the total number of shares of common stock
        currently issued and outstanding. Daniel E. Josipovich may be deemed to share
        beneficial ownership of the 283,750 shares of common stock held in the name
        of
        Dorothy E. Josipovich and the 2,733,333 shares of common stock owned by The
        Freedom Family, LLC, but hereby disclaims beneficial ownership of shares.
        The
        address of Daniel E. Josipovich is 21391 Avenida Manantial, Lake Forest,
        CA
        92630.
 
 (3)
        Dorothy E. Josipovich beneficially owns an aggregate of 3,543,000 shares
        of
        common stock, consisting of 283,750 shares of common stock held in her name,
        525,917 shares of common stock held in the name of Daniel E. Josipovich and
        2,733,333 shares of common stock owned by The Freedom Family, LLC. These
        shares
        collectively constitute 40.44% of the total number of shares of common stock
        currently issued and outstanding. Dorothy E. Josipovich may be deemed to
        share
        beneficial ownership of the 525,917 shares of common stock held in the name
        of
        Daniel E. Josipovich and the 2,733,333 shares of common stock owned by The
        Freedom Family, LLC, but hereby disclaims beneficial ownership of such shares.
        The address of Dorothy Josipovich is 21391 Avenida Manantial, Lake Forest,
        CA
        92630.
 
 (4)
        The
        address of The Freedom Family, LLC is 21391 Avenida Manantial, Lake Forest,
        CA
        92630.
 
 (5)
        Includes stock underlying a warrant to purchase up to 140,000 shares of common
        stock at an exercise price of $1.31 per share. The address of Roaring Fork
        Capital SBIC, L.P. is 5310 DTC Parkway, Suite i, Greenwood Village, CO 80111.
 
 (6)
        Eugene M. McColley is the natural control person of Roaring Fork Capital
        Management, LLC, which is the general partner and investment advisor to Roaring
        Fork Capital SBIC, L.P. Roaring Fork Capital Management, LLC and Eugene M.
        McColley have investment power and voting control over the 840,000 shares
        of
        common stock held in the name of Roaring Form Capital SBIC, L.P., but each
        disclaims beneficial ownership of these securities. The 840,000 shares of
        common
        stock includes stock underlying warrants to purchase up to 140,000 shares
        of
        common stock at an exercise price of $1.31 per share. The address of Eugene
        C.
        McColley is 5310 DTC Parkway, Suite i, Greenwood Village, CO 80111.
  
  (7)
        Roaring Fork Capital Management, LLC is the general partner and investment
        advisor to Roaring Fork Capital SBIC, L.P. Roaring Fork Capital Management,
        LLC
        and Eugene M. McColley, the natural control person of Roaring Fork Capital
        Management, LLC, have investment power and voting control over the 840,000
        shares of common stock held in the name of Roaring Form Capital SBIC, L.P.,
        but
        each disclaims beneficial ownership of these securities. The 840,000 shares
        of
        common stock includes stock underlying warrants to purchase up to 140,000
        shares
        of common stock at an exercise price of $1.31 per share. The address of Roaring
        Fork Capital Management, LLC is 5310 DTC Parkway, Suite i, Greenwood Village,
        CO
        80111.
 
 (8)
        Ian
        P. Ellis is the natural control person of MicroCapital, LLC, which is the
        general partner and investment advisor to MicroCapital Fund L.P. and
        MicroCapital Fund Ltd. MicroCapital LLC and Ian P. Ellis have investment
        power
        and voting control over the 516,000 shares of common stock held in the name
        of
        MicroCapital Fund L.P. and the 318,000 shares of common stock held in the
        name
        of MicroCapital Fund Ltd, but each disclaims beneficial ownership of these
        securities. The 834,000 shares of common stock includes stock underlying
        warrants to purchase up to 139,000 shares of common stock at an exercise
        price
        of $1.31 per share. The address of Ian P. Ellis is 201 Post Street, Suite
        1001,
        San Francisco, CA 94108. Ian P. Ellis is the principal owner of MicroCapital
        LLC
        and has sole responsibility for the selection, acquisition and disposition
        of
        the portfolio securities by MicroCapital LLC on behalf of its funds.
        MicroCapital LLC is the general partner and investment advisor to MicroCapital
        Fund L.P. and MicroCapital Fund Ltd.
 
