<PAGE>

                                  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 YEAR ENDED DECEMBER 31, 2005


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

           FOR THE TRANSITION PERIOD FROM ____________ TO ____________

           COMMISSION FILE NUMBER 0-23761


                       BRILLIANT TECHNOLOGIES CORPORATION
                 (Name of small business issuer in its charter)


               DELAWARE                                        13-4000208
    (State or other jurisdiction of                         (I.R.S. Employer
    incorporation or organization)                        Identification No.)

              211 MADISON AVENUE APT. 28B, NEW YORK, NEW YORK 10116
               (Address of principal executive offices)     (Zip Code)

       Issuer's telephone number: (212) 532-2736

       Securities Registered Pursuant to Section 12(b) of the Act:  NONE

       Securities Registered Pursuant to Section 12(G) of the Act:  COMMON STOCK

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

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

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

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

       Issuer's revenues for its most recent fiscal year. $0

       As of May 22, 2006 there were 363,893,010 outstanding shares of the
issuer's common stock held by non-affiliates with an aggregate market value of
approximately $8,733,432 based on a closing bid quotation on the OTC Bulletin
Board of $0.024 on such date.

       As of May 22, 2006 there were 370,455,662 outstanding shares of the
issuer's common stock.


       Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

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                                     PART I

ITEM 1. BUSINESS

         Brilliant Technologies Corporation was incorporated in Delaware in
October 1995. As used in this annual report, references to "we", "us" and "our"
refer to Brilliant Technologies Corporation and its consolidated subsidiaries.

ACQUISITIONS

ACQUSITION OF LTDNETWORK, INC.

On December 15, 2004, we consummated the acquisition of all of the issued and
outstanding shares of capital stock of LTDnetwork, Inc., which is referred to in
this annual report as "LTDN". Such acquisition was effected pursuant to a merger
of LTDN with and into one of our subsidiaries. Pursuant to the terms of the
merger we issued to the stockholders of LTDN consideration consisting of (i)
193,336 shares of our Series A Convertible Preferred Stock and (ii) warrants to
purchase 487,903 shares of our Series A Convertible Preferred Stock at an
exercise price of $16.33 per share. The exercise period for such warrants will
expire on June 18, 2006.

The terms of our Series A Convertible Preferred Stock provided that each share
of our Series A Convertible Preferred Stock would automatically convert into 400
shares of our common stock if the holders of our common stock approved an
amendment to our certificate of incorporation to increase our authorized capital
stock from 100,000,000 shares to at least 500,000,000 shares. The holders of our
common stock approved such amendment at our annual meeting of stockholders held
on September 26, 2005 and we filed such amendment with the Secretary of State of
the State of Delaware on September 27, 2005. As a result, all shares of our
Series A Convertible Preferred Stock were converted into shares of our common
stock and the corresponding warrants became warrants to purchase shares of our
common stock at approximately $0.04 per share.

We agreed to file a registration statement with the Securities and Exchange
Commission relating to the resale of the shares of our common stock issuable
upon conversion of our Series A Convertible Preferred Stock issued in such
merger within 90 days following the date of such amendment to our certificate of
incorporation. In addition, we agreed to use our reasonable efforts to cause
such registration statement to be declared effective within 180 days following
the date of such amendment to our certificate of incorporation. We have filed
such registration statement and it became effective on January 26, 2006. We have
agreed to keep such registration statement effective until the earliest of (a)
the sale of all securities eligible to be sold thereunder, (b) the expiration of
the period referred to in Rule 144(k) under the Securities Act of 1933 and (c)
two years from the effective date of such registration statement.

Since immediately following such merger the former stockholders of LTDN owned a
majority of our common stock (assuming the conversion of all the shares of our
Series A Convertible Preferred Stock and the exercise of all the warrants to
purchase shares of our Series A Convertible Preferred Stock, in each case issued
to such stockholders) and the former management of LTDN constituted a majority
of our Board of Directors, we accounted for the acquisition of LTDN as a reverse
merger with LTDN as the acquirer of us. LTDN was formed on October 1, 1999.


                                       1
<PAGE>

ALFA-PRO PRODUCTS GMBH--ACQUISITION OF STOCK AND ASSETS.

Prior to the reverse merger with LTDN, on December 13, 2004, we entered into,
and consummated the acquisitions contemplated by, a Stock and Intellectual
Property Purchase Agreement with Alice Schlattl, Schlattl GBR, Claudia
Schreiner, Susanne Schlattl and Ralph Schlattl.

Pursuant to such Stock and Intellectual Property Purchase Agreement, we
purchased (a) all of the equity interests of Alfa-Pro Products GmbH, referred to
in this annual report as "Alfa-Pro", from Alice Schlattl in consideration for
43,600 shares of our Series A Convertible Preferred Stock and $90,000, and (b)
certain intellectual property rights from Schlattl GBR in consideration for
6,400 shares of our Series A Convertible Preferred Stock. Such $90,000 amount
was due and payable prior to June 11, 2005, however, we have not yet made such
payment. As a result of the acquisition of Alfa-Pro and such intellectual
property rights, we obtained the intellectual property rights to over 40
consumer products. Such products are in varying stages of the development
process and none have yet been commercialized.

COMPANY OPERATIONS
------------------

GENERAL. We are a development stage company and our efforts have been primarily
devoted to technology identification and acquisition, research and development
and raising capital.

Our primary strategy is to acquire and commercialize new or previously existing
but non-commercialized technologies. Directly or through a subsidiary, we may
acquire a direct interest in these technologies, a right to use these
technologies, and/or an ownership interest in the entity owning these
technologies. The acquisition of technologies by us may be made by the issuance
of our common stock or other securities, cash or other consideration, or a
combination thereof. Our principal activities include identifying, reviewing and
assessing technologies for their commercial applicability and potential.

Described below are the various technologies which we presently own.

LTDNETWORK, INC.
----------------

LTDN specializes in the development of innovative technologies, software and
services for online e-tailers, advertising, media and marketing companies.
LTDN's software and services include the following:

QTRAX. We believe that Qtrax, a unique music file sharing technology based
Internet service, will be the first music file sharing application that provides
consumers the ability, at no charge, to download music files from the Gnutella
peer to peer network with the permission of the record and publishing companies
that own the rights to such music to the extent that such record and publishing
companies have executed licensing agreements with LTDN. It is contemplated that
we will share with such record companies at least 50% of the revenue we generate
from advertising on our Qtrax website and that we will share with such
publishing companies at least 15% of the revenue we generate from such
advertising. This revolutionary free service will allow a consumer to play the
music files only on the computer such consumer uses to download such music
files. QTrax will also operate as an online music store where a consumer can
purchase music files as a permanent download so that the consumer can play such
music files on any device that plays MP3 files. Through the integration of
LTDN's innovative Xpeer software application as part of the Qtrax service, LTDN
will be able to offer online e-tailers, advertising, media and marketing
companies the ability to provide highly targeted advertising, promotional and
other marketing information to consumers who may have a strong interest in such
advertisers' products. For example, if a consumer downloads music files of a
particular artist, Xpeer will display books, music and other products that
feature such artist.


                                       2
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INTELLIPRICE. intelliPrice is a fully customizable, event driven Internet
Explorer browser add-in that automatically performs price comparisons on
recognized products that a consumer is viewing on an alternate or a competitors
website. intelliPrice can boost referral and commission revenues to portals by
increasing the visibility and accessibility of products and services available
from portal affiliates. intelliPrice can also be used by large independent
Internet retailing partners to promote their products directly to their
customers when they are at alternative websites. As shoppers browse,
intelliPrice is able to identify what is being viewed and can deliver current
price comparisons, targeted advertising and personalized information from portal
partners in either a slide-out panel, a toolbar, or an alert window from the
task bar. We believe that intelliPrice is unobtrusive yet significantly enhances
the price- and value-seeking shopper experience.

PROMOSENSE. PromoSense is an event driven and fully customizable web browser
add-in that enables an advertiser to deliver highly targeted information
depending on customizable rules and the web page the PromoSense user is
currently viewing by performing basic promotional alerts (window pane, pop-up or
Windows Taskbar notification).

XPEER. XPeer is an interactive component designed for price comparison providers
that want to promote themselves within P2P file sharing applications. Xpeer
offers end users product information and price comparison data based off keyword
searches performed while searching for files or music. As an example, if a user
searches for a particular music artist, XPeer will display a list of all music
and books that feature references to that artist.

DYNAAD. DynaAd enables an advertiser to build and display exact match product
ads on any website/web page as opposed to broad, category level based ads.

MESSAGERETRIEVER. MessageRetriever is a web based proprietary software that
enables the automatic retrieval of e-mail by the simple provision of a user's
standard e-mail address and password from any ISP and from any computer with a
web browser. If an e-tailer integrates their own branded version of
MessageRetriever on its website, it will encourage repeat visitors to such site
so such visitors can check their e-mail.

PAGEQUERY WEB SERVICE. PageQuery Web Service is a high performance URL query
system that allows a business to automatically extract specific or user defined
nuggets of data from a web page. Any number of items can be configured into a
system for extraction and once they are, the PageQuery Web Service will
automatically detect their presence on any page across an entire domain.

FREE TEXT ANALYSIS WEB SERVICE. Free Text Analysis Web Service is a URL query
system that automatically catalogues the information presented in a web page
into a structured, hierarchical view of visually important ranked data. All
existing page data is preserved along with a collection of meta data that allows
a business to further process, manipulate or extract specific information from
the results.

RESEAL, LTD.
------------

Reseal, Ltd, a 96% owned subsidiary referred to in this annual report as
"Reseal", holds the intellectual property related to our proprietary resealable
metal beverage can. This innovative product allows a beverage can to be resealed
while maintaining the carbonation and/or freshness of the contents longer than a
pop top feature of most beverage cans. To date, Reseal has not entered into any
distribution or sales agreements and there can be no assurance that Reseal will
enter into distribution or sales agreements, or if entered into that the
agreements will result in significant sales or revenue. The ability to
successfully commercialize the resealable metal beverage can is heavily
dependent upon our ability to raise additional funds.


                                       3
<PAGE>

ALFA-PRO
--------

Alfa-Pro is a German based firm focused on developing and patenting technologies
and products for the consumer market. Alfa Pro's products are designed to fill a
gap in a market where products do not exist or to make a significant improvement
over products currently serving the target markets. The products of Alfa-Pro are
in various stages of development and none of such products has reached the
commercialization stage.

INTELLECTUAL PROPERTY
---------------------

Our success depends substantially upon our intellectual property. We have a
portfolio of approximately 28 patents and/or patents pending. We may be
unsuccessful in prosecuting our patent applications or patents may not be issued
from our patent applications. Even if patents are issued and maintained, these
patents may not be of adequate scope to benefit us or may be held invalid and
unenforceable against third parties.

MARKETING AND DISTRIBUTION
--------------------------

We believe that several of our acquired technologies and products are ready for
commercialization and marketing, specifically the Qtrax and intelliPrice
services.

As a result, we will devote significant business activities and resources to the
successful commercialization and marketing of our acquired technologies and
products. We have little experience marketing products of a technological or
consumer nature. The introduction of a new product or technology into the market
place requires vast capital resources and an increase in corporate personnel.
Our product marketing with respect to our consumer products relies on the
development of strategic alliances with global distributors. This would place
the burden of marketing the products directly on the strategic partners and
would keep our cost risk low and reduce the amount of capital resources we need
to operate successfully. Conversely, the risks include the inability to locate
the proper partner and that any such partner is not effective.

COMPETITION
-----------

Competition in all of the areas in which we own and propose to purchase
technologies is intense. We compete against a wide range of companies,
universities, think tanks, consumer product companies and others, most which
possess substantially greater financial and marketing resources and experience
than us. Competition in our core business segments is typically based on product
recognition and acceptance, price, and sales and marketing expertise and
resources. Any one or more of our competitors or other enterprises not presently
identified by or known to us may develop technologies and/or products which are
superior to, or less expensive than, our products and technologies or market
more successfully existing or new competing products and technologies. To date,
we have not generated any revenues from our products or technologies and are
competing against companies that may have significantly greater financial and
human resources.


                                       4
<PAGE>

RESEARCH AND DEVELOPMENT
------------------------

In the fiscal year ended December 31, 2005, we incurred expenses of $812,175 on
research and development. By comparison, in the fiscal year ended December 31,
2004, we incurred expenses of $558,249 on research and development.

GOVERNMENTAL REGULATION
-----------------------

Few U.S. or foreign laws and regulations specifically apply to the marketing,
sale or use of any of our present technologies, other than laws and regulations
generally applicable to businesses. Many laws and regulations, however, are
pending and may be adopted in the United States and other countries with respect
to the Internet and intellectual property rights relating to the products of our
subsidiary, LTDN. There can be no assurance that such laws and regulations or
different standards if adopted or applied in the future will not materially
increase the cost of licensing and using such products, or prevent their use
altogether. Moreover, there can be no assurance that any or all jurisdictions in
which we presently operate or in the future may conduct our business will not
enact laws or adopt regulations which increase the cost of or prevent us from
licensing or marketing our other technologies or otherwise doing business
therein.

EMPLOYEES
---------

We currently employ no part-time and four full-time employees. LTDN currently
employs seven full-time and no part-time employees. LTDN's employees engage in
software development and marketing.

We believe that we have satisfactory relations with our current employees.

ITEM 2. DESCRIPTION OF PROPERTY

Our principal executive offices are located in a 142.9 square foot office space
at 211 Madison Avenue, Apt. #28B New York, New York 10016.

LTDN's principal executive offices are located in a 250 square meter space at
459 Collins Street Level 11, Melbourne, Victoria 3000, Australia.

ITEM 3. LEGAL PROCEEDINGS

We are also subject to various matters of litigation during our normal course of
operations. Management believes that the eventual outcome of these matters will
not have a material adverse effect on our consolidated financial position,
results of operations, or cash flows.

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

There were no matters submitted to a vote of security holders during the fourth
quarter of the year ended December 31, 2005.


                                       5
<PAGE>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information.
-------------------

Our common stock is traded on the OTC Bulletin Board currently under the symbol
BLLN.

The table below sets forth the range of high and low bid quotes of our common
stock for each quarter for the last two fiscal years, as reported by the OTC
Bulletin Board. The bid prices represent inter-dealer quotations, without
adjustments for retail mark-ups, markdowns or commissions and may not represent
actual transactions.

                     2004                          HIGH                LOW
                     ----                          ----                ---
                 First Quarter                  $      0.35         $     0.16
                Second Quarter                  $      0.24         $     0.11
                 Third Quarter                  $      0.22         $     0.09
                Fourth Quarter                  $      0.36         $     0.16

                     2005                          HIGH                LOW
                     ----                          ----                ---
                 First Quarter                  $      0.24         $     0.12
                Second Quarter                  $      0.25         $     0.10
                 Third Quarter                  $      0.14         $     0.07
                Fourth Quarter                  $      0.12         $     0.07


Holders
-------

There were approximately 301 stockholders of record of our common stock as of
May 22, 2006.

Dividends
---------

We have never declared or paid cash dividends on our common stock, and we
anticipate that future earnings, if any, will be retained for development of our
business. Payment of cash dividends in the future will be wholly dependent upon
our earnings, financial condition, capital requirements and other factors deemed
relevant by us.

Stock Issuances
---------------

In November 2005, we issued 236,556 shares of our common stock in connection
with the conversion of salary of an employee. Such issuance was effected
pursuant to Regulation S of the Securities Act of 1933.

In November 2005 we issued 2,500,000 for services provided to us. We valued such
services at $250,000. Such issuance was effected pursuant to Section 4(2) of the
Securities Act of 1933.

In December 2005 certain holders of warrants issued in connection with the
acquisition of LTDN exercised such warrants to purchase 17,098,043 shares of our
common stock. The Company received $697,979 gross proceeds as a result of such
exercise. Such issuance was effected pursuant to Regulation S and Section 4(2)
of the Securities Act of 1933.


                                       6
<PAGE>

In December 2005 we issued 208,333 shares of our common stock in connection with
a financing transaction. Such issuance was effected pursuant to Regulation S of
the Securities Act of 1933.

ITEM 6. PLAN OF OPERATION

The following discussion and analysis should be read in conjunction with the
remainder of this annual report including, but not limited to, the financial
statements and notes thereto included herein. In addition, this annual report
contains certain statements that are "forward looking statements", which relate
to future events or our future financial performance. Any statements contained
in this annual report which are not statements of historical fact may be deemed
to be forward looking statements. Without limiting the generality of the
foregoing, forward looking statements can be identified by the use of words such
as "believes," "expects," "intends," "projects," "anticipates," "contemplates,"
or "estimates." Although we believe that the expectations reflected in the
forward looking statements are reasonable, management can give no assurance that
such expectations will prove to have been correct. Generally, forward looking
statements relate to business plans or strategies, projected or anticipated
benefits or other consequences of such plans or strategies, or projections
involving anticipated revenues, expenses, earnings, levels of capital
expenditures, liquidity or indebtedness, ability to raise working capital, or
other aspects of operating results or financial position. All phases of our
operations are subject to a number of uncertainties, risks and other influences
which are set forth below under the caption entitled "Risk Factors", many of
which are outside of our control and any one of which, or a combination of
which, could materially affect our results of operations and whether the forward
looking statements made by us ultimately prove to be accurate.

We are a development stage company and our efforts have been primarily devoted
to technology identification and acquisition, research and development and
raising capital. This discussion provides an analysis of our anticipated plan of
operation for the next 12 months.

During the next 12 months we intend to concentrate on the (i) continued
development and marketing of the software products of LTDN, (ii)
commercialization of our proprietary resealable metal beverage can, and (iii)
commercialization of products developed by Alfa-Pro and from the intellectual
property acquired from Schlattl GBR.

Except for a nominal amount of revenue from the sale of products of one of our
subsidiaries in a prior period, we have not generated any revenue from
operations since our inception and we have not been profitable since our
inception. We will require additional financing to continue our planned
operations during the next 12-month period. We believe that we will be able to
raise the necessary financing to continue planned operations. We will attempt to
raise this additional capital through the public or private placement of our
securities, debt or equity financing, joint ventures, or the licensing or sale
of our technologies and products. However, there is no guarantee that we will be
able to successfully raise the required funds for operations or that such funds
will be available on terms satisfactory to us. Any inability to raise additional
funds would require that we significantly scale back our planned operations.

In particular, we need to obtain financing for the production of
machine-fabricated samples of our resealable beverage can for distribution to
beverage producers who have previously expressed an interest in our resealable
beverage can. It is anticipated that production of those samples, marketing and
general operational expenses will require less than $450,000. We anticipate that
in the event we are required to purchase capital equipment for the full scale
production of our resealable beverage cans, an additional $2,000,000 would be
required. The production of the machine produced samples has been delayed by a
failed financing, the proceeds of which were to be used to complete this
production run.


                                       7
<PAGE>

Also, we have recently launched our intelliPrice product developed by LTDN. We
need to raise additional funds in order to put us in a position to successfully
market and distribute such product. We also plan on launching our Qtrax product
in the near future.

Ideally, upon the commercialization of our products, including intelliPrice and
Qtrax, and implementation of operational cost controls, we would hope that
sustainable revenues will be able to be generated so as to avoid the necessity
to raise significant funds in the longer term. There can be no assurances as to
when and whether we will be able to commercialize our products and technologies
and realize any revenues therefrom.

No assurance can be given that we can complete the development of any technology
or that, if any technology is fully developed, it can be manufactured and
marketed on a commercially viable basis. Furthermore, no assurance can be given
that any technology will receive market acceptance. Being a development stage
company, we are subject to all the risks inherent in the establishment of a
developing or new business.

Between March 1, 2005 and May 22, 2006, we have raised from various financing
sources approximately $4,315,000 through the issuance of our 9% Convertible
Debentures and warrants to purchase shares of our common stock. We have also
issued an additional $45,000 aggregate principal amount of such 9% Convertible
Debentures and warrants to certain holders of such 9% Convertible Debentures in
consideration for such holders agreeing to certain amendments with respect to
the terms of such 9% Convertible Debentures and an additional $200,000 aggregate
principal amount of such 9% Convertible Debentures as a penalty for not filing
this annual report with the Securities and Exchange Commission on or prior to
May 17, 2006.