 (9)
        MicroCapital LLC is the general partner and investment advisor to MicroCapital
        Fund L.P. and MicroCapital Fund Ltd. MicroCapital LLC and Ian P. Ellis, the
        natural control person of MicroCapital LLC, have investment power and voting
        control over the 516,000 shares of common stock held in the name of MicroCapital
        Fund L.P. and the 318,000 shares of common stock held in the name of
        MicroCapital Fund Ltd, but each disclaims beneficial ownership of these
        securities. The 834,000 shares of common stock includes stock underlying
        warrants to purchase up to 139,000 shares of common stock at an exercise
        price
        of $1.31 per share. The address of MicroCapital LLC is
        201 Post Street, Suite 1001, San Francisco, CA 94108.
 
 (10)
        Includes stock underlying a warrant to purchase up to 86,000 shares of common
        stock at an exercise price of $1.31 per share. The address of MicroCapital
        Fund
        LP is 410 Jessie Street, Suite 1002, San Francisco, CA 94103.
 
 (11)
        Includes stock underlying a warrant to purchase up to 90,000 shares of common
        stock at an exercise price of $1.40 per share. The address of Chris Albrick
        is
        25 Bridgeport, Dana Point, CA 92629.
 
 **ITEM
        12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**
 
 As
        part
        of an Amended and Restated Asset Purchase and Sale Agreement, dated September
        15, 2001, the Company is obligated to pay a royalty to Daniel E. and Dorothy
        E.
        Josipovich in the amount of 6% of net revenue, defined as the aggregate of
        all
        gross revenues, sales, and receipts of whatever nature or kind received by
        the
        Company, less any returns, rebates, discounts, allowances, rejections and
        credits, and less the actual out-of-pocket costs and expenses incurred, except
        depreciation, reserves, taxes, interest and extraordinary expenses. As of
        December 31, 2005 and 2004, under the above definition, the Company has negative
        net revenue; therefore no royalty expenses were accrued.
 
 Effective
        as of January 1, 2002, Bluebook International entered into a consulting
        agreement with Daniel E. Josipovich, father of the Company’s executive officers
        Mark A. Josipovich and Daniel T. Josipovich. Daniel E. Josipovich provides
        consulting services relating to labor and material costs, among other factors
        that affect the pricing information provided by THE BLUEBOOK and our InsureBASE
        product. In addition, Mr. Josipovich provides consulting services relating
        to
        the automation of our database. The consulting relationship with Mr. Josipovich
        is ongoing. The term of the agreement was for two years with automatic annual
        extensions unless terminated with 90 days notice. The agreement is currently
        on
        extension. For his services, the Company has agreed to pay Mr. Josipovich
        $150,000 per year. As of December 31, 2005 and 2004 the amount unpaid to
        him for
        his consulting services rendered were $211,602 and $285,670, respectively.
 
 Paul
        D.
        Sheriff, a director, serves as President of PDSA, Inc., which served as one
        of
        the Company’s consultants from December 1997 until October 2002. PDSA provided
        consulting services relating to programming (coding), product design assistance
        and product development. Aggregate fees billed to us by PDSA for consulting
        services rendered during the year ended December 31, 2002 was $158,770, and
        is
        included in Programming costs. As of December
        31, 2005, accounts payable includes $70,000 due to this vendor.
 
 In
        August
        2002 we entered into a Stock Purchase Agreement with Cotelligent, Inc. in
        which
        we agreed to sell to Cotelligent approximately 5.3 million shares of our
        Series
        C Convertible Preferred Stock for $5.1 million in two tranches. The first
        tranche closed in August 2002 in which Cotelligent purchased approximately
        3.055
        million shares of Series C Convertible Preferred Stock with a combination
        of
        cash in the amount of $1.5 million and extinguishment of $2.1 million of
        outstanding accounts payable.
 
 The
        second tranche closed in December 2002 for the purchase of the remaining
        shares
        of Series C stock in cash in the amount of $1.5 million. Approximately $3
        million of the sale proceeds from the sale of the Series C Convertible Preferred
        Stock represented an investment by Cotelligent in the Company, while the
        remaining $2.1 million was intended to pay for the development of B.E.S.T.Net
        and B.E.S.T.Central. By virtue of its ownership of approximately 5.3 million
        shares of our Series C Convertible Preferred Stock, which were convertible
        into
        an equal number of shares of our common stock, Cotelligent became, at the
        time,
        a beneficial owner of more than 5% of our voting securities. In connection
        with
        this financing, we also entered into the Consulting Agreement with Cotelligent
        under which Cotelligent was to complete development of B.E.S.T.Net and
        B.E.S.T.Central by August 2002. In March 2003, Cotelligent refused to continue
        further development work unless we agreed to pay over $400,000 in invoices,
        which exceeded the total project cost provided in the Consulting Agreement.
        We
        terminated the Consulting Agreement soon thereafter and paid Cotelligent
        $2,413,375 for its services. We disputed that any further amounts were due
        under
        the Consulting Agreement.
  