Debentures due August 20, 2006
------------------------------

An aggregate of $3,145,000 of such 9% Convertible Debentures are due and payable
on August 20, 2006 and bear interest at 9% per annum on a simple non-compounded
basis. Such 9% Convertible Debentures are convertible, at the holder's option,
into shares of our common stock at a conversion rate equal to the lesser of
$0.07 (subject to adjustment for subsequent lower price issuances by us and
other customary events including stock splits, reverse stock splits, dividends
of common stock and spin-offs) and 75% of the average of the 10 lowest closing
bid prices of our common stock for the 30 trading days immediately preceding the
applicable date of conversion. As of May 22, 2006, an aggregate of $1,714,600 of
such 9% Convertible Debentures had been converted into shares of our common
stock. Subject to limited exceptions, a holder shall not be entitled to convert
a 9% Convertible Debenture held by such holder if such conversion would result
in such holder beneficially owning more than 4.99% of our common stock following
such conversion (in lieu of such restriction, an aggregate of $300,000 of such
9% Convertible Debentures provided that the holder thereof shall not be entitled
to convert a 9% Convertible Debenture held by such holder if such conversion
would result in such holder beneficially owning more than 9.99% of our common
stock following such conversion). If a holder elects to convert all or a portion
of such 9% Convertible Debentures and the conversion price is less than $0.07
(subject to adjustment for subsequent lower price issuances by us and other
customary events including stock splits, reverse stock splits, dividends of
common stock and spin-offs), in lieu of effecting such conversion, we may elect
to redeem the amount of such 9% Convertible Debentures requested to be so
converted at a purchase price equal to 150% of the principal amount of such 9%
Convertible Debentures plus accrued and unpaid interest to the date of
redemption. The holder may accelerate the maturity date of such 9% Convertible
Debentures following the occurrence of customary events of default, including,
without limitation, payment defaults, breaches of certain covenants and
representations, certain events of bankruptcy, certain judgment defaults and the
suspension of our common stock from trading on the OTC Bulletin Board. Such 9%
Convertible Debentures are secured by a security interest in all of our assets.


                                       8
<PAGE>

Each warrant issued in connection with such 9% Convertible Debentures is
exercisable until the second anniversary of the effective date of the
registration statement registering our shares of common stock issuable upon the
exercise of such warrants. Such warrants are exercisable at $0.10 per share,
such exercise price subject to adjustment for subsequent lower price issuances
by us and other customary events including stock splits, reverse stock splits,
dividends of common stock and spin-offs. Subject to limited exceptions, a holder
shall not be entitled to convert a warrant held by such holder if such
conversion would result in such holder beneficially owning more than 4.99% of
our common stock following such conversion (in lieu of such restriction, an
aggregate of 4,285,714 of such warrants provided that the holder thereof shall
not be entitled to convert such warrants held by such holder if such conversion
would result in such holder beneficially owning more than 9.99% of our common
stock following such conversion). If the average of the closing bid prices of
our common stock during any period of 20 consecutive trading days is equal to or
greater than $0.50 and the closing bid price of our common stock is equal to or
greater than $0.50 for at least 10 trading days during such period then with
respect to each such warrant that the holder does not exercise during the 15
trading day period following the receipt by the holder of a notice from us that
such average price and closing bid prices have occurred, the exercise price for
such warrants will each be adjusted to $0.25 per share (subject to adjustment
for customary events including stock splits, reverse stock splits, dividends of
common stock and spin-offs). Holders of such warrants are entitled to effect a
cashless exercise of such warrants if the registration statement registering our
shares of common stock issuable upon the exercise of such warrants has not been
declared effective prior the first anniversary of the issuance of such warrants.

Debentures due March 24, 2007
-----------------------------

An aggregate of $350,000 of such 9% Convertible Debentures are due and payable
on March 24, 2007 and bear interest at 9% per annum on a simple non-compounded
basis. In addition, a certain investor has agreed to purchase (i) an aggregate
of $250,000 principal amount of such 9% Convertible Debentures at least three
days prior to the filing of the registration statement registering such 9%
Convertible Debentures, and (ii) an aggregate of $600,000 principal amount of
such 9% Convertible Debentures at least three days prior to the effective date
of such registration statement. Such 9% Convertible Debentures are convertible,
at the holder's option, into shares of our common stock at a conversion rate
equal to the lesser of $0.07 (subject to adjustment for subsequent lower price
issuances by us and other customary events including stock splits, reverse stock
splits, dividends of common stock and spin-offs) and 75% of the average of the 5
lowest closing bid prices of our common stock for the 30 trading days
immediately preceding the applicable date of conversion. As of May 22, 2006,
none of such 9% Convertible Debentures had been converted into shares of our
common stock. Subject to limited exceptions, a holder shall not be entitled to
convert a 9% Convertible Debenture held by such holder if such conversion would
result in such holder beneficially owning more than 4.99% of our common stock
following such conversion. If a holder elects to convert all or a portion of
such 9% Convertible Debentures and the conversion price is less than $0.07
(subject to adjustment for subsequent lower price issuances by us and other
customary events including stock splits, reverse stock splits, dividends of
common stock and spin-offs), in lieu of effecting such conversion, we may elect
to redeem the amount of such 9% Convertible Debentures requested to be so
converted at a purchase price equal to 150% of the principal amount of such 9%
Convertible Debentures plus accrued and unpaid interest to the date of
redemption. The holder may accelerate the maturity date of such 9% Convertible
Debentures following the occurrence of customary events of default, including,
without limitation, payment defaults, breaches of certain covenants and
representations, certain events of bankruptcy, certain judgment defaults and the
suspension of our common stock from trading on the OTC Bulletin Board. Such 9%
Convertible Debentures are secured by a security interest in all of our assets.


                                       9
<PAGE>

Each warrant issued in connection with such 9% Convertible Debentures is
exercisable until the second anniversary of the effective date of the
registration statement registering our shares of common stock issuable upon the
exercise of such warrants. Such warrants are exercisable at $0.07 per share,
such exercise price subject to adjustment for subsequent lower price issuances
by us and other customary events including stock splits, reverse stock splits,
dividends of common stock and spin-offs. Subject to limited exceptions, a holder
shall not be entitled to convert a warrant held by such holder if such
conversion would result in such holder beneficially owning more than 4.99% of
our common stock following such conversion. If the average of the closing bid
prices of our common stock during any period of 20 consecutive trading days is
equal to or greater than $0.50 and the closing bid price of our common stock is
equal to or greater than $0.50 for at least 10 trading days during such period
then with respect to each such warrant that the holder does not exercise during
the 15 trading day period following the receipt by the holder of a notice from
us that such average price and closing bid prices have occurred, the exercise
price for such warrants will each be adjusted to $0.25 per share (subject to
adjustment for customary events including stock splits, reverse stock splits,
dividends of common stock and spin-offs). Holders of such warrants are entitled
to effect a cashless exercise of such warrants if the registration statement
registering our shares of common stock issuable upon the exercise of such
warrants has not been declared effective prior the first anniversary of the
issuance of such warrants.

Debentures due April 3, 2007
----------------------------

An aggregate of $625,000 of such 9% Convertible Debentures are due and payable
on April 3, 2007 and bear interest at 9% per annum on a simple non-compounded
basis. Such 9% Convertible Debentures are otherwise on the same terms as our 9%
Convertible Debentures due on March 24, 2007 described above. As of May 22,
2006, none of such 9% Convertible Debentures had been converted into shares of
our common stock.

Debentures due May 2, 2007
--------------------------

An aggregate of $440,000 of such 9% Convertible Debentures are due and payable
on May 2, 2007 and bear interest at 9% per annum on a simple non-compounded
basis. Such 9% Convertible Debentures are otherwise on the same terms as our 9%
Convertible Debentures due on March 24, 2007 described above. As of May 22,
2006, none of such 9% Convertible Debentures had been converted into shares of
our common stock.

RISK FACTORS

AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. IF ANY OF
THESE RISKS OR UNCERTAINTIES ACTUALLY OCCURS, OUR BUSINESS, FINANCIAL CONDITION
OR RESULTS OF OPERATIONS COULD BE MATERIALLY ADVERSELY AFFECTED.

                    RISKS RELATED TO OUR BUSINESS IN GENERAL

WE HAVE ONLY GENERATED NOMINAL REVENUES FROM OPERATIONS AND WE EXPECT TO INCUR
ADDITIONAL SIGNIFICANT LOSSES.

We have conducted only limited operations to date consisting primarily of
activities related to identifying and acquiring our technologies and products.
We are subject to all of the business risks associated with a development
company, including, but not limited to:


                                       10
<PAGE>

         o        an inability to successfully market our technologies and
                  products;

         o        risks of unforeseen capital requirements;

         o        failure of market acceptance of our technologies and products;

         o        failure to establish business relationships; and

         o        competitive disadvantages as against larger and more
                  established companies.

We anticipate that we will continue to incur significant operating losses for
the foreseeable future as our operating expenses will increase as we continue to
develop, enhance and commence the commercialization of our products. We have
generated no meaningful revenues to date. As of December 31, 2005, we had an
accumulated deficit of $33,850,537. Although our management believes that we may
recognize revenues once we launch our products in the marketplace, there can be
no assurance as to when or whether we will be able to commercialize our products
and technologies and realize any revenues therefrom.

WE WILL REQUIRE SIGNIFICANT ADDITIONAL CAPITAL IN ORDER TO FULLY IMPLEMENT OUR
BUSINESS PLAN AND MARKETING STRATEGY.

Our future capital requirements could vary significantly and will depend upon
certain factors, many of which are not within our control. Factors that may bear
on our future capital requirements include:

         o        the timing of licensing of technologies and sales of products;

         o        market acceptance of our technologies and products;

         o        the existence and terms of any licensing and/or joint venture
                  agreements for the marketing and sales of technologies and
                  products;

         o        the ongoing development and testing of technologies and
                  products; and

         o        the availability of financing.

We will require substantial additional capital to expand our business, for
research and development activities and to hire administrative, marketing,
technical and operational support personnel. We cannot provide any assurances
that we ever will obtain the additional capital necessary to fully effectuate
our business goals or obtain such capital on commercially reasonable terms.
Moreover, we cannot provide assurances that additional capital requirements will
not arise, or that we will generate sufficient revenues to cover expenses or
generate profits. If adequate financing is not available, we may be required to
delay, scale back or eliminate certain of our research and development programs
and marketing and sales programs, forego technology acquisition opportunities,
or license third parties to commercialize technologies that we would otherwise
seek to develop. In addition, we may have to issue our common stock or
securities convertible into our common stock in order to obtain the funding
necessary to support operations which will dilute shareholdings and may
negatively impact the price of our common stock.


                                       11
<PAGE>

THE HOLDERS OF OUR 9% CONVERTIBLE DEBENTURES HAVE A LIEN ON ALL OF OUR ASSETS
(INCLUDING OUR INTELLECTUAL PROPERTY) AND COULD FORECLOSE IN THE EVENT THAT WE
DEFAULT UNDER THOSE DEBENTURES.

Our 9% Convertible Debentures are due and payable with 9% interest on August 20,
2006, March 24, 2007, April 3, 2007 or May 2, 2007, as the case may be, unless
sooner converted into shares of our common stock. In addition, any event of
default as described in our 9% Convertible Debentures could require the early
repayment of such 9% Convertible Debentures. If we are required to repay such 9%
Convertible Debentures, we may need to raise additional funds. Also, under the
terms of the Security Agreement among us and the holders of our 9% Convertible
Debentures we have granted a security interest to such holders on all our assets
(including our intellectual property). If we default under the terms of our 9%
Convertible Debentures, the holders of such 9% Convertible Debentures would be
entitled, among other things, to foreclose on our assets in order to satisfy our
obligations under such 9% Convertible Debentures. A foreclosure on our assets
would have a material adverse effect on our business, financial condition and
results of operations.

OUR CURRENT AND NEW PRODUCTS MAY NOT COMPETE SUCCESSFULLY WITH COMPETITOR'S
PRODUCTS.

The markets for our products experience and will continue to experience rapidly
changing technologies, evolving industry standards and new product introductions
by our competitors. These market characteristics and the activities of our
competitors, including their introduction of new products and product upgrades,
could render our technology obsolete. We may not successfully develop, introduce
or manage the transition of new products or do so on a timely basis in response
to changing technologies and standards and new products and product upgrades
introduced by our competitors.

Many of our current and potential competitors have larger technical staffs, more
established and larger marketing and sales organizations and significantly
greater financial resources. Our inability to compete in the following factors
could have a material adverse effect on our business: product performance,
product features, ease of use, reliability, hardware and competitor
compatibility, brand name recognition, product reputation, pricing, levels of
advertising, availability and quality of customer support and timeliness of
product upgrades.

ANY INABILITY TO PROTECT OUR INTELLECTUAL PROPERTY MAY LIMIT OUR ABILITY TO
COMPETE AND RESULT IN A LOSS OF A COMPETITIVE ADVANTAGE.

We rely principally on copyright, trademark, patent, trade secret and contract
laws to protect our proprietary technology. We cannot be certain that we have
taken adequate steps to prevent misappropriation of our technology or that our
competitors will not independently develop technologies that are substantially
equivalent or superior to our technology.

We have prepared and filed patent applications covering several of our software
and consumer products. Our success depends, in part, on our ability to obtain
and protect patents covering, and maintain trade secrecy protection of,
technologies, as well as other, future technologies, and to operate without
infringing on the proprietary rights of third parties. There can be no assurance
that any of our pending or future patent applications will be approved, that we
will develop additional proprietary technology that is patentable, that any
patents issued will provide us with a competitive advantage or will not be
challenged by third parties or that the patents of others will not have an
adverse effect on our ability to conduct business.


                                       12
<PAGE>

In addition to patent protection, we rely on trade secrets, proprietary know-how
and technology which we seek to protect. There can be no assurance that our
trade secrets and proprietary know-how will not become known or be independently
discovered by others.

WE MAY BE SUBJECT TO INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS THAT ARE COSTLY
TO DEFEND AND COULD LIMIT OUR ABILITY TO USE SOME TECHNOLOGIES IN THE FUTURE.

Although we believe that none of the technologies or products we have developed
or the trademarks we use or any of the other elements of our business infringe
on the proprietary rights of any third parties, third parties may assert claims
against us for infringement of their proprietary rights and these claims may be
successful. We could incur substantial costs and diversion of management
resources in the defense of any claims relating to proprietary rights, which
could materially adversely affect our business, results of operations or
financial condition. Parties making these claims could secure a judgment
awarding substantial damages as well as injunctive or other equitable relief
that could effectively block our ability to market or license our products. Such
a judgment could have a material adverse effect on our ability to sell our
products or on our costs of doing business. If a third party asserts a claim
relating to proprietary technology or information against us, we may seek
licenses to the intellectual property from such third party. However, we cannot
be certain that third parties will extend licenses to us on commercially
reasonable terms, or at all. Our failure to obtain the necessary licenses or
other rights or to obtain those rights at a reasonable cost could materially
adversely affect our ability to sell our products or our costs of doing
business.

IF WE ARE UNABLE TO HIRE AND RETAIN KEY PERSONNEL, WE MAY BE UNABLE TO DEVELOP
PRODUCTS OR ACHIEVE SALES OF PRODUCTS.

Our success depends to a significant extent on the performance of our executive
officers and key technical personnel. The loss of one or more of our key
employees could have a material adverse effect on our ability to develop and
sell products. We believe that our future success will depend in large part on
our ability to attract and retain highly skilled technical, managerial and sales
and marketing personnel. There can be no assurance that we will be successful in
attracting and retaining these personnel.

WE MAY NOT SUCCESSFULLY OVERCOME PROBLEMS ENCOUNTERED IN CONNECTION WITH
POTENTIAL FUTURE ACQUISITIONS.

As part of our long-term growth strategy, we may seek to acquire or make
investments in complementary businesses, technologies, services or products or
enter into strategic relationships with parties who can provide access to those
assets, if appropriate opportunities arise. From time to time, we may enter into
discussions and negotiations with companies regarding our acquiring, investing
in, or partnering with their businesses, products, services or technologies. We
may not identify suitable acquisition, investment or strategic partnership
candidates, or if we do identify suitable candidates, may not complete those
transactions on commercially acceptable terms or at all.

Acquisitions often involve a number of special risks, including the following:

         o        difficulty integrating acquired operations, products, services
                  and personnel;

         o        the acquisition may disrupt our ongoing business;


                                       13
<PAGE>

         o        we may not be able to retain the key personnel of the acquired
                  company;

         o        the acquired businesses may fail to achieve the revenues and
                  earnings anticipated; and

         o        we may ultimately be liable for contingent and other
                  liabilities, not previously disclosed to us, of the companies
                  that we acquire.

Any of these factors could have a material adverse effect on our business. These
difficulties could distract our management and employees and increase our
expenses. Furthermore, we may incur indebtedness or issue equity securities to
pay for any future acquisitions.

WE MAY NOT BE SUCCESSFUL IN ENTERING INTO STRATEGIC ALLIANCES.

We intend to enter into strategic partnerships, joint ventures and/or teaming
arrangements with regional and multinational corporations to promote our
technologies and products. In the event that we are unable to develop these
relationships or once developed maintain them for any reason, our business,
operating results and financial condition could be materially adversely
affected. Moreover, we can give no assurances that any such relationships will
result in the sale or licensing of our technologies or products.

CERTAIN RISKS MAY ATTACH TO OPERATIONS IN FOREIGN COUNTRIES.

We conduct a significant portion of our operations in Australia and Germany.
Certain risks attach to operations in foreign countries. Legal systems in some
of the nations in which we conduct operations, including the licensing of
technologies and selling products, may not be as developed as the United States
legal system. Consequently, certain contract rights may be unenforceable in some
of these jurisdictions. Any inability to enforce contracts or collect payment
from clients located in these areas could have a material adverse effect on our
business and results of operations. In addition, changes in a specific country's
political or economic condition and unexpected changes in foreign laws and
regulatory requirements could have a material adverse effect on our business and
results of operations.

Our expenses are recorded in different currencies. As a result, we will be
subject to the effects of exchange rate fluctuations with respect to these
currencies.

                       RISKS RELATED TO OUR QTRAX BUSINESS

WE ARE SUBJECT TO RISKS ASSOCIATED WITH GOVERNMENTAL REGULATION.

We do not know for certain how existing laws governing issues such as property
ownership, copyright and other intellectual property issues, digital rights
management, taxation, security, retransmitting of media, personal privacy and
data protection apply to the Internet. The vast majority of such laws were
adopted before the advent of the Internet and related technologies and do not
address the unique issues associated with the Internet and related technologies.
Most of the laws that relate to the Internet have not yet been interpreted. In
addition to potential legislation from local, state and federal governments,
labor guild agreements and other laws and regulations that impose fees,
royalties or unanticipated payments regarding the distribution of media over the
Internet may directly or indirectly affect our business. While we, and our
potential customers, may be directly affected by such agreements, we are not a
party to such agreements and have little ability to influence the degree such
agreements favor or disfavor Internet distribution. Changes to or the
interpretation of these laws and the entry into such industry agreements could:


                                       14
<PAGE>

         o        limit the growth of the Internet;

         o        create uncertainty in the marketplace that could reduce demand
                  for our products and services;

         o        increase our cost of doing business;

         o        expose us to increased litigation risk, substantial defense
                  costs and significant liabilities associated with content
                  available on our Websites or distributed or accessed through
                  our products or services;

         o        lead to increased product development costs or otherwise harm
                  our business; or

         o        decrease the rate of growth of our user base and limit our
                  ability to effectively communicate with and market to our user
                  base.

There are a large number of legislative proposals before the United States
Congress and various state legislatures regarding intellectual property, digital
rights management and copy protection requirements. It is not possible to
predict whether or when such legislation may be adopted, and certain proposals,
if adopted, could materially and adversely affect our business.

WE ARE SUBJECT TO RISKS ASSOCIATED WITH LEGAL UNCERTAINTIES.

We do not know for certain how the recent Supreme Court case, Metro-Goldwyn v.
Grokster, will affect our business model. The Court found that companies that
distribute music file sharing software with the object of promoting its use to
infringe copyright, as shown by clear expression or other affirmative steps
taken to foster infringement, are liable for the resulting acts of infringement
by third parties. Record companies may assert claims against us for infringement
of their proprietary rights and these claims may be successful. We could incur
substantial costs and diversion of management resources in the defense of any
claims relating to proprietary rights, which could materially adversely affect
our business, results of operations or financial condition. Parties making these
claims could secure a judgment awarding substantial damages as well as
injunctive or other equitable relief that could effectively block our ability to
market Qtrax.

WE FACE COMPETITION FROM OTHER "FREE" PEER-TO-PEER SERVICES, FROM TRADITIONAL
RETAIL MUSIC DISTRIBUTORS AND FROM EMERGING PAID ONLINE MUSIC SERVICES DELIVERED
ELECTRONICALLY.

Our online music services will face significant competition from other "free"
peer-to-peer services, such as KaZaA, Morphues, Grokster and a variety of other
similar services that allow computer users to connect with each other and to
copy many types of program files, including music and other media, from one
another's hard drives, all without securing licenses from content providers. The
legal status of these other "free" services is questionable since the Supreme
Court recently ruled that certain of such services violate copyright laws.
However, it is not clear what effect such ruling will have on users of such
services, and there can be no assurance that these services will ever be shut
down.

Our paid online music services will also face competition from traditional
retail music distributors such as Tower Records as well as online retailers such
as Amazon.com. These retailers may include regional and national mall-based
music chains, international chains, deep-discount retailers, mass merchandisers,
consumer electronics outlets, mail order, record clubs, independent operators
and online physical retail music distributors, some of which have greater
financial and other resources than we do. To the extent that consumers choose to
purchase media in non-electronic formats, it may reduce our sales, reduce our
gross margins, increase our operating expense and decrease profit margins in
specific markets.


                                       15
<PAGE>

Online music services competitors will include Napster, RealNetworks, Inc.,
Apple Computer's iTunes Music Store, Sony Connect, Walmart.com, Yahoo!, MSN and
online music services powered by MusicNet such as AOL Music and Virgin.

ONLINE MUSIC DISTRIBUTION SERVICES IN GENERAL ARE NEW AND RAPIDLY EVOLVING AND
MAY NOT PROVE TO BE A PROFITABLE OR EVEN A VIABLE BUSINESS MODEL.

Online music distribution services that principally rely on advertising as a
source of revenue are a relatively new business model for delivering digital
media over the Internet. It is too early to predict whether consumers and
advertisers will accept in significant numbers online music services and
accordingly whether the services will be financially viable. If online music
distribution services do not prove to be popular with consumers, or if these
services cannot sustain any such popularity, our business and prospects would be
harmed.

WE RELY ON CONTENT PROVIDED BY THIRD PARTIES, WHICH MAY NOT BE AVAILABLE TO US
ON COMMERCIALLY REASONABLE TERMS OR AT ALL.

We rely on third-party content providers to offer music online content that can
be delivered to users of our service. These third party providers include music
publishers and music labels. Rights to provide this content to our customers,
particularly publishing rights, may be difficult to obtain and will require
significant time and expense. In some cases, we may have to pay substantial fees
to obtain this third party content. We cannot guarantee that we will be able to
secure licenses to music content or that such licenses will be available on
commercially reasonable terms.

WE MUST PROVIDE DIGITAL RIGHTS MANAGEMENT SOLUTIONS THAT ARE ACCEPTABLE TO BOTH
CONTENT PROVIDERS AND CONSUMERS.

We must provide digital rights management solutions and other security
mechanisms in our online music distribution services in order to address
concerns of content providers and artists, and we cannot be certain that we can
develop, license or acquire such solutions, or that content licensors or
consumers will accept them. Consumers may be unwilling to accept the use of
digital rights management technologies that limit their use of content.

OUR BUSINESS COULD BE HARMED BY A LACK OF AVAILABILITY OF POPULAR CONTENT.

Our business could be affected by the release of "hit" music titles, which can
create cyclical trends in sales distinctive to the music industry. It is not
possible to determine the timing of these cycles or the future availability of
hit titles. Hit products are important because they generate customer interest.
We will depend upon the music content providers to continue to produce hit
products. To the extent that new hits are not available, or not available at
prices attractive to consumers, our sales and margins may be adversely affected.


                                       16
<PAGE>

THE GROWTH OF OUR BUSINESS DEPENDS ON THE INCREASED USE OF THE INTERNET FOR
COMMUNICATIONS, ELECTRONIC COMMERCE AND ADVERTISING.

The growth of our business depends on the continued growth of the Internet as a
medium for media consumption, communications, electronic commerce and
advertising. Our business could be harmed if Internet usage does not continue to
grow, particularly as a source of media information and entertainment and as a
vehicle for commerce in goods and services. Our success also depends on the
efforts of third parties to develop the infrastructure and complementary
products and services necessary to maintain and expand the Internet as a viable
commercial medium. We believe that other Internet-related issues, such as
security, privacy, reliability, cost, speed, ease of use and access, quality of
service and necessary increases in bandwith availability, remain largely
unresolved and may affect the amount and type of business that is conducted over
the Internet, and may impact our ability to sell our products and services and
ultimately impact our business results and prospects.

If Internet usage grows, the Internet infrastructure may not be able to support
the demands placed on it by such growth, specifically the demands of delivering
high-quality media content. As a result, its performance and reliability may
decline. In addition, Websites have experienced interruptions in service as a
result of outages, system attacks and other delays occurring throughout the
Internet network infrastructure. If these outages, attacks or delays occur
frequently or on a broad scale in the future, Internet usage, as well as the
usage of our products, services and Websites, could grow more slowly or decline.

MORE CONSUMERS ARE UTILIZING NON-PC DEVICES TO ACCESS DIGITAL CONTENT, AND WE
MAY NOT BE SUCCESSFUL IN DEVELOPING VERSIONS OF OUR PRODUCTS AND SERVICES THAT
WILL GAIN WIDESPREAD ADOPTION BY USERS OF SUCH DEVICES.

In the coming years, the number of individuals who access digital content
through devices other than a personal computer, such as personal digital
assistants, cellular telephones, televisions, set-top devices, game consoles and
Internet appliances, is expected to increase dramatically. Manufacturers of
these types of products are increasingly investing in media-related
applications, but development of these devices is still in an experimental stage
and business models are new and unproven. If we are unable to offer our services
on these alternative non-PC devices, we may fail to capture a sufficient share
of an increasingly important portion of the market for digital media services or
our costs may increase significantly.

OUR NETWORK WILL BE SUBJECT TO SECURITY AND STABILITY RISKS THAT COULD HARM OUR
BUSINESS AND REPUTATION AND EXPOSE US TO LITIGATION OR LIABILITY.

Online commerce and communications depend on the ability to transmit
confidential information and licensed intellectual property securely over
private and public networks. Any compromise of our ability to transmit such
information and data securely or reliably, and any costs associated with
preventing or eliminating such problems, could harm our business. Online
transmissions are subject to a number of security and stability risks,
including:

         o        our own or licensed encryption and authentication technology,
                  and access and security procedures, may be compromised,
                  breached or otherwise be insufficient to ensure the security
                  of customer information or intellectual property;

         o        we could experience unauthorized access, computer viruses,
                  system interference or destruction, "denial of service"
                  attacks and other disruptive problems, whether intentional or
                  accidental, that may inhibit or prevent access to our Websites
                  or use of our products and services;


                                       17
<PAGE>

         o        someone could circumvent our security measures and
                  misappropriate our, our partners' or our customers'
                  proprietary information or content or interrupt operations;

         o        our computer systems could fail and lead to service
                  interruptions;

         o        we may be unable to scale our infrastructure with increases in
                  customer demand; or

         o        our network of facilities may be affected by a natural
                  disaster, terrorist attack or other catastrophic events.

The occurrence of any of these or similar events could damage our business, hurt
our ability to distribute products and services and collect revenue, threaten
the proprietary or confidential nature of our technology, harm our reputation
and expose us to litigation or liability. We may be required to expend
significant capital or other resources to protect against the threat of security
breaches, hacker attacks or system malfunctions or to alleviate problems caused
by such breaches, attacks or failures.

    RISKS RELATED TO THE SECURITIES MARKETS AND OWNERSHIP OF OUR COMMON STOCK

HOLDERS OF OUR COMMON STOCK MAY HAVE THEIR PERCENTAGE OWNERSHIP DILUTED AS A
RESULT OF THE CONVERSION OF OUR 9% CONVERTIBLE DEBENTURES, THE EXERCISE OF
WARRANTS ISSUED IN CONNECTION WITH SUCH 9% CONVERTIBLE DEBENTURES AND THE
EXERCISE OF WARRANTS ISSUED IN CONNECTION WITH OUR ACQUISITION OF LTDNETWORK,
INC.

If all our 9% Convertible Debentures outstanding as of May 22, 2006 are
converted at the conversion price as of such date and all the warrants issued in
connection with such 9% Convertible Debentures outstanding as of May 22, 2006
are exercised at their exercise price as of such date, then 267,715,902 shares
of our common stock will be issued with respect to such conversion (not
including any shares of our common stock to be issued on the conversion of
interest accrued on such 9% Convertible Debentures) and exercise. In addition,
if all the warrants issued in connection with our acquisition of LTDN
outstanding as of May 22, 2006 are exercised, then 162,496,084 shares of our
common stock will be issued with respect to such exercise. The exercise price
for such warrants is equal to approximately $0.04 per share. The additional
shares in the market will dilute the percentage interest of our stockholders and
may have a material adverse effect on the market price of our common stock. Any
such decline in the market price of our common stock could impede our efforts to
obtain additional financing through the sale of additional equity or
equity-related securities or could make such financing more costly.

THE ADJUSTABLE CONVERSION PRICE OF OUR 9% CONVERTBLE DEBENTURES COULD REQUIRE US
TO ISSUE A SUBSTANTIALLY GREATER NUMBER OF SHARES OF OUR COMMON STOCK.

Our 9% Convertible Debentures are convertible at a conversion rate equal to the
lesser of $0.07 (subject to adjustment for subsequent lower price issuances by
us and other customary events including stock splits, reverse stock splits,
dividends of our common stock and spin-offs) and 75% of the average of the 10 or
5, as the case may be, lowest closing bid prices of our common stock for the 30
trading days immediately preceding the applicable date of conversion.
Accordingly, the conversion price may fluctuate with the market price of our
common stock and the number of shares we would be required to issue would


                                       18
<PAGE>

increase, perhaps substantially, while the market price of our common stock
trades below $0.09. Also, since such conversion price has no lower limit (ie a
"floorless" conversion feature), the market price of our common stock could
decline to a level requiring us to issue more shares than are currently
authorized under our certificate of incorporation resulting in a default under
our 9% Convertible Debentures. In addition, since our 9% Convertible Debentures
are convertible at a discount to the trading price of our common stock prior to
the conversion, the significant downward pressure on the price of our common
stock as the selling stockholders convert and sell material amounts of our
common stock could encourage short sales by investors. The selling stockholders
could sell our common stock into the market in anticipation of covering the
short sale by converting their securities, which could cause the further
downward pressure on the stock price.

THE PRICE OF OUR COMMON STOCK HAS BEEN AND MAY IN THE FUTURE BE AFFECTED BY
PRICE AND VOLUME FLUCTUATION IN THE MARKET FOR DEVELOPMENTAL STAGE COMPANIES.

The OTC Bulletin Board, where many developmental stage companies are traded,
experiences extreme price and volume fluctuations. These fluctuations often have
been unrelated or disproportionate to the operating performance of these
companies. These broad market and industry factors may materially adversely
affect the market price of our common stock, regardless of our actual operating
performance. In the past, following periods of volatility in the market price of
an individual company's securities, securities class action litigation often has
been instituted against that company. We have not been subject to any lawsuits
alleging that we have violated any provisions of federal securities laws. The
filing of litigation against us, or any other claims, if made, could result in
substantial costs and a diversion of the attention and resources of our
management.

OUR COMMON STOCK MAY BECOME INELIGIBLE FOR QUOTATION ON THE OTC BULLETIN BOARD
AS A RESULT OF OUR FAILURE TO FILE OUR PERIODIC REPORTS UNDER THE SECURITIES
EXCHANGE ACT OF 1934 WITH THE SECURITIES AND EXCHANGE COMMISSION IN A TIMELY
MANNER.

On November 16, 2005, the Securities and Exchange Commission approved a change
to NASD Rule 6530 providing that if an issuer with securities quoted by a NASD
member on the OTC Bulletin Board is cited for delinquent filing of its periodic
reports under the Securities Exchange Act of 1934 with the Securities and
Exchange Commission three times in a 24 month period or is removed from such
quotation for failure to timely make such filings two times in a 24 month period
then the securities of such issuer would be ineligible for quotation by a NASD
member on the OTC Bulletin Board. If an issuer becomes ineligible to be so
quoted, such issuer would not become eligible for quotation on the OTC Bulletin
Board until it has filed such periodic reports for one year in a timely manner.
We have been cited two times since the enactment of such change to NASD Rule
6530 for delinquent filings of such periodic reports. If we are delinquent in
the filing of another periodic report in the next 23 months our common stock
will be ineligible to be quoted on the OTC Bulletin Board. Such ineligibility
may severely limit the market liquidity of our common stock and the ability of
holders of our equity securities to sell their securities in the secondary
market.

OUR COMMON STOCK IS PRESENTLY SUBJECT TO THE "PENNY STOCK" RULES WHICH MAY MAKE
IT A LESS ATTRACTIVE INVESTMENT.

Since the trading price of our common stock is less than $5.00 per share,
trading in our common stock is also subject to the requirements of Rule 15g-9 of
the Securities Exchange Act of 1934. Our common stock is also considered a penny
stock under the Securities Enforcement Remedies and Penny Stock Reform Act of
1990, which defines a penny stock, generally, as any equity security not traded


                                       19
<PAGE>

on an exchange or quoted on the Nasdaq SmallCap Market that has a market price
of less than $5.00 per share. Under such Rule 15g-9, brokers who recommend our
common stock to persons who are not established customers and accredited
investors, as defined in the Securities Exchange Act of 1934, must satisfy
special sales practice requirements, including requirements that they make an
individualized written suitability determination for the purchaser and receive
the purchaser's written consent prior to the transaction. The Securities
Enforcement Remedies and Penny Stock Reform Act of 1990 also requires additional
disclosures in connection with any trades involving a penny stock, including the
delivery, prior to any penny stock transaction, of a disclosure schedule
explaining the penny stock market and the risks associated with that market.
Such requirements may severely limit the market liquidity of our common stock
and the ability of purchasers of our equity securities to sell their securities
in the secondary market.

ITEM 7. FINANCIAL STATEMENTS

Our financial statements for the year ended December 31, 2005 are attached
hereto as pages F-1 through F-36.

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

None.

ITEM 8A. CONTROLS AND PROCEDURES.

We maintain a set of disclosure controls and procedures designed to ensure that
information required to be disclosed by us in the reports filed under the
Securities Exchange Act of 1934, is recorded, processed, summarized and reported
within the time periods specified by the Securities and Exchange Commission's
rules and forms. Disclosure controls are also designed with the objective of
ensuring that this information is accumulated and communicated to our management
to allow timely decisions regarding required disclosure.

Based upon our management's evaluation as of the end of the period covered by
this report, our chief executive officer concluded that, our disclosure controls
and procedures are not effective to ensure that information required to be
included in our periodic Securities and Exchange Commission filings is recorded,
processed, summarized, and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms.

In connection with the audit of our financial statements for the year ended
December 31, 2005, our auditors identified the following material weaknesses:

         o        the lack of segregation of duties in the process of cash
                  receipts and disbursements;
         o        the lack of a timely closing of our books and records and
                  preparation of our financial statements;
         o        the lack of controls with respect to the documentation and
                  accounting for the issuance of our equity securities; and
         o        inadequate accounting resources to account for and analyze
                  technical accounting issues, including, without limitation,
                  accounting for derivative obligations.

There have not been any changes in our internal control over financial reporting
during the quarter ended December 31, 2005 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.


                                       20
<PAGE>

ITEM 8B. OTHER INFORMATION.

None.

                                    PART III

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

DIRECTORS AND OFFICERS

The following table sets forth certain information regarding our officers and
directors as of the date of this annual report:

Name                    Age      Title
----                    ---      -----
Allan Klepfisz          50       President, Chief Executive Officer and Director
Arie Baalbergen         66       Director
Chai Ong                56       Director

All directors hold office until the next annual meeting of stockholders and
until their successors have been elected and qualified. The Board of Directors
elects the officers annually.

Allan Klepfisz joined us as our President, Chief Executive Officer and a
Director on December 15, 2004. Mr. Klepfisz was appointed to our Board of
Directors in connection with the consummation of our acquisition of LTDN.
Between August 1999 and March 2000, Mr. Klepfisz was involved in the formation
of LTDN. Since March 2000, Mr. Klepfisz has served as the Chief Executive
Officer and a director of LTDN.

Arie Baalbergen joined us as a Director on December 15, 2004. Mr. Baalbergen was
appointed to our Board of Directors in connection with the consummation of our
acquisition of LTDN. Between August 1999 and March 2000, Mr. Baalbergen was
involved in the formation of LTDN. Since March 2000, Mr. Baalbergen has served
as the Chief Financial Officer and a director of LTDN.

Chai Ong joined us a Director on December 15, 2004. Mr. Ong was appointed to our
Board of Directors in connection with the consummation of our acquisition of
LTDN. Since 2001, Mr. Ong has served as a director of LTDN. During 2000 and
2001, Mr. Ong served as the Vice President, Corporate Finance of LTDN.

We do not have a separate audit committee. In addition, our Board of Directors
has determined that none of our directors is an "audit committee financial
expert" as defined under the rules of the Securities and Exchange Commission.
Due to our small size and limited resources we are not able to recruit potential
directors that would qualify as such an "audit committee financial expert".

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934 requires our officers and
directors, and persons who own more than ten percent (10%) of a registered class
of our equity securities, to file certain reports regarding ownership of, and
transactions in, our securities with the Securities and Exchange Commission.
Such officers, directors and 10% stockholders are also required to furnish us
with copies of all Section 16(a) forms that they file.


                                       21
<PAGE>

Based solely on our review of copies of Forms 3 and 4 and any amendments
furnished to us with respect to the fiscal year ended December 31, 2005, and any
written representations referred to in Item 405(b)(2)(i) of Regulation S-B
stating that no Forms 5 were required, we believe that, during such fiscal year,
James Samuelson, our former Chief Financial Officer, was delinquent in filing
Form 4s with respect to securities acquired by him during such year.

CODE OF ETHICS

We have not adopted a Code of Ethics that applies to our executive officers. Due
to our small size and limited resources we currently only have a single
executive officer. We have communicated to such executive officer the high level
of ethical conduct expected of him. We intend to adopt a written Code of Ethics
as soon as practicable.

ITEM 9. EXECUTIVE COMPENSATION

The following table presents, for each of the last three fiscal years ending
December 31, 2005 the annual compensation earned by our chief executive officer
and our most highly compensated executive officers, who are referred to in this
annual report as the "Named Executive Officers".

<TABLE>
<S>     <C>
--------------- ----------- ------------------------------------------ ---------------------------------------------------
                                       Annual Compensation                           Long-Term Compensation
--------------- ----------- ------------------------------------------ ---------------------------------------------------
                                                                                Awards                   Payouts
--------------- ----------- -------------- ------------- ------------- ------------------------- -------------------------
                                                                                     Securities
                                                            Other       Restricted   Underlying                 All Other
   Name and                                                 Annual        Stock       Options/       LTIP        Compen
  Principal                    Salary         Bonus         Compen        Awards        SARs        Payouts     -sation
   Position        Year          ($)           ($)         -sation          ($)          (#)          ($)          ($)
--------------- ----------- -------------- ------------- ------------- ------------ ------------ ------------ ------------
James
Samuelson,
Former Vice        2005     $225,000       $293,300(2)        --           --           --           --           --
President,
Chief              2004     $225,000(3)         --            --        $206,000      937,000        --           --
Financial
Officer and        2003     $120,000            --            --           --           --           --           --
Secretary (1)

--------------- ----------- -------------- ------------- ------------- ------------ ------------ ------------ ------------
Allan
Klepfisz,
Chief              2005     $275,000        $78,571(4)    $91,200(5)       --           --           --           --
Executive
Officer and
President          2004     $11,455(6)          --            --           --           --           --           --

--------------- ----------- -------------- ------------- ------------- ------------ ------------ ------------ ------------
</TABLE>

         (1) Mr. Samuelson resigned his positions as an officer and director
with us on January 26, 2006.

         (2) During 2005, Mr. Samuelson received 2,333,000 shares of our common
stock registered on Form S-8. He is owed an additional 667,000 shares of our
common stock for performance goals met in 2005.