 
 We
        entered into a mutual settlement agreement with Cotelligent pursuant to which
        all of the approximately 5.3 million shares of Series C Convertible Preferred
        Stock held by
        Cotelligent was converted into the same number of shares of our common stock
        on
        May 6, 2004. These shares represent 265,835 shares of the Company’s common
        stock.
 
 In
        September 2004 the Company issued a total of 57,775 shares of privately placed
        common stock in settlement of debts totaling $83,930 to Peter Johnson, Peter
        Davidson, Julia Sugityo, Steve Byrne, Clint Lien, Keith Klein, Lawrence Rogers
        and Mike Kenney, consultants and employees of the Company, who provided
        consulting services relating to programming (coding), database modeling and
        design, budgeting and forecasting models, internal accounting, artwork design
        and creation, marketing of THE BLUEBOOK and our B.E.S.T.7 software, and employee
        recruiting, development and review. In September 2004, the Company also issued
        10,000 shares of privately placed common stock in partial settlement of a
        $30,000 loan from Robert Dewar ,
        an
        immediate family member of our executive officer Mark A. Josipovich.
 
 In
        October 2004, the Company issued a total of 2,733,333 shares of common stock
        on
        conversion of the Company’s outstanding 2,050 shares of Series B Convertible
        Preferred Stock held by Daniel E. and Dorothy E. Josipovich in the name of
        The
        Freedom Family, LLC. Also in October of 2004, the Company issued:
 
 ·
            354,505
                shares of common stock in settlement of $265,879 of debt owed to
                Mark A.
                Josipovich,
                our President, Chief Executive Officer and a director;  ·
            477,484
                shares of common stock in settlement of $358,113 of debt owed to
                Daniel T.
                Josipovich,
                our Chief Operating Officer and a
                director;  ·
            242,167
                shares of common stock in settlement of $181,625 of debt owed to
                Daniel E.
                Josipovich,
                one of our largest security holders and an immediate family member
                of our
                executive officers Mark A. Josipovich and Daniel T.
                Josipovich;  ·
            157,560
                shares of common stock in settlement of $118,170 of debt owed to
                Michela
                Josipovich , an immediate family member of our executive officers
                Mark A.
                Josipovich and Daniel T. Josipovich;  ·
            126,116
                shares of common stock in settlement of $94,587 of debt owed to Brian
                Jones our Vice President - Insurance Solutions; and  ·
            30,000
                shares of common stock in settlement of $22,500 of debt owed to Robert
                Dewar,
                an immediate family member of our executive officer Mark A.
                Josipovich. 
 In
        November 2004, the Company issued:
  ·
            10,000
                shares of common stock to Julia Sugityo in settlement of debts totaling
                $10,000 pursuant to a Share Purchase Agreement dated November 8,
                2004; and  ·
            306,667
                shares of common stock to Century Capital Management Ltd., a consultant
                to
                the Company, for consulting services rendered. 
 During
        year ended December 31, 2004, the Company incurred consulting fees of $150,000
        that were accrued to Daniel E. Josipovich, the father of our executive officers
        Mark A. Josipovich and Daniel T. Josipovich, and is included in due to
        stockholders and related parties as of December 31, 2004. This amount was
        converted into shares of common stock in October 2004 as described above.
 
 In
        addition, Michela Josipovich’s annual salary was $95,000 from September 15, 2001
        through December 31, 2004, $118,170 of which was accrued and paid off by
        the
        issuance of 157,560 shares of common stock in October 2004. For 2005, Michela
        Josipovich is paid on a commission basis in the amount of 20% of the gross
        sales
        revenues she generated.
 
 **ITEM
        13. EXHIBITS******
 
 The
        exhibits listed below are required by Item 601 of Regulation S-B.
 