                                       22
<PAGE>

         (3) During 2004, Mr. Samuelson received 1,526,238 shares of our common
stock, registered on Form S-8 and 1,183,333 shares of our unregistered common
stock as payment of $407,800 in salary accrued and unpaid for prior years. Mr.
Samuelson received as a bonus 937,777 shares of our unregistered common stock
valued at $206,000. Mr. Samuelson also received as a bonus an option to purchase
937,777 shares of our common stock with an exercise price of $0.22 per share

         (4) During 2005, Mr. Klepfisz received 523,811 shares of our common
stock registered on Form S-8.

         (5) Mr. Klepfisz receives an expense allowance of $7,600 per month.

         (6) Mr. Klepfisz has served as our President and Chief Executive
Officer since December 15, 2004 and has a base annual salary of $275,000.

The following table sets forth certain information with respect to options
exercised during the fiscal year ended December 31, 2005 by the Named Executive
Officers and with respect to unexercised options held by such persons at
December 31, 2005.

<TABLE>
                           AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
                                       AND FY-END OPTION/SAR VALUES

------------------------------------- --------------------------------- ---------------------------------
                                         Number of Shares Underlying          Value of Unexercised
                                          Unexercised Options as of         In-The-Money Options/SARs
                                            December 31, 2005 (#)          as of December 31, 2005 ($)
                Name                      Exercisable/Unexercisable         Exercisable/Unexercisable
------------------------------------- --------------------------------- ---------------------------------
<S>                                              <C>                                 <C>
          James Samuelson                        1,037,777/0                         0/0
------------------------------------- --------------------------------- ---------------------------------
          Allan Klepfisz                             0/0                             0/0
------------------------------------- --------------------------------- ---------------------------------
</TABLE>

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

The following table sets forth information as of May 22, 2006 as to each person
who is known to us to be the beneficial owner of more than 5% of our common
stock (giving effect to all warrants and options exercisable within 60 days) and
as to the security and percentage ownership of each of our Named Executive
Officers and directors and all of our officers and directors as a group. Except
where specifically noted, each person listed in the table has sole voting and
investment power with respect to the shares listed.

<TABLE>
--------------------------------- ---------------------------------- ---------------------------------
Name of Beneficial Owner           Common Stock Beneficially Owned       Percent of Common Stock
--------------------------------- ---------------------------------- ---------------------------------
<S>                                          <C>                                   <C>
Alice Schlattl                               17,440,000                            4.7%
--------------------------------- ---------------------------------- ---------------------------------
Allan Klepfisz                                  523,811                            0.1%
--------------------------------- ---------------------------------- ---------------------------------
James Samuelson (1)                           7,694,847                            2.1%
--------------------------------- ---------------------------------- ---------------------------------
Chai Ong (2)                                  4,820,452                            1.3%
--------------------------------- ---------------------------------- ---------------------------------
Arie Baalbergen (3)                          11,517,400                            3.1%
--------------------------------- ---------------------------------- ---------------------------------
All Officers and Directors as a
group (4 persons)                            24,032,699                            6.5%
--------------------------------- ---------------------------------- ---------------------------------
</TABLE>

                                       23
<PAGE>

(1) Includes options to purchase 1,037,777 shares of our common stock and
667,000 shares of our common stock owed to Mr. Samuelson for performance goals
met in 2005.
(2) Includes warrants to purchase 1,481,200 shares of our common stock. Also
includes 190,400 shares of our common stock and warrants to purchase 480,800
shares of our common stock held by Mr. Ong's wife.
(3) Includes warrants to purchase 7,813,200 shares of our common stock.

Equity Compensation Plan Information
------------------------------------

The following table provides certain information as of December 31, 2005
concerning shares of our common stock that may be issued under existing equity
compensation plans.

<TABLE>
--------------------------------- ------------------------------ ------------------------------- ----------------------------
                                  Number of securities to be     Weighted-average exercise       Number of securities
                                  issued upon exercise of        price of outstanding options,   remaining available for
                                  outstanding options,           warrants and rights             future issuance under
                                  warrants and rights                        (b)                 equity compensation plans
                                          (a)                                                    (excluding securities
                                                                                                 reflected in column (a))
                                                                                                            (c)
--------------------------------- ------------------------------ ------------------------------- ----------------------------
<S>                                         <C>                              <C>                          <C>
Equity compensation plans
approved by security holders (1)             205,000                         $0.34                        16,915,000
--------------------------------- ------------------------------ ------------------------------- ----------------------------
Equity compensation plans not
approved by security holders (2)             937,000                         $0.22                          772,452
--------------------------------- ------------------------------ ------------------------------- ----------------------------
Total                                       1,142,777                        $0.30                        17,687,452
--------------------------------- ------------------------------ ------------------------------- ----------------------------
</TABLE>

         (1)      Included in this category are the Brilliant Technologies
                  Corporation 2000 Stock Option Plan and the Brilliant
                  Technologies Corporation 2005 Equity Incentive Plan.
         (2)      Included in this category are the Brilliant Technologies
                  Corporation 2001 Consultants Stock Plan and the Brilliant
                  Technologies Corporation 2005 Stock Compensation Plan.

On November 30, 2001 our Board of Directors adopted a stock plan entitled the
Brilliant Technologies Corporation 2001 Consultants Stock Plan (the "2001
Plan"). Our stockholders have not approved the 2001 Plan. Under the 2001 Plan,
options and restricted stock awards may be issued to persons providing
consulting services to us. Our Board of Directors administers the 2001 Plan but
may delegate such administration to a committee, which shall consist of at least
two members of our Board. Our Board or such committee has the authority to
determine the number of options to be granted, when the options may be exercised
and the exercise price of the options, provided that the exercise price may
never be less than 85% of the fair market value of the shares of our common
stock on the date the option is granted. Our Board or such committee may also
grant the options according to a defined vesting schedule, provided that in no
case shall any option provide for the vesting of option shares for a period of
time which exceeds five years from date of grant of the option, or on a
cumulative incremental percentage basis which is less than twenty percent (20%)
per year. Options may be granted for terms not exceeding ten years from the date
of the grant.


                                       24
<PAGE>

On February 23, 2005 our Board of Directors adopted a stock plan entitled the
Brilliant Technologies Corporation 2005 Stock Compensation Plan (the "2005
Plan"). Our stockholders have not approved the 2005 Plan. Under the 2005 Plan,
options and restricted stock awards may be issued to persons providing
consulting services to us. Our Board of Directors administers the 2005 Plan but
may delegate such administration to a committee, which shall consist of at least
two members of our Board. Our Board or such Committee has the authority to
determine the number of options to be granted, when the options may be exercised
and the exercise price of the options. Our Board or such Committee may also
grant the options according to a defined vesting schedule. Options may be
granted for terms not exceeding ten years from the date of the grant.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On July 8, 2004, we entered into a consulting agreement with Allan Klepfisz
pursuant to which we issued to Mr. Klepfisz 2,337,500 shares of our common
stock, with a value of $352,750, for consulting services performed by Mr.
Klepfisz between November 1, 2002 and July 8, 2004 and for further services to
be performed by Mr. Klepfisz up to the date of our acquisition of LTDN, which
occurred on December 15, 2004. On July 8, 2004, we entered into a consulting
agreement with Chai Ong pursuant to which we issued to Mr. Ong 1,700,000 shares
of our common stock, with a value of $255,000, for consulting services performed
by Mr. Ong between November 1, 2002 and July 8, 2004 and for further services to
be performed by Mr. Ong up to the date of our acquisition of LTDN, which
occurred on December 15, 2004. In February 2005, we issued 380,952 shares of our
common stock to Mr. Ong in connection with consulting services provided to us by
Mr. Ong. As of December 31, 2005 We owed Mr. Klepfisz $606,664 related to
advances made by him. This obligation is payable on demand and does not provide
for interest.

Each of Allan Klepfisz, Arie Baalbergen, and Chai Ong was a stockholder of LTDN
at the time of our acquisition of LTDN on December 15, 2004. As a result, such
persons received shares of our Series A Convertible Preferred Stock and warrants
to purchase shares of our Series A Convertible Preferred Stock in exchange for
their shares of common stock of LTDN. Mr. Klepfisz received 12,278 shares of our
Series A Convertible Preferred Stock and warrants to purchase 30,985 shares of
our Series A Convertible Preferred Stock, Mr. Baalbergen received 7,748 shares
of our Series A Convertible Preferred Stock and warrants to purchase 19,553
shares of our Series A Convertible Preferred Stock and Mr. Ong received 1,944
shares of our Series A Convertible Preferred Stock and warrants to purchase
4,905 shares of our Series A Convertible Preferred Stock. Each of Mr. Klepfisz,
Mr. Baalbergen and Mr. Ong also has the right to participate in the registration
of our common stock received upon exercise of such shares of our Series A
Convertible Preferred Stock and such warrants.


                                       25
<PAGE>

ITEM 13. EXHIBITS

Exhibit 2.1       Amended and Restated Agreement and Plan of Merger, dated as of
                  August 11, 2004, among the Registrant,
                  LTDnetwork, Inc. and LTDN Acquisition Corp. (1)

Exhibit 2.2       First Amendment, dated as of December 15, 2004, among the
                  Registrant, LTDnetwork, Inc. and LTDN Acquisition Corp. to
                  that certain Amended and Restated Agreement and Plan of
                  Merger, dated as of August 11, 2004, among the Registrant,
                  LTDnetwork, Inc. and LTDN Acquisition Corp. (2)

Exhibit 2.3       Stock and Intellectual Property Purchase Agreement, dated as
                  of December 13, 2004, among Alice Schlattl, Schlattl GBR, the
                  Registrant, Claudia Schreiner, Susanne Schlattl and Ralph
                  Schlattl. (2)

Exhibit 3.1       Certificate of Incorporation of the Registrant *

Exhibit 3.2       Certificate of Designations for the Series A Convertible
                  Preferred Stock of the Registrant (2)

Exhibit 3.3       Amendment No. 1 to the Certificate of Designations for the
                  Series A Convertible Preferred Stock of the Registrant (7)

Exhibit 3.4       Amended and Restated By-laws of the Registrant (15)

Exhibit 4.1       Warrant Agreement, dated as of December 15, 2004, between the
                  Registrant and LTDnetwork, Inc. (2)

Exhibit 4.2       Registration Rights Agreement, dated as of December 15, 2004,
                  between the Registrant and LTDnetwork, Inc. (2)

Exhibit 4.3       Securities Purchase Agreement dated as of March 1, 2005
                  between the Registrant and The Gross Foundation, Inc.(7)

Exhibit 4.4       Amendment No. 1 dated as of April 5, 2005 to the Securities
                  Purchase Agreement and the Transaction Documents between the
                  Registrant and The Gross Foundation, Inc.(7)

Exhibit 4.5       Form of 9% Convertible Debenture issued to The Gross
                  Foundation, Inc.(7)

Exhibit 4.6       Form of Warrant issued to The Gross Foundation, Inc.(7)

Exhibit 4.7       Registration Rights Agreement dated as of March 1, 2005
                  between the Registrant and The Gross Foundation, Inc.(7)

Exhibit 4.8       Securities Purchase Agreement dated as of April 14, 2005
                  between the Registrant and Double U Master Fund, L.P.(7)

Exhibit 4.9       Form of 9% Convertible Debenture issued to Double U Master
                  Fund, L.P.(7)

Exhibit 4.10      Form of Warrant issued to Double U Master Fund, L.P.(7)

Exhibit 4.11      Registration Rights Agreement dated as of April 14, 2005
                  between the Registrant and Double U Master Fund, L.P.(7)

Exhibit 4.12      Securities Purchase Agreement dated as of April 14, 2005
                  between the Registrant and Platinum Partners Value Arbitrage
                  Fund, L.P.(7)

Exhibit 4.13      Form of 9% Convertible Debenture issued to Platinum Partners
                  Value Arbitrage Fund, L.P.(7)

Exhibit 4.14      Form of Warrant issued to Platinum Partners Value Arbitrage
                  Fund, L.P.(7)


                                       26
<PAGE>

Exhibit 4.15      Registration Rights Agreement dated as of April 18, 2005
                  between the Registrant and Platinum Partners Value Arbitrage
                  Fund, L.P.(7)

Exhibit 4.16      Securities Purchase Agreement dated as of April 18, 2005
                  between the Registrant and JM Investors, Inc.(7)

Exhibit 4.17      Form of 9% Convertible Debenture issued to JM Investors,
                  Inc.(7)

Exhibit 4.18      Form of Warrant issued to JM Investors, Inc.(7)

Exhibit 4.19      Registration Rights Agreement dated as of April 18, 2005
                  between the Registrant and JM Investors, Inc.(7)

Exhibit 4.20      Securities Purchase Agreement dated as of July 14, 2005
                  between the Registrant and the investors named therein (9)

Exhibit 4.21      Form of 9% Convertible Debenture issued to certain investors
                  on July 19 (9)

Exhibit 4.22      Form of Warrant issued to certain investors on July 19 (9)

Exhibit 4.23      Registration Rights Agreement dated as of July 14, 2005
                  between the Registrant and the investors named therein (9)

Exhibit 4.24      Amendment No. 1 dated as of July 19, 2005 to the Registration
                  Rights Agreements between the Registrant and the investors
                  named therein and the related Debentures(9)

Exhibit 4.25      Security Agreement dated as of July 19, 2005 between the
                  Registrant and the investors named therein (9)

Exhibit 4.26      Securities Purchase Agreement dated as of August 26, 2005
                  between the Registrant and Harborview Master Fund L.P.(10)

Exhibit 4.27      Form of 9% Convertible Debenture issued to Harborview Master
                  Fund L.P. (10)

Exhibit 4.28      Form of Warrant issued to Harborview Master Fund L.P.(10)

Exhibit 4.29      Registration Rights Agreement dated as of August 26, 2005
                  between the Registrant and Harborview Master Fund L.P. (10)

Exhibit 4.30      Securities Purchase Agreement dated as of September 12, 2005
                  between the Registrant and Silverlake Holdings. Inc.(10)

Exhibit 4.31      Form of 9% Convertible Debenture issued to Silverlake
                  Holdings. Inc. (10)

Exhibit 4.32      Form of Warrant issued to Silverlake Holdings. Inc. (10)

Exhibit 4.33      Registration Rights Agreement dated as of September 12, 2005
                  between the Registrant and Silverlake Holdings. Inc. (10)

Exhibit 4.34      Securities Purchase Agreement dated as of October 11, 2005
                  between the Registrant and Chicago Venture Partners L.P.(10)

Exhibit 4.35      Form of 9% Convertible Debenture issued to Chicago Venture
                  Partners L.P. (10)

Exhibit 4.36      Form of Warrant issued to Chicago Venture Partners L.P. (10)

Exhibit 4.37      Registration Rights Agreement dated as of October 11, 2005
                  between the Registrant and Chicago Venture Partners L.P. (10)

Exhibit 4.38      Securities Purchase Agreement dated as of October 17, 2005
                  between the Registrant and Monarch Capital Fund Ltd (10)


                                       27
<PAGE>

Exhibit 4.39      Form of 9% Convertible Debenture issued to Monarch Capital
                  Fund Ltd (10)

Exhibit 4.40      Form of Warrant issued to Monarch Capital Fund Ltd (10)

Exhibit 4.41      Registration Rights Agreement dated as of October 17, 2005
                  between the Registrant and Monarch Capital Fund Ltd (10)

Exhibit 4.42      Securities Purchase Agreement dated as of February 21, 2006
                  between the Registrant and The Gross Foundation, Inc.(12)

Exhibit 4.43      Form of 9% Convertible Debenture issued to The Gross
                  Foundation, Inc.(12)

Exhibit 4.44      Form of Warrant issued to The Gross Foundation, Inc.(12)

Exhibit 4.45      Registration Rights Agreement dated as of February 21, 2006
                  between the Registrant and The Gross Foundation, Inc.(12)

Exhibit 4.46      Securities Purchase Agreement dated as of March 13, 2006
                  between the Registrant and Nite Capital LP (13)

Exhibit 4.47      Form of 9% Convertible Debenture issued to Nite Capital LP
                  (13)

Exhibit 4.48      Form of Warrant issued to Nite Capital LP (13)

Exhibit 4.49      Registration Rights Agreement dated as of March 13, 2006
                  between the Registrant and Nite Capital LP (13)

Exhibit 4.50      Securities Purchase Agreement dated as of March 24, 2006
                  between the Registrant and Chicago Venture Partners, L.P. (13)

Exhibit 4.51      Form of 9% Convertible Debenture issued to Chicago Venture
                  Partners, L.P. (13)

Exhibit 4.52      Form of Warrant issued to Chicago Venture Partners, L.P. (13)

Exhibit 4.53      Registration Rights Agreement dated as of March 24, 2006
                  between the Registrant and Chicago Venture Partners, L.P. (13)

Exhibit 4.54      Form of Securities Purchase Agreement dated as of March 30,
                  2006 between the Registrant and each of Double U Master Fund,
                  L.P., CMS Capital, Brio Capital, L.P. and Treshnish
                  Investment, Inc., respectively. (14)

Exhibit 4.55      Form of 9% Convertible Debenture issued to each of Double U
                  Master Fund, L.P., CMS Capital, Brio Capital, L.P. and
                  Treshnish Investment, Inc., respectively. (14)

Exhibit 4.56      Form of Warrant issued to each of Double U Master Fund, L.P.,
                  CMS Capital, Brio Capital, L.P. and Treshnish Investment,
                  Inc., respectively. (14)

Exhibit 4.57      Registration Rights Agreement dated as of March 30, 2006
                  between the Registrant and each of Double U Master Fund, L.P.,
                  CMS Capital, Brio Capital, L.P. and Treshnish Investment,
                  Inc., respectively. (14)

Exhibit 4.58      Securities Purchase Agreement dated as of May 2, 2006 between
                  the Registrant and Monarch Capital Fund Ltd. (16)

Exhibit 4.59      Form of 9% Convertible Debenture issued to Monarch Capital
                  Fund Ltd. (16)

Exhibit 4.60      Form of Warrant issued to Monarch Capital Fund Ltd. (16)

Exhibit 4.61      Registration Rights Agreement dated as of May 2, 2006 between
                  the Registrant and Monarch Capital Fund Ltd. (16)


                                       28
<PAGE>


Exhibit 4.62      Securities Purchase Agreement dated as of May 2, 2006 between
                  the Registrant and Harborview Master Fund L.P. (16)

Exhibit 4.63      Form of 9% Convertible Debenture issued to Harborview Master
                  Fund L.P. (16)

Exhibit 4.64      Form of Warrant issued to Harborview Master Fund L.P. (16)

Exhibit 4.65      Registration Rights Agreement dated as of May 2, 2006 between
                  the Registrant and Harborview Master Fund L.P. (16)

Exhibit 4.66      Securities Purchase Agreement dated as of May 12, 2006 between
                  the Registrant and Cobalt Blue LLC. (17)

Exhibit 4.67      Form of 9% Convertible Debenture issued to Cobalt Blue LLC.
                  (17)

Exhibit 4.68      Form of Warrant issued to Cobalt Blue LLC. (17)

Exhibit 4.69      Registration Rights Agreement dated as of May 12, 2006 between
                  the Registrant and Cobalt Blue LLC. (17)

Exhibit 10.1      Release and Stock Purchase Agreement, dated as of July 15,
                  2003, between James Samuelson and the Registrant (3)

Exhibit 10.2      Option Agreement, dated as of March 12, 2004, between James
                  Samuelson and the Registrant. (4)

Exhibit 10.3      Settlement Agreement and General Release, dated as of May 17,
                  2004, among Richardson & Patel, a Law Corporation, Richardson
                  & Patel LLP, LTDnetwork, Inc. and the Registrant. (4)

Exhibit 10.4      Consulting Services Agreement dated as of July 8, 2004 between
                  Allan Klepfisz and the Registrant. (4)

Exhibit 10.5      Consulting Services Agreement dated as of July 8, 2004 between
                  Chai Ong and the Registrant. (4)

Exhibit 10.6      2000 Stock Option Plan (8)

Exhibit 10.7      2001 Consultant's Stock Plan (5)

Exhibit 10.8      2005 Stock Compensation Plan (6)

Exhibit 10.9      2005 Equity Incentive Plan (11)

Exhibit 21        List of Subsidiaries *

Exhibit 23.1      Consent of Independent Registered Public Accounting Firm*

Exhibit 31        Certification of the Principal Executive Officer and Principal
                  Financial Officer pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002*

Exhibit 32        Certification of the Principal Executive Officer and Principal
                  Financial Officer pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002*


*  Filed herewith

(1)       Incorporated herein by reference to the Registrant's Current Report on
          Form 8-K as filed with the Securities and Exchange Commission on
          August 13, 2004
(2)       Incorporated herein by reference to the Registrant's Current Report on
          Form 8-K as filed with the Securities and Exchange Commission on
          December 17, 2004
(3)       Incorporated by reference to the Registrant's Quarterly Report on Form
          10-QSB for the quarter ended June 30, 2003 as filed with the
          Securities and Exchange Commission on September 24, 2003.
(4)       Incorporated by reference to the Registrant's Registration Statement
          on Form S-8 as filed with the Securities and Exchange Commission on
          July 15, 2004
(5)       Incorporated by reference to the Registrant's Registration Statement
          on Form S-8 as filed with the Securities and Exchange Commission on
          December 3, 2001


                                       29
<PAGE>

(6)       Incorporated by reference to the Registrant's Registration Statement
          on Form S-8 as filed with the Securities and Exchange Commission on
          February 28, 2005
(7)       Incorporated by reference to the Registrant's Annual Report on Form
          10-KSB for the year ended December 31, 2004 as filed with the
          Securities and Exchange Commission on June 10, 2005.
(8)       Incorporated herein by reference to the Registrant's Current Report on
          Form 8-K as filed with the Securities and Exchange Commission on
          November 8, 2000
(9)       Incorporated herein by reference to the Registrant's Current Report on
          Form 8-K as filed with the Securities and Exchange Commission on July
          20, 2005
(10)      Incorporated herein by reference to the Registrant's Current Report on
          Form 8-K as filed with the Securities and Exchange Commission on
          November 2, 2005
(11)      Incorporated by reference to the Registrant's Registration Statement
          on Form 8-K as filed with the Securities and Exchange Commission on
          November 1, 2005
(12)      Incorporated herein by reference to the Registrant's Current Report on
          Form 8-K as filed with the Securities and Exchange Commission on March
          10, 2006
(13)      Incorporated herein by reference to the Registrant's Current Report on
          Form 8-K as filed with the Securities and Exchange Commission on March
          31, 2006
(14)      Incorporated herein by reference to the Registrant's Current Report on
          Form 8-K as filed with the Securities and Exchange Commission on April
          11, 2006
(15)      Incorporated herein by reference to the Registrant's Current Report on
          Form 8-K as filed with the Securities and Exchange Commission on May
          1, 2006
(16)      Incorporated herein by reference to the Registrant's Current Report on
          Form 8-K as filed with the Securities and Exchange Commission on May
          9, 2006
(17)      Incorporated herein by reference to the Registrant's Current Report on
          Form 8-K as filed with the Securities and Exchange Commission on May
          25, 2006


ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

Marcum & Kliegman LLP, certified public accountants, provided us accounting
services during the year ended December 31, 2005.

The following table presents fees for professional audit services rendered by
Marcum & Kliegman, LLP for the audit of our annual financial statements for the
years ended December 31, 2005 and 2004, and fees billed for other services
rendered by Marcum & Kliegman, LLP during such years.

                                                  2005             2004
                                               ---------------------------
Audit Fees (1)                                  $325,000         $250,000
Audit Related Fees (2)                                --               --
Tax Fees (3)                                          --           12,500
All Other Fees (4)                                    --            6,500

                                               ---------------------------
                                                $325,000         $269,000


                                       30
<PAGE>

Notes:

(1)      Audit fees consist of fees for audit of our annual financial
         statements, review of financial statements included in our quarterly
         reports on Form 10-Q and services normally provided by the independent
         auditor in connection with statutory and regulatory filings or
         engagements.

(2)      Audit related fees consist of fees for assurance and related services
         by the independent auditor.

(3)      Tax fees consist of fees for tax consultation and tax compliance
         services provided to us.

(4)      All other fees consist of fees primarily related to a registration
         statement filed by us.

We do not have an audit committee, therefore there is no pre-approval of audit
and permissible non-audit services that are provided by the independent
auditors. The non-audit services include audit-related services, tax services
and other services. Our policy is to pre-approve all services and fees for up to
one year, which approval includes the appropriate detail with regard to each
particular service and its related fees.

We have considered whether the services provided by Marcum & Kliegman, LLP,
apart from the audit services described under the heading "Audit Fees" above,
are compatible with maintaining the independence of Marcum & Kliegman, LLP.


                                       31
<PAGE>

                                   SIGNATURES
                                   ----------


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

                                      BRILLIANT TECHNOLOGIES CORPORATION

Dated:  May 25, 2006                  By /s/ Allan Klepfisz
                                         ---------------------------------------
                                             Allan Klepfisz
                                             Chief Executive Officer,
                                             President and Director, and
                                             Acting Chief Financial Officer


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


Dated:  May 25, 2006                     /s/ Allan Klepfisz
                                         ---------------------------------------
                                             Allan Klepfisz
                                             Chief Executive Officer,
                                             President and Director, and
                                             Acting Chief Financial Officer

Dated:  May 25, 2006                     /s/  Chai Ong
                                         ---------------------------------------
                                              Chai Ong
                                              Director


Dated:  May 25, 2006                     /s/  Arie Baalbergen
                                         ---------------------------------------
                                              Arie Baalbergen
                                              Director


                                       32
<PAGE>
<TABLE>
<S>     <C>
                                BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                         (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                                           (A Development Stage Company)


                                INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS


Report of Independent Registered Public Accounting Firm                                                        F-1

Consolidated Balance Sheet at December 31, 2005                                                                F-2

Consolidated Statements of Operations for the Years Ended December 31, 2005 and 2004
    and for the Period from Inception (October 31, 1999) to December 31, 2005                                  F-3

Consolidated Statements of Stockholders' (Deficiency) for the Period from Inception
    (October 31, 1999) to December 31, 2005                                                             F-4 to F-9

Consolidated Statements of Cash Flows for the Years Ended December 31, 2005 and 2004
    and for the Period from Inception (October 31, 1999) to December 31, 2005                                 F-10

Notes to the Consolidated Financial Statements                                                        F-11 to F-36
</TABLE>

<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             -------------------------------------------------------


To the Board of Directors of
Brilliant Technologies Corporation
(formerly Advanced Technology Industries, Inc.)

We have audited the accompanying consolidated balance sheet of Brilliant
Technologies Corporation and Subsidiaries (formerly Advanced Technology
Industries, Inc.) (the "Company") as of December 31, 2005, and the related
consolidated statements of operations, changes in stockholders' deficiency and
cash flows for the years ended December 31, 2005 and 2004 and for the period
from inception (October 1, 1999) to December 31, 2005. These 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 the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Brilliant Technologies Corporation and Subsidiaries (formerly Advanced
Technology Industries, Inc.), as of December 31, 2005, and the results of their
operations and their cash flows for the years ended December 31, 2005 and 2004
and for the period from inception (October 1, 1999) to December 31, 2005 in
conformity with U.S. generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, the Company
continues to generate operating losses and has a significant working capital
deficiency as of December 31, 2005. The Company has yet to generate revenues.
These conditions raise substantial doubt about the Company's ability to continue
as a going concern. Management's plans regarding 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.



/s/ Marcum & Kliegman LLP


New York, New York
May 24, 2006


                                      F-1
<PAGE>

<TABLE>
<S>     <C>

                   BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
             (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                              (A Development Stage Company)

                                CONSOLIDATED BALANCE SHEET
                                    DECEMBER 31, 2005


                                          ASSETS
                                          ------

Current Assets:
     Cash and cash equivalents                                              $     44,281
     Prepaid expenses and other current assets                                     4,841
                                                                            ------------

         Total Current Assets                                                     49,122

Property and equipment, net                                                       33,055

Deferred financing costs, net                                                    164,630

Capitalized software                                                             804,875

Other assets                                                                      13,204
                                                                            ------------

         TOTAL ASSETS                                                       $  1,064,886
                                                                            ============

                         LIABILITIES AND STOCKHOLDERS' DEFICIENCY
                         ----------------------------------------

CURRENT LIABILITIES:
  Notes payable, includes related parties of $221,440                       $  1,083,934
  Convertible debentures, net of debt discount of $1,630,962                   1,114,038
  Accrued liabilities, including $535,417 due to related parties               5,579,417
  Accrued settlement satisfied in common stock                                 2,200,000
  Due to related parties                                                         787,175
  Derivative liabilities for conversion options and warrants                  10,880,847
                                                                            ------------

         TOTAL LIABILITIES                                                    21,645,411
                                                                            ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY:
   Preferred stock - $.001 par value; 1,000,000 shares authorized;
     -0- shares issued and outstanding                                                --
   Common stock - $.0001 par value; 800,000,000 shares authorized;
     231,484,424 shares issued and outstanding                                    23,147
   Additional paid-in capital                                                 16,065,823
   Accumulated other comprehensive income                                        273,226
   Deficit accumulated during the development stage                          (36,942,721)
                                                                            ------------

         TOTAL STOCKHOLDERS' DEFICIENCY                                      (20,580,525)
                                                                            ------------

         TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                     $  1,064,886
                                                                            ============


 The accompanying notes are an integral part of these consolidated financial statements.

                                           F-2
<PAGE>

                                 BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                          (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                                            (A Development Stage Company)

                                        CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                                                  For the Period
                                                                                                  From Inception
                                                                                                 (October 1, 1999)
                                                               For the Years Ended                    Through
                                                                   December 31,                     December 31,
                                                            2005                  2004                  2005
                                                      ----------------      ----------------      ----------------

REVENUES                                              $             --      $             --      $          9,862
                                                      ----------------      ----------------      ----------------

OPERATING COSTS:
  Research and development                                     812,175               558,249             2,171,377
  In-process research and development                               --            23,224,695            23,224,695
  Consulting fees                                              377,488             4,165,809             8,073,962
  General and administrative, including
    compensatory element of stock
    issuance of $664,044 and $3,668,637
    for 2005 and 2004, respectively                          3,570,478               520,259             9,502,388
  Depreciation and amortization                                 84,440                31,089               342,173
  Settlement provision                                       2,200,000                    --             2,200,000
                                                      ----------------      ----------------      ----------------

TOTAL OPERATING COSTS                                        7,044,581            28,500,101            45,514,595
                                                      ----------------      ----------------      ----------------

LOSS FROM OPERATIONS                                        (7,044,581)          (28,500,101)          (45,504,733)

Derivative gains, net                                      (10,840,340)                   --           (10,840,340)
Interest and amortization of debt issuance costs,
  including stock compensatory issuances of
  $519,989 for 2005                                          2,057,274                14,745             2,174,399
Other (income) expenses                                        (12,508)               32,888               103,929
                                                      ----------------      ----------------      ----------------

NET INCOME (LOSS)                                     $      1,750,994      $    (28,547,734)     $    (36,942,721)
                                                      ================      ================      ================


Basic net income (loss) per common share              $            .01      $           (.52)
                                                      ================      ================
Diluted net income (loss) per common share            $            .01      $           (.52)
                                                      ================      ================
Weighted average number of shares outstanding
  - Basic                                                  197,714,949            54,892,590
                                                      ================      ================
Weighted average number of shares outstanding
  - Diluted                                                326,855,149            54,892,590
                                                      ================      ================


               The accompanying notes are an integral part of these consolidated financial statements.

                                                        F-3
<PAGE>

                                       BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                                 (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                                                  (A Development Stage Company)

                                        CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
                                      From Inception (October 1, 1999) to December 31, 2005


                                                                                                                      Additional
                                             Per Share           Common Stock                 Preferred Stock           Paid-in
                                              Amount         Shares         Amount         Shares         Amount        Capital
                                            ----------     ----------     ----------     ----------     ----------     ----------
Period from Inception (October 1, 1999)
  through December 31, 1999                         --             --     $       --             --     $       --     $       --

Issuance of founders shares                 $      .01             --             --         52,014             --            487
Net loss                                            --             --             --             --             --             --
                                            ----------     ----------     ----------     ----------     ----------     ----------
Balance at 12/31/99                                                --             --         52,014             --            487

Issuance of stock for cash                  $   174.47             --             --          8,310              8      1,449,788
Issuance of stock for services              $    35.27             --             --          3,640              4        128,390
Subscription receivable                             --             --             --             --             --             --
Net loss                                            --             --             --             --             --             --
Foreign currency translation
  adjustment                                        --             --             --             --             --             --
Comprehensive loss                                  --             --             --             --             --             --
                                            ----------     ----------     ----------     ----------     ----------     ----------
Balance at December 31, 2000                                       --             --         63,964             12      1,578,665

Issuance of stock for cash                  $   252.29             --             --          8,140              8      2,053,695
Issuance of stock for services              $   503.35             --             --          2,080              1      1,046,999
Subscription receivable                             --             --             --             --             --             --
Net loss                                            --             --             --             --             --             --
Foreign currency translation
  adjustment                                        --             --             --             --             --             --
Comprehensive loss                                  --             --             --             --             --             --
                                            ----------     ----------     ----------     ----------     ----------     ----------
Balance at December 31, 2001                                       --     $       --         74,184     $       21     $4,679,359
                                            ==========     ==========     ==========     ==========     ==========     ==========


                     The accompanying notes are an integral part of these consolidated financial statements.

                                                               F-4
<PAGE>

                                         BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                                  (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                                                    (A Development Stage Company)

                                         CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
                                        From Inception (October 1, 1999) to December 31, 2005


                                                                                    Accumulated
                                                                   Accumulated        Deficit          Total
                                   Receivable                         Other         During the      Stockholders
                                   on Sale of        Unearned      Comprehensive    Development        Equity         Comprehensive
                                      Stock        Compensation    Income (Loss)      Stage         (Deficiency)          Loss
                                   -----------      -----------     -----------     -----------      -----------      -------------
Period from Inception
  (October 1, 1999)
  through December 31, 1999        $        --      $        --     $        --     $        --      $        --      $        --

Issuance of founders shares                 --               --              --              --              487               --
Net loss                                    --               --              --            (483)            (483)            (483)
                                   -----------      -----------     -----------     -----------      -----------      ===========
Balance at 12/31/99                         --               --              --            (483)               4

Issuance of stock for cash                  --               --              --              --        1,449,796               --
Issuance of stock for services              --               --              --              --          128,394               --
Subscription receivable            $   (65,000)              --              --              --          (65,000)              --
Net loss                                    --               --              --      (1,877,614)      (1,877,614)      (1,877,614)
Foreign currency translation
  adjustment                                --               --           2,391              --            2,391            2,391
Comprehensive loss                          --               --              --              --               --       (1,875,223)
                                   -----------      -----------     -----------     -----------      -----------      ===========
Balance at December 31, 2000       $   (65,000)              --           2,391      (1,878,097)        (362,029)

Issuance of stock for cash                  --               --              --              --        2,053,703               --
Issuance of stock for services              --               --              --              --        1,047,000               --
Subscription receivable            $    65,000               --              --              --           65,000               --
Net loss                                    --               --              --      (2,983,450)      (2,983,450)      (2,983,450)
Foreign currency translation
  adjustment                                --               --          51,020              --           51,020           51,020
Comprehensive loss                          --               --              --              --               --       (2,932,430)
                                   -----------      -----------     -----------     -----------      -----------      ===========
Balance at December 31, 2001       $        --      $        --     $    53,411     $(4,861,547)     $  (128,756)
                                   ===========     ===========     ===========      ===========      ===========


                       The accompanying notes are an integral part of these consolidated financial statements.

                                                                F-5
<PAGE>

                                        BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                                  (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                                                   (A Development Stage Company)

                                         CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
                                       From Inception (October 1, 1999) to December 31, 2005


                                                                                                                      Additional
                                      Per Share    Common Stock                          Preferred Stock               Paid-in
                                       Amount         Shares          Amount          Shares          Amount           Capital
                                     ----------    ------------    ------------    ------------     ------------     ------------

Balance at December 31, 2001                 --              --    $         --          74,184     $         21     $  4,679,359

Issuance of stock for cash           $   197.75              --              --          13,624               --        2,694,254
Issuance of stock for services       $    52.32              --              --           8,446                8          441,833
Net loss                                     --              --              --              --               --               --
Foreign currency translation
  adjustment                                 --              --              --              --               --               --
Comprehensive loss                           --              --              --              --               --               --
                                     ----------    ------------    ------------    ------------     ------------     ------------
Balance at December 31, 2002                                 --              --          96,254               29        7,815,446

Issuance of stock for cash           $   168.09              --              --           2,203               16          370,351
Issuance of stock for services       $    68.99              --              --           7,595                8          523,965
Net loss                                     --              --              --              --               --               --
Amortization of unearned
  compensation                               --              --              --              --               --               --
Foreign currency translation
  adjustment                                 --              --              --              --               --               --
Comprehensive loss                           --              --              --              --               --               --
                                     ----------    ------------    ------------    ------------     ------------     ------------
Balance at December 31, 2003                                 --              --         106,052               53        8,709,762
Issuance of stock for cash           $    51.67              --              --          63,659               64        3,288,885
Offering costs                               --              --              --              --               --         (125,000)
Issuance of stock for services       $    90.23              --              --          36,125               36        3,259,533
Conversion of debt                           --              --              --           2,053                2          224,817
Issuance of stock to stockholders
  of ATI                             $   109.51      83,931,775           8,393          50,000               50       15,933,212
Net loss                                     --              --              --              --               --               --
Amortization of unearned
  compensation                               --              --              --              --               --               --
Foreign currency translation
  adjustment                                 --              --              --              --               --               --
   Comprehensive loss                        --              --              --              --               --               --
Adjustment pursuant to merger
  agreement                                  --              --              --         (14,553)             (10)              10
                                     ----------    ------------    ------------    ------------     ------------     ------------
Balance at December 31, 2004         $       --      83,931,775    $      8,393         243,336     $        195     $ 31,291,219
                                     ==========    ============    ============    ============     ============     ============


                      The accompanying notes are an integral part of these consolidated financial statements.

                                                                F-6
<PAGE>

                                         BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                                  (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                                                    (A Development Stage Company)

                                         CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
                                        From Inception (October 1, 1999) to December 31, 2005


                                                                     Accumulated     Accumulated         Total
                                    Receivable                          Other       Deficit During    Stockholders
                                    on Sale of       Unearned       Comprehensive  the Development       Equity       Comprehensive
                                      Stock        Compensation     Income (Loss)       Stage         (Deficiency)         Loss
                                   ------------    ------------     ------------     ------------     ------------     ------------
Balance at December 31, 2001       $         --    $         --     $     53,411     $ (4,861,547)    $   (128,756)    $         --

Issuance of stock for cash                   --              --               --               --        2,694,254               --
Issuance of stock for services               --        (344,157)              --               --           97,684               --
Net loss                                     --              --               --       (2,824,849)      (2,824,849)      (2,824,849)
Foreign currency translation
  adjustment                                 --              --         (162,210)              --         (162,210)        (162,210)
Comprehensive loss                           --              --               --               --               --       (2,987,059)
                                   ------------    ------------     ------------     ------------     ------------     ============
Balance at December 31, 2002                 --        (344,157)        (108,799)      (7,686,396)        (323,877)

Issuance of stock for cash                   --              --               --               --          370,367               --
Issuance of stock for services               --        (523,973)              --               --               --               --
Net loss                                     --              --               --       (2,459,819)      (2,459,819)      (2,459,819)
Amortization of unearned
compensation                                 --         458,948               --               --          458,948               --
Foreign currency translation
  adjustment                                 --              --         (160,901)              --         (160,901)        (160,901)
Comprehensive loss                           --              --               --               --               --       (2,620,720)
                                   ------------    ------------     ------------     ------------     ------------     ============
Balance at December 31, 2003                 --        (409,182)        (269,700)     (10,146,215)      (2,115,282)

Issuance of stock for cash                   --              --               --               --        3,288,949               --
Offering costs                               --              --               --               --         (125,000)              --
Issuance of stock for services               --      (3,259,569)              --              234              234               --
Conversion of debt                           --              --               --               --          224,819               --
Issuance of stock to
  stockholders of ATI                        --              --               --               --       15,941,655               --
Net loss                                     --              --               --      (28,547,734)     (28,547,734)     (28,547,734)
Amortization of unearned
  compensation                               --       3,668,751               --               --        3,668,751               --
Foreign currency translation
  adjustment                                 --              --         (164,023)              --         (164,023)        (164,023)
Comprehensive loss                           --              --               --               --               --      (28,711,757)
Adjustment pursuant to merger
  agreement                                  --              --               --               --               --               --
                                   ------------    ------------     ------------     ------------     ------------     ============
Balance at December 31, 2004       $         --    $         --     $   (433,723)    $(38,693,715)    $ (7,827,631)
                                   ============    ============     ============     ============     ============


                      The accompanying notes are an integral part of these consolidated financial statements.