 **Exhibit**
              
              **Description
                  of Document**3.1(4)
              
              Certificate
                  of Incorporation, including all amendments thereto through and
                  including
                  November 17, 2004, filed with the Delaware Secretary of
                  State.3.2(1)
              
              Bylaws
                  of the Registrant.4.1(4)
              
              Registration
                  Rights Agreement, dated as of November 17, 2004, between The Bluebook
                  International Holding Company and the investors party
                  thereto.10.1(4)
              
              Agreement
                  and Plan of Merger, dated as of September 24, 2001, by and among
                  Gama
                  Computer Corporation, The Bluebook International, Inc. Bluebook
                  Acquisitions Corp., Bluebook’s Shareholders and Andrew Hromyk,
                  incorporated by reference to the Information Statement filed with
                  the
                  Securities and Exchange Commission of October 12,
                  2001.
 10.2(4)
                
                Employment
                    Agreement by and between The Bluebook International, Inc. and
                    Mark A.
                    Josipovich, dated September 27, 2001.10.3(4)
                
                Employment
                    Agreement by and between The Bluebook International, Inc. and
                    Daniel T.
                    Josipovich, dated September 27, 2001.10.4(4)
                
                Independent
                    Contractor Consulting Agreement, dated January 1, 2002, between
                    The
                    Bluebook International Inc. and Daniel Josipovich Sr.10.5(4)
                
                InsureBASE
                    Agreement, dated November 11, 2003, between The Bluebook International,
                    Inc., Underwriters Rating Board, a New York Unincorporated Association
                    and
                    URB Services Corp., a New York Corporation.10.6(3)
                
                Convertible
                    Promissory Note Purchase Agreement made as of August 13, 2004
                    between The
                    Bluebook International Holding Company and Christopher Albrick
                    (together
                    with Convertible Promissory Note)10.7(3)
                
                Engagement
                    Letter dated August 19, 2004 between The Bluebook International
                    Holding
                    Company and Roth Capital Partners, LLC.10.8(4)
                
                Debt
                    Settlement Agreement, dated October 14, 2004, between The Bluebook
                    International Holding Company and Mark A. Josipovich.10.9(4)
                
                Debt
                    Settlement Agreement, dated October 14, 2004, between The Bluebook
                    International Holding Company and Daniel T. Josipovich.10.10(4)
                
                Debt
                    Settlement Agreement, dated October 14, 2004, between The Bluebook
                    International Holding Company and Michela Josipovich.10.11(4)
                
                Debt
                    Settlement Agreement, dated October 14, 2004, between The Bluebook
                    International Holding Company and Daniel E. Josipovich.10.12(4)
                
                Debt
                    Settlement Agreement, dated October 14, 2004, between The Bluebook
                    International Holding Company and Brian Jones.10.13(4)
                
                Engagement
                    Letter, dated November 12, 2004, between The Bluebook International
                    Holding Company and Century Capital Management Ltd.10.14(4)
                
                Form
                    of Securities Purchase Agreement, dated as of November 12, 2004,
                    between
                    The Bluebook International Holding Company and the investor’s party
                    thereto.10.15(4)
                
                Form
                    of Warrant Certificate issued by The Bluebook International Holding
                    Company dated as of November 17, 2004.10.16(4)
                
                Warrant
                    Certificate issued by The Bluebook International Holding Company
                    to Roth
                    Capital Partners, LLC dated as of November 17, 2004.10.17(4)
                
                Lock-Up
                    Agreement, dated as of November 17, 2004, between The Bluebook
                    International Holding Company and certain of its
                    stockholders.10.18(5)
                
                Web
                    Services Agreement, dated as of March 7, 2005, between The Bluebook
                    International, Inc. and Homesite Insurance Company.10.19(6)
                
                Joint
                    License & Revenue Share Agreement dated as of March 25, 2005, between
                    First American Real Estate Solutions, L.P. and The Bluebook International
                    Inc.10.20(8)
                
                Loan
                    Agreement, dated as of June 10, 2005, by and among The Bluebook
                    International Holding
                  Company,
                    as borrower, and Daniel and Dorothy Josipovich, asLenders.10.21(9)
                
                Loan
                    Agreement, dated as of September 30, 2005, by and among The Bluebook
                    International Holding
                  Company,
                    as borrower, and Daniel and Dorothy Josipovich, as
                    Lenders.10.22*
                
                Agreement
                    between the Company and Bathgate Capital Partners dated as of
                    December 2,
                    2005, filed herewith.16.1(7)
                
                Letter
                    dated as of November 7, 2002 from Good Swartz Brown & Berns addressed
                    to the Securities and Exchange Commission.21.1(2)
                
                Subsidiaries
                    of The Bluebook International Holding Company.23.1*
                
                Consent
                    of Weinberg & Company, P.A.31*
                
                Certification
                    pursuant to Rule 13a-14(a)/15d-14(a)32*
                
                Certification
                    pursuant to Section 1350 of the Sarbanes-Oxley Act of
                    2002
 *
        Filed
        herewith.
 