                                                                F-7
<PAGE>

                                         BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                                  (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                                                    (A Development Stage Company)

                                         CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
                                        From Inception (October 1, 1999) to December 31, 2005


                                                                               Accumulated
                                                                                  Other       Deficit
                                                                                  Compre-   Accumulated                   Compre-
                                                                    Additional    hensive   During the       Total        hensive
                               Common Stock       Preferred Stock    Paid-in      Income    Development   Stockholders'   Income
                             Shares    Amount     Shares    Amount   Capital      (Loss)       Stage       Deficiency     (Loss)
                          -----------  -------    -------  -------  ---------- -----------  -----------   ------------    --------
Balance at
  January 1, 2005          83,931,775  $ 8,393    243,336  $  195   31,291,219  $(433,723) $(38,693,715)  $(7,827,631)
Issuance of stock on
  a conversion of an
  accrued expense ($.17)    1,692,388      169         --      --      287,537         --            --       287,706
Issuance of stock on
  a conversion of an
  accrued expense ($68.75)         --       --     10,538      11      727,459                                727,470
Issuance of stock for
  compensation ($.15)         523,811       52         --      --       78,519         --            --        78,571
Issuance of stock for
  compensation ($.15)         380,952       38         --      --       57,104         --            --        57,142
Issuance of stock for
  consulting fees ($69.23)         --       --        375       1       22,499                                 22,500
Issuance of stock for
  consulting fees ($.19)      187,500       19         --      --       35,981         --            --        36,000
Issuance of common
  stock for cash ($.10)       500,000       50         --      --       49,950         --            --        50,000
Issuance of common
  stock for cash ($.10)       250,000       25         --      --       24,975         --            --        25,000
Issuance of common
  stock for cash ($.099)      300,000       30                          29,535                                 29,565
Issuance of stock on
  a conversion of a
  note payable ($.17)       1,971,428      197         --      --      137,803         --            --       138,000
Issuance of common stock
  for cash ($.10)             250,000       25         --      --       24,975         --            --        25,000
Issuance of common stock
  for services ($.13)         276,394       28         --      --       35,903         --            --        35,931
Issuance of common stock
  for services ($.12)         312,500       31         --      --       37,469         --            --        37,500
Issuance of stock to
 an officer of the
  Company ($.12)            1,000,000      100         --      --      119,900         --            --       120,000
Issuance of stock to
  an officer of the
  Company ($.14)            1,000,000      100         --      --      139,900         --            --       140,000
Issuance of stock to
  an officer of the
  Company ($.10)              333,000       33         --      --       33,300         --            --        33,333
Issuance of stock to
  an officer of the
  Company ($.11)              333,000       33         --      --       36,634         --            --        36,667
Issuance of stock for
  consulting fees ($.11)      300,000       30         --      --       32,970         --            --        33,000
Issuance of stock on a
  conversion of an
  accrued expense ($.13)       70,000        7         --      --        9,093         --            --         9,100
Issuance of stock with
  investor in connection
  with certain amendments
  related to the 9%
  Convertible Debenture
  financing consulting
  fees ($32.00)                    --       --      1,875      10       59,990         --            --        60,000
Issuance of stock for
  finders fees ($32.00)            --       --     10,000      10      319,990         --            --       320,000
Exercise of warrants
  to purchase Series
  A Convertible Stock              --       --     28,205      28      460,625         --            --       460,653
Conversion of Preferred
  Stock to Common Stock   117,731,600   11,773   (294,329)   (255)     (11,518)        --            --            --
Issuance of stock for
  for services ($.10)       2,500,000      250         --      --      249,750         --            --       250,000


                       The accompanying notes are an integral part of these consolidated financial statements.

                                                                 F-8
<PAGE>

                                        BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                                  (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                                                   (A Development Stage Company)

                                         CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
                                       From Inception (October 1, 1999) to December 31, 2005

                                                            (Continued)


                                                                               Accumulated
                                                                                  Other       Deficit
                                                                                  Compre-   Accumulated                   Compre-
                                                                    Additional    hensive   During the       Total        hensive
                               Common Stock       Preferred Stock    Paid-in      Income    Development   Stockholders'   Income
                             Shares    Amount     Shares    Amount   Capital      (Loss)       Stage       Deficiency     (Loss)
                          ----------------------------------------------------------------------------------------------------------

Reclassification of
  derivative liabilities           --       --         --      --  (20,565,700)        --            --   (20,565,700)           --
Conversion of derivative
  liabilities                      --       --         --      --    1,589,513         --            --     1,589,513            --
Exercise of warrants       17,098,043    1,710         --      --      696,269         --            --       697,979            --
Incentive bonus               334,000       33         --      --       33,367         --            --        33,400            --
Issuance of Shares for
Services$(.10)                208,033       21         --      --       20,812         --            --        20,833            --
Comprehensive Income:
   Net income                      --       --         --      --           --         --     1,750,994     1,750,994     1,750,994
   Foreign currency
     translation
     adjustment                    --       --         --      --           --    706,949            --       706,949       706,949
                          -----------  -------   --------  ------  -----------  ---------  ------------  ------------   -----------

Balance at
  December 31, 2005       231,484,424  $23,147         --  $   --  $16,065,823  $ 273,226  $(36,942,721) $(20,580,525)  $ 2,457,943
                          ===========  =======   ========  ======  ===========  =========  ============   ===========   ===========


                      The accompanying notes are an integral part of these consolidated financial statements.

                                                                F-9
<PAGE>

                               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
                        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                                          (A Development Stage Company)

                                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                                 For the Period
                                                                                                 From Inception
                                                                    For the Years Ended          October 1, 1999
                                                                        December 31,             To December 31,
                                                                  2005              2004              2005
                                                              ------------      ------------      ------------


CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)                                          $  1,750,994      $(28,547,734)     $(36,942,721)
   Adjustments to reconcile net income (loss) to net cash
     used in operating activities:
       Acquired in process technology                                   --        23,224,695        23,224,695
       Gain on derivative liabilities                          (10,840,340)               --       (10,840,340)
       Stock-based compensation                                  1,184,033         3,668,637         6,585,297
       Accrued settlement provision                              2,200,000         2,200,000
       Depreciation and amortization                                84,440            31,089           324,742
       Loss on sale of investment                                   88,927                --            88,927
       Non-cash charges for consulting services                         --           240,000           470,000
       Amortization of deferred financing costs                    126,292                --           126,292
       Write-off of fixed assets                                        --            11,068            11,068
       Debt discount amortization                                1,114,038                --         1,114,038
   Changes in Operating Assets and Liabilities:
     Prepaid expenses and other current assets                     114,669            (9,176)          (46,431)
     Other assets                                                       --           (13,205)          (13,205)
     Accrued liabilities                                         1,898,650          (280,689)        2,600,469
                                                              ------------      ------------      ------------
          Net Cash Used in Operating Activities                 (2,278,297)       (1,675,315)      (11,097,169)
                                                              ------------      ------------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from sale of ATI stock prior to merger                      --           300,000           460,000
   Capitalized software costs                                     (325,499)         (249,558)         (804,875)
   Advances to ATI prior to merger                                      --        (1,428,000)       (2,443,619)
   Proceeds of sale of investments                                  21,019                --            21,019
   Capital expenditures                                                 --                --          (317,467)
                                                              ------------      ------------      ------------
         Net Cash Used in Investing Activities                    (304,480)       (1,377,558)       (3,084,942)
                                                              ------------      ------------      ------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuance of common stock                           129,565         3,288,949         9,986,633
  Capitalized financing costs                                     (290,922)               --          (290,922)
  Proceeds from loans                                            2,700,000           191,181         3,586,903
  Repayment of loans                                                    --           (74,999)          (78,954)
  Due from (to) related parties, net                                38,553          (361,449)        1,022,732
                                                              ------------      ------------      ------------
         Net Cash Provided by Financing Activities               2,577,196         3,043,682        14,226,392
                                                              ------------      ------------      ------------

(Decrease) Increase in Cash                                         (5,581)           (9,191)           44,281

Cash - Beginning of Year                                            49,862            59,053                --
                                                              ------------      ------------      ------------

Cash - End of Year                                            $     44,281      $     49,682      $     44,281
                                                              ============      ============      ============

Interest paid                                                 $         --      $         --      $    362,819
                                                              ============      ============      ============

Income taxes paid                                             $         --      $         --      $  1,055,000
                                                              ============      ============      ============

Non-Cash Investing and Financing Transactions:

   Conversion of debt and related interest                    $    138,000      $    224,819      $    362,819
                                                              ============      ============      ============
                                                              ============      ============      ============
   Exercise of warrants satisfied by reduction in
related                                                       $    460,653      $         --      $         --
                                                              ============      ============      ============
   Conversion of advances to affiliate                        $         --      $    130,000      $  1,055,000
                                                              ============      ============      ============
   Conversion of accrued liabilities                          $  1,015,176      $         --      $  1,015,176
                                                              ============      ============      ============
   Reclassification of derivative liability                   $ 20,565,700      $         --      $ 20,565,700
                                                              ============      ============      ============
   Offering costs satisfied by transfer of ATI stock          $         --      $   (125,000)     $   (125,000)
                                                              ============      ============      ============

In addition, see Note 3 for details related to the acquisition of ATI.

             The accompanying notes are an integral part of these consolidated financial statements.

                                                      F-10
</TABLE>
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BUSINESS, REVERSE MERGER AND BASIS OF PRESENTATION

Reverse Merger
--------------

On December 15, 2004 (the "Closing Date"), Brilliant Technologies Corporation
(formerly Advanced Technology Industries, Inc. ("ATI")) consummated the
acquisition of all of the issued and outstanding shares of capital stock of
LTDnetwork, Inc., a Delaware corporation ("LTDN"). LTDN and ATI collectively are
referred to herein as "the Company".

LTDN and its wholly-owned Australian subsidiary, LTDnetwork PTY LTD ("LTD PTY"),
are development stage companies and their efforts have been primarily devoted to
technology identification and acquisition, research and development and raising
capital. LTDN and LTD PTY specialize in the development of innovative
technologies, software and services for online e-tailers, advertising, media and
marketing companies.

The acquisition was consummated pursuant to the Amended and Restated Agreement
and Plan of Merger, dated as of August 11, 2004, among ATI, LTDN and LTDN
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of ATI
("Acquisition Sub"), as amended by the First Amendment thereto, dated as of
December 15, 2004, among ATI, LTDN and Acquisition Sub. Such acquisition was
effected pursuant to a merger (the "Merger") of LTDN with and into Acquisition
Sub. Pursuant to the terms of the Merger and taking into account the purchase
price adjustment in connection therewith, ATI issued to the stockholders of LTDN
consideration (the "Merger Consideration") consisting of (i) 193,336 shares of
Series A Convertible Preferred Stock of ATI ("Series A Preferred Stock") and
(ii) warrants (the "Warrants") to purchase 487,903 shares of Series A Preferred
Stock at an exercise price of $16.33 per share. The exercise period with respect
to the Warrants will expire on June 18, 2006.

The terms of the Series A Preferred Stock provided that each share of Series A
Preferred Stock would automatically convert into 400 shares of common stock of
the Company ("Common Stock") if the holders of the Common Stock approved an
amendment to the certificate of incorporation of the Company to increase the
authorized capital stock from 100,000,000 shares to at least 500,000,000 shares.
The holders of the Common Stock approved such amendment at the Company's annual
meeting of stockholders held on September 26, 2005 and increased the number of
authorized common shares to 800,000,000 and the Company filed such amendment
with the Secretary of State of the State of Delaware on September 27, 2005. As a
result, all shares of the Series A Preferred Stock were converted into shares of
Common Stock and the corresponding Warrants became Warrants to purchase shares
of Common Stock at approximately $0.04 per share.

ATI agreed to file a registration statement with the Securities and Exchange
Commission relating to the resale of the shares of Common Stock issuable upon
conversion of the Series A Preferred Stock issued in the Merger. The Company has
filed such registration statement and it became effective on January 26, 2006.
The Company has agreed to keep such registration statement effective until the
earliest of (a) the sale of all securities eligible to be sold thereunder, (b)
the expiration of the period referred to in Rule 144(k) under the Securities Act
of 1933 and (c) two years from the effective date of such registration
statement.

Since immediately following the Merger the former stockholders of LTDN owned a
majority of the Common Stock (assuming the conversion of all the shares of the
Series A Preferred Stock and the exercise of all the Warrants, in each case
issued to such stockholders) and the management of LTDN controlled the Board of
Directors of the Company, the Merger has been accounted for as a reverse merger
with LTDN as the acquirer of ATI (See Note 3). The accompanying consolidated
financial statements of the Company reflect the historical results of LTDN, and
the consolidated results of operations of ATI subsequent to the Closing Date.

The common stock of LTDN has been retroactively restated to reflect the
recapitalization and merger transactions discussed above.


                                      F-11
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BUSINESS, REVERSE MERGER AND BASIS OF PRESENTATION (CONTINUED)

Organization And Description Of ATI
-----------------------------------

ATI was incorporated under the laws of the State of Delaware on October 25,
1999. ATI is a development-stage company and was organized to identify, assess
and commercialize technologies introduced and developed by scientists throughout
the world with particular emphasis on technologies originating in Russia,
Germany and Israel. There is no assurance that commercially successful products
will be developed, nor that ATI will achieve a profitable level of operations.

During December of 1999, ATI acquired all of the outstanding capital stock of
Cetoni Umwelttechnologie Entwicklungs Gmbh ("Cetoni"), a German-based design and
engineering firm focused on developing and patenting technologies and products
for the consumer market. Cetoni is a development-stage company and as such has
generated nominal revenue or no earnings from operations. Cetoni's European
operations closed in 2005.

On August 22, 2000, ATI entered into a joint agreement with Nurescell US, a
Nevada corporation, to form a German company named Nurescell AG. At the time of
this agreement, ATI Nuklear AG was owned 51% by Nurescell US and 49% by ATI.
During June 2001, ATI acquired the remaining 51% interest in Nurescell AG and
during July 2001, Nurescell AG changed its name to ATI Nuklear AG ("ATI
Nuklear"). ATI Nuklear is a development-stage company focused on development of
nuclear waste remediation technologies. Since inception, ATI Nuklear has had no
revenues or earnings from operations. ATI Nuklear's European operations was
closed in 2005.

On June 8, 2001, ATI formed a new entity, Reseal, Ltd., ("Reseal") which was
incorporated under the laws of the State of Delaware. Reseal is a
development-stage company organized to commercialize its proprietary
"resealable" packaging systems technology. Reseal, LTD has had no revenues or
earnings from operations.

Prior to the reverse merger with LTDN, on December 13, 2004, ATI entered into,
and consummated the acquisitions contemplated by, a Stock and Intellectual
Property Purchase Agreement with Alice Schlattl, Schiattl GBR, Claudia
Schreiner, Susanne Schlattl and RalphSchlattl.

Pursuant to such Stock and Intellectual Property Purchase Agreement, ATI
purchased (a) all of the equity interests of Alfa-Pro Products Gmbh, "Alfa-Pro",
from Alice Schlattl in consideration for 43,600 shares of Series A Convertible
Preferred Stock and $90,000, and (b) certain intellectual property rights from
Schlattl GBR in consideration for 6,400 shares of Series A Convertible Preferred
Stock. Such $90,000 amount was due and payable prior to June 11, 2005. However,
it has not yet made such payment. As a result of the acquisition of the Alfa-Pro
intellectual property rights, the Company obtained the intellectual property
rights to over 40 consumer products. Such products are in varying stages of the
development process and none have yet been commercialized.


                                      F-12
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BUSINESS, REVERSE MERGER AND BASIS OF PRESENTATION (CONTINUED)

Going Concern and Management's Plan
-----------------------------------

The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of
America, which contemplate the continuation of the Company as a going concern.
However, as shown in the accompanying consolidated financial statements, the
Company has incurred losses from operations since inception. Management
anticipates incurring substantial additional losses in 2006. Further, the
Company may incur additional losses thereafter, depending on its ability to
generate revenues from the licensing or sale of its technologies and products,
or to enter into any or a sufficient number of joint ventures. The Company has
no revenue to date. There is no assurance that the Company can successfully
commercialize any of its technologies and products and realize any revenues
there from. The Company's technologies and products have never been utilized on
a large-scale commercial basis and there is no assurance that any of its
technologies or products will receive market acceptance.. There is no assurance
that the Company can continue to identify and acquire new technologies. As of
December 31, 2005, the Company had an accumulated deficit since inception of
$36,942,721 and a working capital deficiency and stockholder's deficiency of
$21,596,289 and $20,580,525 respectively.

While no assurance can be given, management believes the Company can raise
adequate capital to keep the Company functioning during 2006. No assurance can
be given that the Company can obtain additional working capital, or if obtained,
that such funding will not cause substantial dilution to stockholders of the
Company. If the Company is unable to raise additional funds, it may be forced to
change or delay its contemplated marketing and business plans. During the year
2005, the Company has raised from various financing sources approximately
$2,700,000 through the issuance of convertible debt securities and warrants to
purchase 38,571,428 shares of Common Stock (see Note 6).

Being a development stage company, the Company is subject to all the risks
inherent in the establishment of a new enterprise and the marketing and
manufacturing of a new product, many of which risks are beyond the control of
the Company. All of the factors discussed above raise substantial doubt about
the Company's ability to continue as a going concern.

These consolidated financial statements do not include any adjustments relating
to the recoverability of recorded asset amounts that might be necessary as a
result of the above uncertainty.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles Of Consolidation
---------------------------

The consolidated financial statements include the accounts of LTDN and its
subsidiaries and ATI and all of its wholly-owned and its majority-owned
subsidiaries commencing with the Closing Date. All significant intercompany
accounts and transactions have been eliminated in consolidation. Investments in
unconsolidated affiliates are accounted for using the equity method when the
Company owns at least 20%, but no more than 50% of such affiliates and under the
cost method when the Company owns less than 20%. Under the equity method, the
Company records its proportionate shares of profits and losses based on its
percentage interest in earnings.

Use Of Estimates
----------------

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


                                      F-13
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Equity Method Of Accounting For Unconsolidated Affiliates
---------------------------------------------------------

At December 31, 2005, investments in companies accounted for under the equity
method consist of the following inactive foreign development-stage technology
companies:

                                                    %               Country of
                                                  Owned             Operations
                                                  -----             ----------
              Flexitech, Ltd.                     20.00%               Israel
              Pirocat, Ltd.                       20.00%               Israel
              Sibconvers                          50.00%               Russia
              Container Engineering, Ltd          50.00%               Russia

The Company does not have sufficient control over management, the board of
directors or financial matters and accordingly the Company does not consolidate
such entities. The above companies do not have any revenue nor any significant
assets, liabilities, commitments and contingencies. The Company's carrying
values in these equity-method investments is zero as of December 31, 2005.

Fair Value Of Financial Instruments
-----------------------------------

The recorded carrying values of accounts receivable, accounts payable and other
long-term obligations approximate the fair value of such financial instruments.

Cash And Cash Equivalents
-------------------------

For purposes of the statement of cash flows, the Company considers all
short-term investments with original maturities of three months or less when
purchased to be cash equivalents. The Company had no cash equivalents as of
December 31, 2005.

Concentration Of Credit Risk
----------------------------

The Company places its cash in what it believes to be creditworthy financial
institutions. However, cash balances may exceed FDIC insured levels at various
times during the year.

Property And Equipment
----------------------

Property and equipment are stated at cost, less accumulated depreciation and
amortization. Depreciation is provided on a straight-line basis over the
estimated useful lives of the related assets, generally two to ten years.

Amortization of leasehold improvements is provided on a straight-line basis over
the lesser of the estimated useful lives of the improvements or the initial term
of the lease. Gain or loss is recognized upon sale or other disposition of
property and equipment.

Major repairs or replacements of property, plant and equipment are capitalized.
Maintenance, repairs and minor replacements are charged to operations as
incurred.


                                      F-14
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Impairment Of Long-Lived Assets
-------------------------------

In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal On Long-Lived Assets," the Company
reviews the carrying amount of long-lived assets on a regular basis for the
existence of facts or circumstances, both internally and externally, that
suggest impairment. The Company determines if the carrying amount of a
long-lived asset is impaired based on anticipated undiscounted cash flows before
interest from the use of the asset. In the event of impairment, a loss is
recognized based on the amount by which the carrying amount exceeds the fair
value of the asset. Fair value is determined based on appraised value of the
assets or the anticipated cash flows from the use of the asset, discounted at a
rate commensurate with the risk involved.

Income Taxes
------------

The Company provides deferred taxes on the tax effects of differences between
the financial reporting and tax bases of the Company's assets and liabilities at
the enacted tax rates in effect for the years in which the differences are
expected to reverse. The Company evaluates the recoverability of deferred tax
assets and establishes a valuation allowance when it is more likely than not
that some portion or all of the deferred tax assets will not be realized. Income
tax expense consists of the tax payable for the period and the change during the
period in deferred tax assets and liabilities.

Revenue Recognition
-------------------

The Company expects that it will derive substantially all of its revenue from
the sale, licensing and sub-licensing of its technologies and products. Revenue
from the sale of technology will be recognized in the year of sale. Revenue from
licensing and sub-licensing will be recognized in the periods when the fees have
been earned.

Research And Development
------------------------

In accordance with SFAS No. 2, "Accounting for Research and Development Costs,"
all research and development ("R&D") costs are expensed when they are incurred,
unless they are reimbursed under specific contracts. Assets used in R&D
activity, such as machinery, equipment, facilities and patents that have
alternative future use either in R&D activities or otherwise are capitalized. In
connection with the merger of ATI and LTDN, $23,224,695 was allocated to
in-process research and development costs and was charged to R&D costs during
the period ended December 31, 2004.

Capitalized Software
--------------------

Capitalization of computer software development costs begins upon the
establishment of technological feasibility. Technological feasibility for the
Company's computer software is generally based upon achievement of a detailed
program design free of high risk development issues and the completion of
research and development on the product hardware in which it is to be used. The
establishment of technological feasibility and the ongoing assessment of
recoverability of capitalized computer software development costs require
considerable judgment by management with respect to certain external factors,
including, but not limited to, technological feasibility, anticipated future
gross revenue, estimated economic life and changes in software and hardware
technology.

Amortization of capitalized computer software development costs commences when
the related products become available for general release to customers.
Amortization is provided on a product by product basis. The annual amortization
is the greater of the amount computed using (a) the ratio that current gross
revenue for a product bears to the total of current and anticipated future gross
revenue for that product, or (b) the straight-line method over the remaining
estimated economic life of the product.


                                      F-15
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Capitalized Software (Continued)
--------------------------------

The Company periodically performs reviews of the recoverability of such
capitalized software development costs. At the time a determination is made that
capitalized amounts are not recoverable based on the estimated cash flows to be
generated from the applicable software, the capitalized costs of each software
product is then valued at the lower of its remaining unamortized costs or net
realizable value. Amounts capitalized by LTDN during the years ended December
31, 2005 and 2004 totaled $325,499 and $249,558 respectively. There was no
amortization expense for the years ended December 31, 2005 and 2004 as the
software product was not placed into use as of December 31, 2005.

Comprehensive Income (Loss)
---------------------------

SFAS No. 130, "Accounting for Comprehensive Income," establishes standards for
reporting and disclosure of comprehensive income and its components (including
revenues, expenses, gains and losses) in a full set of general-purpose financial
statements. The items of other comprehensive income that are typically required
to be disclosed are foreign currency items, minimum pension liability
adjustments, and unrealized gains and losses on certain investments in debt and
equity securities.

Accumulated other comprehensive income, at December 31, 2005, consists of
foreign currency translation adjustments in the amount of $273,226.

Translation Of Foreign Currencies
---------------------------------

The U.S. dollar is the functional currency for all of the Company's businesses,
except its operations in Australia and Europe. Foreign currency denominated
assets and liabilities for these units are translated into U.S. dollars based on
exchange rates prevailing at the end of each period presented, and revenues and
expenses are translated at average exchange rates during the period presented.
The effects of foreign exchange gains and losses arising from these translations
of assets and liabilities are included as a component of equity.

Net Income (Loss) Per Share Of Common Stock
-------------------------------------------

Basic net income (loss) per share of common stock are computed by dividing net
income (loss) available to common stockholders by the weighted average number of
shares of common stock outstanding during the periods presented.

Diluted net income (loss) per share reflects per share amounts that result if
dilutive common stock equivalents are converted to common stock.

Common stock equivalents, consisting of convertible debt, options and warrants,
discussed in Note 9, were not included in the calculation of diluted loss per
share for 2004 because their inclusion would have had been anti-dilutive.

Basic and diluted loss per share have been calculated assuming the Series A
Preferred Stock has been converted under the "if converted method" since each
share of Series A Preferred Stock automatically converts into 400 shares of
common stock upon the increase in authorized common shares to 500 million. The
Series A Preferred Stock was converted into common shares on September 27, 2005.


                                      F-16
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Net Income (Loss) Per Share Of Common Stock, continued

<TABLE>
                                                                                2005                 2004
                                                                        --------------------- -------------------
<S>                                                                       <C>                     <C>
Numerator:
  Net income (loss) - numerator for basic income (loss) per share
    income available to common stockholders                               $    1,750,993          $(28,547,734)

  Effect of dilutive securities:
    Interest related to Convertible Debentures                                 1,139,140             N/A
                                                                        --------------------- -------------------

  Numerator for diluted income (loss) per share - income
    available to common stockholders after assumed conversions            $    2,890,133          $(28,547,734)
                                                                        --------------------- -------------------

Denominator:
  Denominator for basic income (loss) per share - weighted
    average shares                                                           197,714,949            54,892,590
                                                                        --------------------- -------------------
  Effect of diluted securities:
    Convertible debentures and accrued interest                               45,750,000             N/A
    Warrants                                                                  83,390,500             N/A
                                                                        --------------------- -------------------

Total potentially dilutive securities                                        129,140,500             N/A
                                                                        --------------------- -------------------

Denominator for diluted income (loss) per share - adjusted
  weighted average shares and assumed conversions                            326,855,149           54,892,590
                                                                        --------------------- -------------------

Basic net income (loss) per share                                               $.01                $(.52)
                                                                        ===================== ===================

Diluted net income (loss) per share                                             $.01                $(.52)
                                                                        ===================== ===================
</TABLE>

For the year ended December 31, 2005, 41,927,062 shares attributable to
outstanding stock options and warrants were excluded from the calculation of
diluted earnings per share because the exercise prices of the stock options and
warrants were greater than, or equal to, the average price of the common shares
and, therefore, their inclusion would have been anti-dilutive.


                                      F-17
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Business Segment
----------------

SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information," establishes standards for the way public enterprises report
information about operating segments in annual consolidated financial statements
and requires reporting of selected information about operating segments in
interim financial statements regarding products and services, geographical areas
and major customers. The Company has determined that under SFAS No. 131, it
operates in three geographic segments (see Note 11).

Convertible Notes and Warrants
------------------------------

The Company accounts for conversion options embedded in convertible notes in
accordance with SFAS No. 133 "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133") and Emerging Issues Task Force ("EITF") 00-19,
"Accounting for Derivative Financial Instruments Indexed to, and Potentially
Settled in, a Company's Own Stock" ("EITF 00-19"). SFAS 133 generally requires
companies to bifurcate conversion options embedded in convertible notes from
their host instruments and to account for them as free standing derivative
financial instruments in accordance with EITF 00-19. SFAS 133 provides for an
exception to this rule when convertible notes, as host instruments, are deemed
to be conventional as that term is described in the implementation guidance
under Appendix A to SFAS 133 and further clarified in EITF 05-2 "The Meaning of
"Conventional Convertible Debt Instrument" in Issue No. 00-19.

The Company accounts for convertible notes deemed conventional and conversion
options embedded in non-convertible notes which qualify as equity under EITF
00-19, in accordance with the provisions of Emerging Issues Task Force Issue
("EITF") 98-5 "Accounting for Convertible Securities with Beneficial Conversion
Features," and EITF 00-27 "Application of EITF 98-5 to Certain Convertible
Instruments," Accordingly, the Company records, as a discount to convertible
notes, the intrinsic value of such conversion options based upon the differences
between the fair value of the underlying common stock at the commitment date of
the note transaction and the effective conversion price embedded in the note.
Debt discounts under these arrangements are amortized over the term of the
related debt to their earliest date of redemption.

The Company accounts for embedded conversion options in non-conventional
convertible notes which do not qualify as equity under EITF 00-19, as derivation
liabilities. Accordingly, the Company determines the fair value (as determined
under the Black-Scholes Valuation Method) of all embedded derivatives (usually
conversion option and warrants). Such fair value is recorded as a debt discount
up to the proceeds of the debt and any amount in excess of the proceeds of the
debt is charged to operations at the security issuance date.

The Company's 2005 Convertible Notes host embedded conversion options that are
deemed to be free standing derivatives financial instruments which have been
accounted for as derivative liabilities (Note 6).

The Company accounts for the issuance of common stock purchase warrants issued
and other free standing derivative financial instruments in accordance with the
provisions of EITF 00-19. Based on the provisions of EITF 00-19, the Company
classifies as equity any contracts that (i) require physical settlement or
net-share settlement or (ii) gives the Company a choice of net-cash settlement
or settlement in its own shares (physical settlement or net-share settlement).
The Company classifies as assets or liabilities any contracts that (i) require
net-cash settlement (including a requirement to net cash settle the contract if
an event occurs and if that event is outside the control of the Company and (ii)
give the counterparty a choice of net-cash settlement or settlement in shares
(physical settlement or net-share settlement). All of the outstanding warrants
have been classified as free standing derivative liabilities (Note 6).

In connection with the audit of the Company's consolidated financial statements
for the year ended December 31, 2005, the Company discovered that during the
quarters ended March 31, 2005, June 30, 2005 and September 30, 2005, it had
incorrectly accounted for the certain derivative financial instruments indexed
to, and potentially settled in, its own common stock. Accordingly, the Company
will be required to file amended Form 10-QSBs for such periods.


                                      F-18
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Stock Based Compensation
------------------------

As permitted under SFAS No. 148, "Accounting for Stock-Based
Compensation--Transition and Disclosure", which amended SFAS No. 123 ("SFAS
123"), "Accounting for Stock-Based Compensation", the Company has elected to
continue to follow the intrinsic value method in accounting for its stock-based
employee compensation arrangements as defined by Accounting Principles Board
Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees", and related
interpretations including "Financial Accounting Standards Board Interpretation
No. 44, Accounting for Certain Transactions Involving Stock Compensation", an
interpretation of APB No. 25. No stock-based employee compensation cost is
reflected in net income, as all options that the Company granted had exercise
prices equal to the fair market value of the underlying common stock, on their
dates of grant.

There were no stock options granted to employees during 2005 and 2004 and,
accordingly, there was no difference between the reported net income (loss) and
proforma net income (loss).

Non-Employee Stock Based Compensation
-------------------------------------

The Company accounts for stock based compensation awards issued to non-employees
for services, as prescribed by SFAS No. 123, at either the fair value of the
services rendered or the instruments issued in exchange for such services,
whichever is more readily determinable, using the measurement date guidelines
enumerated in EITF 96-18, "Accounting for Equity Instruments That Are Issued to
Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services."

Warrants and options issued to non-employees for services in which performance
by the counterparty is complete, are accounted for as free standing derivative
financial instruments in accordance with EITF 00-19.

Recently Issued Accounting Pronouncements
-----------------------------------------

In January 2003, Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46").
This interpretation of Accounting Research Bulletin No. 51, "Consolidated
Financial Statements," provides guidance for identifying a controlling interest
in a variable interest entity ("VIE") established by means other than voting
interest. FIN 46 also required consolidation of a VIE by an enterprise that
holds such controlling interest. In December 2003, the FASB completed its
deliberations regarding the proposed modifications to FIN No. 46 and issued
Interpretation Number 46R, "Consolidation of Variable Interest Entities - an
Interpretation of ARB 51" ("FIN No. 46 R"). The decisions reached included a
deferral of the effective date and provisions for additional scope exceptions
for certain types of variable interests. Application of FIN No. 46R is required
in financial statements of public entities that have interests in VIEs or
potential VIEs commonly referred to as special-purpose entities for periods
ending after December 15, 2003. Application by public issuers' entities is
required in all interim and annual financial statements for periods ending after
December 15, 2004. The adoption of this pronouncement did not have a material
effect on the Company's financial statements.

In December 2004, the FASB issued SFAS No. 123R "Share Based Payment". This
statement is a revision of SFAS Statement No. 123, "Accounting for Stock-Based
Compensation" and supersedes APB Opinion No. 25, Accounting for Stock Issued to
Employees, and its related implementation guidance. SFAS 123R addresses all
forms of share based payment ("SBP") awards including shares issued under
employee stock purchase plans, stock options, restricted stock and stock
appreciation rights. Under SFAS 123R, SBP awards result in a cost that will be
measured at fair value on the awards' grant date, based on the estimated number
of awards that are expected to vest and will result in a charge to operations
for stock-based compensation expense. SFAS 123R is effective for public entities
that file as small business issuers--as of the beginning of the first annual
reporting period of the fiscal year that begins after December 15, 2005. The
adoption of this pronouncement will result in the recognition of stock based
compensation expense in the Company's financial statements.


                                      F-19
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
Assets". SFAS 153 amends APB Opinion No. 29 to eliminate the exception for
nonmonetary exchanges of similar productive assets and replaces it with a
general exception for exchanges of nonmonetary assets that do not have
commercial substance. A nonmonetary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result
of the exchange. The provisions of SFAS 153 are effective for nonmonetary asset
exchanges occurring in fiscal periods beginning after June 15, 2005. Earlier
application is permitted for nonmonetary asset exchanges occurring in fiscal
periods beginning after December 15, 2004. The provisions of this Statement are
intended be applied prospectively. The adoption of this pronouncement did not
have material effect on the Company's financial statements.

EITF Issue No. 04-8, "The Effect of Contingently Convertible Instruments on
Diluted Earnings per Share." The EITF reached a consensus that contingently
convertible instruments, such as contingently convertible debt, contingently
convertible preferred stock, and other such securities should be included in
diluted earnings per share (if dilutive) regardless of whether the market price
trigger has been met. The consensus became effective for reporting periods
ending after December 15, 2004. The adoption of this pronouncement did not have
material effect on the Company's financial statements.

In May 2005, the FASB issued Statement of Financial Accounting Standards No.
154, "Accounting Changes and Error Corrections - a replacement of APB Opinion
No. 20 and FASB Statement No. 3"("SFAS 154"). This Statement replaces APB
Opinion No. 20, Accounting Changes, and FASB Statement No. 3, Reporting
Accounting Changes in Interim Financial Statements, and changes the requirements
for the accounting for and reporting of a change in accounting principle. This
Statement applies to all voluntary changes in accounting principle. It also
applies to changes required by an accounting pronouncement in the unusual
instance that the pronouncement does not include specific transition provisions.
When a pronouncement includes specific transition provisions, those provisions
should be followed.

APB Opinion No. 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. This
Statement requires retrospective application to prior periods' financial
statements of changes in accounting principle, unless it is impracticable to
determine either the period-specific effects or the cumulative effect of the
change. When it is impracticable to determine the period-specific effects of an
accounting change on one or more individual prior periods presented, this
Statement requires that the new accounting principle be applied to the balances
of assets and liabilities as of the beginning of the earliest period for which
retrospective application is practicable and that a corresponding adjustment be
made to the opening balance of retained earnings (or other appropriate
components of equity or net assets in the statement of financial position) for
that period rather than being reported in an income statement. When it is
impracticable to determine the cumulative effect of applying a change in
accounting principle to all prior periods, this Statement requires that the new
accounting principle be applied as if it were adopted prospectively from the
earliest date practicable. This Statement is effective for accounting changes
and corrections of errors made in fiscal years beginning after December 15,
2005. The Company does not believe that the adoption of SFAS 154 will have a
significant effect on its financial statements.

On June 29, 2005, the EITF ratified Issue No. 05-2, "The Meaning of
`Conventional Convertible Debt Instrument' in EITF Issue No. 00-19, `Accounting
for Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Company's Own Stock.'" EITF Issue 05-2 provides guidance on determining whether
a convertible debt instrument is "conventional" for the purpose of determining
when an issuer is required to bifurcate a conversion option that is embedded in
convertible debt in accordance with SFAS 133. Issue No. 05-2 is effective for
new instruments entered into and instruments modified in reporting periods
beginning after June 29, 2005. The adoption of this pronouncement did not have a
material effect on the Company's financial statements, since the Company has
accounted for its embedded derivatives as liabilities in accordance with FASB
No. 133 and EITF 00-19.


                                      F-20
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recently Issued Accounting Pronouncements (Continued)
-----------------------------------------

In September 2005, Issue No. 05-4, "The Effect of a Liquidated Damages Clause on
a Freestanding Financial Instrument Subject to EITF Issue No. 00-19, `Accounting
for Derivative Financial Instruments Indexed to, and Potentially Settled in, a
Company's Own Stock.'" EITF 05-4 provides guidance to issuers as to how to
account for registration rights agreements that require an issuer to use its
"best efforts" to file a registration statement for the resale of equity
instruments and have it declared effective by the end of a specified grace
period and, if applicable, maintain the effectiveness of the registration
statement for a period of time or pay a liquidated damage penalty to the
investor. The adoption of this pronouncement did not have a material effect on
the Company's financial statements, since the Company has accounted for its
embedded derivatives as liabilities in accordance with FASB No. 133 and EITF
00-19.

In September 2005, the FASB ratified the Emerging Issues Task Force's ("EITF")
Issue No. 05-7, "Accounting for Modifications to Conversion Options Embedded in
Debt Instruments and Related Issues," which addresses whether a modification to
a conversion option that changes its fair value affects the recognition of
interest expense for the associated debt instrument after the modification and
whether a borrower should recognize a beneficial conversion feature, not a debt
extinguishment if a debt modification increases the intrinsic value of the debt
(for example, the modification reduces the conversion price of the debt). This
issue is effective for future modifications of debt instruments beginning in the
first interim or annual reporting period beginning after December 15, 2005. The
Company is currently in the process of evaluating the effect that the adoption
of this pronouncement may have on its financial statements.

In September 2005, the FASB also ratified the EITF's Issue No. 05-8, "Income Tax
Consequences of Issuing Convertible Debt with a Beneficial Conversion Feature,"
which discusses whether the issuance of convertible debt with a beneficial
conversion feature results in a basis difference arising from the intrinsic
value of the beneficial conversion feature on the commitment date (which is
treated recorded in the shareholder's equity for book purposes, but as a
liability for income tax purposes), and, if so, whether that basis difference is
a temporary difference under FASB Statement No. 109, "Accounting for Income
Taxes." This Issue should be applied by retrospective application pursuant to
Statement 154 to all instruments with a beneficial conversion feature accounted
for under Issue 00-27 included in financial statements for reporting periods
beginning after December 15, 2005. The Company is currently in the process of
evaluating the effect that the adoption of this pronouncement may have on its
financial statements.

In February 2006, the FASB issued SFAS No. 155 "Accounting for Certain Hybrid
Financial Instruments-an amendment of FASB Statements No. 133 and 140" ("FAS
155"). FAS 155 addresses the following: a) permits fair value re-measurement for
any hybrid financial instrument that contains an embedded derivative that
otherwise would require bifurcation; b) clarifies which interest-only strips and
principal-only strips are not subject to the requirements of Statement 133; c)
establishes a requirement to evaluate interests in securitized financial assets
to identify interests that are freestanding derivatives or that are hybrid
financial instruments that contain an embedded derivative requiring bifurcation;
d) clarifies that concentrations of credit risk in the form of subordination are
not embedded derivatives; and e) amends Statement 140 to eliminate the
prohibition on a qualifying special-purpose entity from holding a derivative
financial instrument that pertains to a beneficial interest other than another
derivative financial instrument. FAS 155 is effective for all financial
instruments acquired or issued after the beginning of an entity's first fiscal
year that begins after September 15, 2006. The Company is currently evaluating
the requirements of FAS 155, but does not expect that the adoption of this
pronouncement will have a material effect on its financial statements.