 (1)
              Incorporated
                  by reference from Bluebook’s Annual Report on Form 10-KSB/A for the year
                  ended December 31,2002,
                  asfiledwith(2)
              Incorporated
                  by reference from Bluebook’s Annual Report on Form 10-KSB for the year
                  ended December 31, 2004, as filed with the Securities and Exchange
                  Commission on filed April 15, 2004.(3)
              Incorporated
                  by reference from Bluebook’s Quarterly Report on Form 10-QSB for the
                  fiscal quarter ended September 30,2004,
                  as filed with the Securities and Exchange Commission on November
                  22,2004.(4)
              Incorporated
                  by reference from Bluebook’s Form SB-2 Registration Statement(Registration No. 333-121882)filed with the Securities and Exchange Commission on January 1,
                  2005, as
                  amended by Amendment No. 1 to the Form SB-2 Registration Statement
                  filed
                  with the Securities and Exchange Commission on April 22, 2005,
                  and as
                  further amended by Amendment No. 2 to Form SB-2 Registration Statement
                  filed with the Securities and Exchange Commission on September
                  7,
                  2005.(5)
              Incorporated
                  by reference from Bluebook’s Form 8-K/A filed with the Securities and
                  Exchange Commission on April 1, 2005.(6)
              Incorporated
                  by reference from Bluebook’s Form 8-K filed with the Securities and
                  Exchange Commission on March 31, 2005.(7)
              Incorporated
                  by reference from Bluebook’s Report on Form 8-K filed with the Securities
                  and Exchange Commission on November 7, 2002.(8)
              Incorporated
                  by reference from Bluebook’s Quarterly Report on Form 10-QSB for the
                  fiscal quarter ended June 30,2005
                  as filed with the Securities and Exchange Commission on August
                  22, 2005.
 (9)
              Incorporated
                  by reference from Bluebook’s Quarterly Report on Form 10-QSB for the
                  fiscal quarter ended September 30,2005,
                  as filed with the Securities and Exchange Commission on November
                  21,2005.
 
 
  **ITEM
        14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**
 
 The
        following table sets forth the aggregate fees for professional audit services
        rendered by Weinberg & Company, P.A. for audit of our annual financial
        statements for the years ended December 31, 2005 and 2004, and fees billed
        for
        other services provided by Weinberg & Company, P.A. for the years ended
        December 31, 2005 and 2004.  All of
        the following fees were pre-approved by the Company’s board of directors acting
        as the Company’s audit committee.
 
 **Year
                    Ended**December
                    31******2005**
              
              **2004**Audit
                  Fees
              
              $
              124,045
              
              $
              38,573Audit-Related
                  Fees
              
              
              36,546
              
              
              38,444Tax
                  FeesAll
                  Other Fees
              
              
              
              
              
              1,506Total
                  Fees Paid
              
              $
              160,591
              
              $
              78,523
 
 *Audit
                  Fees*
  The
        aggregate fees for the annual audit of our financial statements and review
        of
        our quarterly financial statements.
  *Audit-Related
                  Fees*
  The
        aggregate fees for the auditor’s consent for use of our audited financial
        statements in our S-8 Registration Statement and SB-2 Registration Statement.
  *Tax
                  Fees*
  The
        aggregate fees for tax preparation, tax advice and tax planning.
 
 *All
                  Other Fees*
  The
        aggregate fees billed for all other products and services provided to the
        Company by its principal accountant.
 
 **Pre-approval
        Policies and Procedures**
 
 Before
        our independent registered public accountant is engaged by the Company to
        render
        audit or non-audit services, the engagement and fees are pre-approved by
        the
        Company's board of directors acting as the Company’s audit
        committee.
  
 
 **SIGNATURES**
 
 In
        accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
        caused this report on Form 10-KSB to be signed on its behalf by the undersigned,
        hereunto duly authorized.
 **THE
                  BLUEBOOK INTERNATIONAL HOLDING**
                **COMPANY***Date:
                August
                31, 2006*
              *By:*
              */s/ Mark A. Josipovich**Name:
                  Mark A. Josipovich,*
                *Title:
                  Chief Executive Officer,*
                *President
                  and Principal*
                *Accounting
                  Officer*
  In
        accordance with the Exchange Act, this report
        has been signed below by the following persons on behalf of the Registrant
        and
        in the capacities listed below on A ugust
        31 ,
        2006.
  *NAME*
              
              *TITLE**/s/ Mark A. Josipovich*
              
              *Chief
                Executive Officer, President, Principal**Mark A. Josipovich*
              
              *Accounting Officer and Chairman of the
                  Board*