In March 2006, the FASB issued SFAS 156 - "Accounting for Servicing of Financial
Assets - an amendment of FASB Statement No. 140" ("SFAS 156"). SFAS 156 is
effective for the first fiscal year beginning after September 15, 2006. SFAS 156
changes the way entities account for servicing assets and obligations associated
with financial assets acquired or disposed of. The Company has not yet completed
its evaluation of the impact of adopting SFAS 156 on its results of operations
or financial position, but does not expect that the adoption of SFAS 156 will
have a material impact.


                                      F-21
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3 - MERGER AND CONVERSION AGREEMENT

Merger Agreement - LTDN
-----------------------

On December 15, 2004, ATI consummated the acquisition of all of the issued and
outstanding shares of capital stock of LTDN, through the Merger discussed in
Note 1.

Immediately following the Merger the former stockholders of LTDN owned a
majority of the Common Stock (assuming the conversion of all the shares of the
Series A Preferred Stock and the exercise of all the Warrants, in each case
issued to such stockholders) and the management of LTDN controlled the Board of
Directors of the Company. Accordingly, LTDN is considered to be the accounting
acquirer in such transaction.

The total consideration provided to the historical shareholders of ATI equity
securities was determined as follows:

<TABLE>
                                                                                No. of
                                                                              Equivalent
                                                                                Common
                                                                                Shares              Amount
                                                                          -------------------   ---------------
<S>                                                                           <C>                 <C>
       Value of ATI common stock                                              83,931,775          $12,589,766
       Value of 50,000 shares of ATI preferred stock, based upon
          a conversion rate of 400 to 1 conversion rate                       20,000,000            3,000,000
       Value of ATI options/warrants                                                                  351,889
                                                                                                ---------------

                Total Consideration                                                               $15,941,655
                                                                                                ===============

The fair value used to value the Common Stock was based on the quoted market
price of Common Stock at the time the Merger was announced.

The fair value of the warrants and options was determined using the
Black-Scholes valuation model using the following assumptions: expected
volatility of 127.33%, risk-free interest rate of 3.250%, and expected life of
four to ten years.

Under the purchase method of accounting, the total estimated purchase price as
detailed above was allocated to ATI's net tangible and intangible assets based
as follows:

       Prepaid expenses and other current assets                                               $         67,589
       Property and equipment, net                                                                       52,166
       Note receivable-Related Party                                                                    229,640
       Due from related parties                                                                          59,946
       Loans and notes payable                                                                         (549,999)
       Accrued liabilities                                                                           (5,584,825)
       Advances from LTDN                                                                            (1,388,619)
       Due to related parties                                                                          (168,938)
       Acquired in-process technology                                                                23,224,695
       Equity securities issued                                                                     (15,941,655)
                                                                                               -----------------

       Net Cash                                                                                $             --
                                                                                               =================
</TABLE>


                                      F-22
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 3 - MERGER AND CONVERSION AGREEMENT (CONTINUED)

Merger Agreement - LTDN (Continued)
-----------------------

The amount allocated to acquired in-process technology of $23,224,695 has been
expensed as a charge against operations and is included in the consolidated
statement of operations for the year ended December 31, 2004. The amount
allocated to acquired in-process technology relates to products that had not yet
reached technological feasibility and that, until completion of development, had
no alternative future use. These products require substantial development and
testing prior to reaching technological feasibility. However, there can be no
assurance that these products will reach technological feasibility or develop
into products that may be sold by the Company. The acquired in-process
technology has required, and may require substantial development by the Company.

The following unaudited pro forma information has been prepared assuming that
this acquisition had taken place on January 1, 2004; it is not necessarily
indicative of results that may occur in the future.

<TABLE>
                                                                                                  Pro Forma
                                                                                                 (Unaudited)
                                                                                                  Year Ended
                                                                                              December 31, 2004
                                                                                              -----------------
<S>                                                                                           <C>
       Net Revenues                                                                           $          --

       Net loss                                                                               $ (34,909,312)

       Basic and diluted loss per common share:                                               $        (.23)

NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment at December 31, 2005 consisted of the following:

       Office furniture and fixtures                                                          $         47,150
       Purchased software                                                                               84,651
       Computer hardware                                                                               173,830
       Assets acquired in merger                                                                        52,166
                                                                                              -----------------
                                                                                                       357,797
       Accumulated depreciation                                                                       (324,742)
                                                                                              -----------------

       Property and equipment, net                                                            $         33,055
                                                                                              =================
</TABLE>

Depreciation expense for the years ended December 31, 2005 and 2004 amounted to
$84,440 and $31,089, respectively.


                                      F-23
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5 - DEFERRED FINANCING COST

At December 31, 2005, deferred financing costs incurred in connection with the
sale of 9% convertible debentures of the Company in the amount of $2,745,000
(see Note 6) was:

       Deferred financing cost                                 $ 290,922
       Accumulated amortization                                 (126,292)
                                                               ----------

       Deferred Financing Cost, Net                            $ 164,630
                                                               ==========

Amortization of deferred financing cost for the years ended December 31, 2005
and December 31, 2004 was $126,292 and $-0-, respectively.

NOTE 6 - CONVERTIBLE DEBENTURES

During March 2005 the Company raised from a financing source $150,000 through
the issuance of convertible debt securities ("Debentures") and warrants
("Debenture Warrants) to purchase 2,142,857 shares of Common Stock. During the
second quarter of 2005, the Company raised from various financing sources
approximately $750,000 through the issuance of Debentures and Debenture Warrants
to purchase 10,714,286 shares of Common Stock. During the third quarter of 2005,
the Company raised from various financing sources approximately $1,150,000
through the issuance of Debentures and Debenture Warrants to purchase 16,428,571
shares of Common Stock. During July 2005, the Company also issued an additional
$45,000 aggregate principal amount of Debentures and Debenture Warrants to
purchase 642,857 shares of Common Stock to certain holders of the Debentures in
consideration for such holders agreeing to certain amendments with respect to
the terms of the Debentures. During the fourth quarter of 2005, the Company
raised from various financing sources approximately $650,000 through the
issuance of Debentures and Debenture Warrants to purchase 9,285,714 shares of
Common Stock. The Debentures are secured by a security interest in the assets of
the Company. The total dollar value of the Debentures and number of Debenture
Warrants totaled $2,745,000 and 39,214,285, respectively, at December 31, 2005.
None of these Debentures and Debenture Warrants were converted or exercised as
of December 31, 2005. (See Note 12 for subsequent conversions and exercises)

The Debentures bear interest at 9% per annum on a simple non-compounded basis
and are due and payable on August 20, 2006. The Debentures are convertible, at
the holder's option, into shares of Common Stock at a conversion rate equal to
the lesser of $0.07 (subject to adjustment for subsequent lower price issuances
by the Company and other customary events including stock splits, reverse stock
splits, dividends of Common Stock and spin-offs) and 75% of the average of the
10 lowest closing bid prices of the Common Stock for the 30 trading days
immediately preceding the applicable date of conversion. If a holder elects to
convert all or a portion of the Debentures and the conversion price is less than
$0.07 (subject to adjustment for subsequent lower price issuances by the Company
and other customary events including stock splits, reverse stock splits,
dividends of Common Stock and spin-offs), in lieu of effecting such conversion,
the Company may elect to redeem the amount of the Debentures requested to be so
converted at a purchase price equal to 150% of the principal amount of the
Debentures plus accrued and unpaid interest to the date of redemption. The
holder may accelerate the maturity date of the Debentures following the
occurrence of customary events of default, including, without limitation,
payment defaults, breaches of certain covenants and representations, certain
events of bankruptcy, certain judgment defaults and the suspension of the Common
Stock from trading on the Over the Counter Bulletin Board.


                                      F-24
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6 - CONVERTIBLE DEBENTURES (CONTINUED)

The Debenture Warrants are exercisable at a per share exercise price of $0.10,
such exercise price subject to adjustment for subsequent lower price issuances
by the Company and other customary events including stock splits, reverse stock
splits, dividends of Common Stock and spin-offs. Each Debenture Warrant is
exercisable until the second anniversary of the effective date of the
registration statement described below. If the average of the closing bid prices
of the Common Stock during any period of 20 consecutive trading days is equal to
or greater than $0.50 and the closing bid price of the Common Stock is equal to
or greater than $0.50 for at least 10 trading days during such period then with
respect to each Debenture Warrant that the holder does not exercise during the
15 trading day period following the receipt by the holder of a notice from the
Company that such average price and closing bid prices have occurred, the
exercise price for such Debenture Warrants will each be adjusted to $0.25 per
share (subject to adjustment for customary events including stock splits,
reverse stock splits, dividends of Common Stock and spin-offs). Holders of
Debenture Warrants are entitled to effect a cashless exercise of the Debenture
Warrants if the registration statement (as described below) has not been
declared effective prior the first anniversary of the issuance of the Debenture
Warrants.

The Company has filed a registration statement to register the shares of Common
Stock issuable upon the conversion of the Debentures and the exercise of the
Debenture Warrants. The Company was obligated to pay the holder of the
Debentures certain liquidated damages since such registration statement was not
filed by October 5, 2005 and was not declared effective by November 30, 2005.
The Company has filed such registration statement and it became effective on
January 26, 2006. In connection with the late effectiveness of the registration
statement, the Company incurred liquidating damages of approximately $82,000 all
of which was accrued as of December 31, 2005.

As a result of a floorless conversion option held by the holders of the
Convertible Debentures, the derivatives embedded in the Convertible Debentures
(the Conversion Option and Debenture Warrants) have been classified as
derivative liabilities. The combined liabilities recorded during 2005 totaled
$5,912,806. Of such amount, $2,745,000 was recorded as a debt discount and is
being amortized over the term of the debentures and $3,167,806 was immediately
charged to loss on derivative obligations during the year ended December 31,
2005.

As a result of the conversion feature contained in the 2005 Convertible
Debentures, the Company's outstanding Warrants at such time no longer qualified
as equity. Accordingly, during 2005, these Warrants were reclassified to
derivative obligations resulting in an increase to liabilities of $20,565,700
and a reduction to stockholders' equity of an equal amount.

The fair value of these derivative obligations on December 31, 2005 totaled
$10,880,847. The change in the fair value of the derivative liabilities during
2005 was recorded as a gain on derivative obligations during the year ended
December 31, 2005.

The net derivative gain for the year ended December 31, 2005 is composed of the
following:

<TABLE>
<S>                                                                    <C>
       Loss recorded at date of issuance of Convertible Debentures     $ (3,167,806)
       Gain recorded on change in fair value of Warrants exercised
         during 2005                                                      1,348,379
       Gain recorded on change in fair value of outstanding
         conversion options and Warrants                                 12,659,767
                                                                       ------------

       Net Gain on Derivatives                                         $ 10,840,340
                                                                       ============
</TABLE>

Amortization of debt discount for the year ended December 31, 2005 was
$1,114,038.


                                      F-25
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 7 - LOANS AND NOTES PAYABLE

During June 2001, ATI borrowed $260,000 from an individual and issued a
promissory note, is which is in default and provides for interest at the rate of
1% per month. This loan is still outstanding at December 31, 2005. Also on July
13, 2001, an officer of ATI advanced $10,000 pursuant to a promissory note,
which is in default and provides for interest at the rate of 1% per month.

On November 27, 2001, ATI borrowed $10,000 from an individual and issued a
promissory note which is in default and provides for interest at the rate of 1%
per month.

During October 2002, ATI received an advance of $120,000 from an individual,
payable on demand. The loan accrues interest at 10% per annum.

As of December 31, 2005, LTDN has loans outstanding payable to four unrelated
parties which aggregate $472,494. These loans are all payable on demand and do
not provide for interest.

As of December 31, 2005, LTDN had a loan payable to a related party of $211,440.
This loan is payable on demand and provides for interest of 12% per annum.

As of December 31, 2005, ATI owed its CEO $654,874 related to advances and
accrued salaries. These advances are payable on demand and do not provide for
interest.

As of December 31, 2005, ATI has outstanding obligations payable to four related
parties totaling $132,301. These loans are payable on demand and do not provide
for interest.

NOTE 8 - INCOME TAXES

There is no provision for income taxes for the years ended December 31, 2005 and
2005, as a result of net operating losses incurred during those years.

The net operating losses of LTDN from October 1, 1999 to December 31, 2005
approximated $22.4 million. Substantially all of these losses are related to
LTDN's operations in Australia and these net operating losses may not be used to
offset future taxable income in the United States. Utilization of this carryover
is dependent upon future income earned by LTDN. The tax benefit of LTDN net
operating loss has been fully reserved by a valuation allowance of approximately
$7.6 million.

As of December 31, 2004, ATI had available approximately $11.9 million of net
operating losses for income tax purposes that may be carried forward to offset
future taxable income, if any. The net operating losses expire during the period
2019 through 2025. Pursuant to Section 382 of the Internal Revenue Code,
substantial restrictions are imposed on the utilization of net operating losses
carryforwards in the event of an ownership change. ATI has a net operating loss
carryforward of approximately $8.5 million. Utilization of this carryover is
dependent upon future income earned by its foreign subsidiary. The tax benefit
of ATI's net operating losses and temporary differences related to stock-based
compensation has been fully reserved by a valuation allowance.


                                      F-26
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                    NOTES TO CONSOLDATED FINANCIAL STATEMENTS


NOTE 8 - INCOME TAXES (CONTINUED)

A reconciliation between the statutory federal income tax rate (34%) and the
LTDN's effective rate is as follows:

<TABLE>
                                                                                 For the Years Ended
                                                                                     December 31,
                                                                                2005             2004
                                                                             -----------     ----------
<S>                                                                             <C>             <C>
 Federal statutory rate                                                          34 %            (34)%
 Unutilized foreign losses                                                      128                6
 Permanent difference In process research and development charge                 -- %             28
 Permanent differences substantially consist of gain on derivative
   obligations                                                                   --             (162)
                                                                             -----------     ----------
Effective rate                                                                  -0- %            -0- %
                                                                             ===========     ==========
</TABLE>

NOTE 9 - STOCKHOLDERS' EQUITY

Preferred Stock
---------------

The Company has authorized 1,000,000 shares of preferred stock, par value $.001
per share. The Board of Directors of the Company has broad discretion to create
one or more series of preferred stock and to determine the rights, preferences
and privileges of any such series.

As described in Note 1, the Company has designated 950,000 shares of Series A
Convertible Preferred Stock. In connection with the Merger and Recapitalization
between ATI and LTDN (Note 1), 193,336 shares of Series A Convertible Preferred
Stock were issued to the stockholders of LTDN and 50,000 shares were issued to
the stockholders of ATI.

During February of 2005, the Company issued a former consultant 10,538 shares of
its Series A Convertible Preferred Stock as part of the consideration in the
settlement of accrued consulting fees (Note 10).

During March 2005, the Company issued 375 shares of Series A Convertible
Preferred Stock, valued at $22,500, to a party as a finders fee relating to
financings the Company entered into during the first quarter of 2005.

In August 2005, the Company issued 1,875 shares of its Series A Convertible
Preferred Stock to an investor in connection with certain amendments to the 9%
Convertible Debentures previously issued to such investors. The Company recorded
a charge of $60,000 which was charged to financing expense.

In September 2005, the Company issued 10,000 shares of its Series A Convertible
Preferred Stock as a finder's fee to a finder in connection with the Company's
acquisition of LTDN. The Company recorded a charge of $320,000 which was charged
to financing expense during the year ended December 31, 2005.

In September 2005 the Company issued to certain affiliates of its chief
executive officer 28,205 shares of the Company's Series A Convertible Preferred
Stock upon the exercise of Preferred Stock warrants at an aggregate exercise
price of $460,653 The exercise price of $460,653 was satisfied by a reduction of
the debt due to the executive officer.

At the Annual Meeting of Stockholders held on September 26, 2005, the
stockholders approved an amendment to the articles of incorporation of ATI
whereby the number of shares of common stock authorized for issuance by the
Company was increased from 100,000,000 shares to 800,000,000 shares.
Accordingly, as a result of this stockholder approval, 293,406 shares of the
Company's Series A Preferred Stock automatically converted into 117,731,600
shares of the Company's Common Stock pursuant to terms of the merger agreement.


                                      F-27
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 9 - STOCKHOLDERS' EQUITY (CONTINUED)

Common Stock Issuances for the Year Ended December 31, 2005
-----------------------------------------------------------

During February 2005, the Company issued to the President and Chief Executive
Officer of the Company 523,811 shares of Common Stock as a bonus valued at
$78,571.

During February 2005, the Company issued to a Director of the Company 380,952
shares of Common Stock as a bonus valued at $57,142.

During February 2005, the Company issued to a former consultant 1,692,388 shares
of Common Stock registered on Form S-8 and 10,538 shares of the Company's Series
A Preferred Stock in settlement of $1,016,000 of accrued consulting fees.

During February 2005, the Company issued 187,500 shares of common stock to a
consultant for services provided valued at $36,000. During March 2005, the
Company sold to several investors 1,050,000 shares of Common Stock for $104,565.

During May 2005, the Company issued 276,394 shares of Common Stock to a
consultant for services provided valued at $35,931.

During June 2005, the Company entered into a conversion agreement with a debt
holder whereby the Company issued 1,971,428 shares of restricted Common Stock as
full and final payment of $138,000 of accrued liabilities.

During June 2005, the Company issued 312,500 shares of Common Stock to a
consultant for services provided valued at $37,500.

During April 2005, the Company sold to an investor 250,000 shares of Common
Stock for $25,000.

During June 2005, the Company issued to an officer 2,000,000 shares of its
Common Stock pursuant to a June 30, 2005 Bonus Inceptive arrangement. The
officer is also entitled to be issued up to 1,000,000 shares of Common Stock
upon additional milestones being reached. The total value of the 2,000,000
shares issued was $260,000, which was charged to operations during the year
ended December 31, 2005.

During July 2005, the Company issued to an officer 333,000 shares as an
incentive bonus. The total value of the 333,000 shares was $33,333, which was
charged to operations during the year ended December 31, 2005.

During July 2005, the Company issued 300,000 shares of Common Stock to a
consultant for services provided valued at $33,000.

During August 2005, the Company issued to an officer 333,000 shares as an
incentive bonus. The total value of the 333,000 shares was $36,667, which was
charged to operations during the year ended December 31, 2005.

During September, 2005, the Company issued 70,000 shares of its Common Stock for
legal services to one of the Company's law firms valued at $9,100, in connection
with a legal settlement discussed in Note 10.

In November 2005, the Company issued to an officer 334,000 shares as an
incentive bonus valued at $33,400.

During November 2005, the Company issued 2,500,000 shares of its common stock
for services provided by a third party valued at $250,000.

In December 2005, various shareholders exercised warrants to purchase 17,098,043
shares of Common Stock resulting in proceeds to the Company aggregating
$697,979.


                                      F-28
<PAGE>

               RILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 9 - STOCKHOLDERS' EQUITY(CONTINUED)

Common Stock Issuances for the Year Ended December 31, 2005 (Continued)
-----------------------------------------------------------

In December 2005, the Company issued 208,333 shares of its Common Stock, valued
at $20,833, in connection with a 2005 financing transaction.

2005 Equity Incentive Plan
--------------------------

At the Annual Meeting of Stockholders held on September 26, 2005, the
stockholders approved the Advanced Technology Industries, Inc. 2005 Equity
Incentive Plan (the "Incentive Plan").

A maximum of 15,000,000 shares of common stock may be delivered in satisfaction
of awards made under the Incentive Plan. In the event of a stock dividend, stock
split or other change in the capital structure of the Company, the person (the
Company's Board or committee of such Board, and their delegates) charged with
administering the Incentive Plan (the "Administrator") will make appropriate
adjustments to the maximum number of shares available under the Incentive Plan
and will also make appropriate adjustments to the number and kind of shares of
stock or securities subject to awards, any exercise prices relating to awards
and any other provisions of awards affected by the change. The Administrator may
also make similar adjustments to take into account other distributions to
stockholders or any other event, if the Administrator determines that
adjustments are appropriate to avoid distortion in the operation of the
Incentive Plan and to preserve the value of awards.

No shares of Common Stock were issued under this Plan during 2005.

Stock Option Plans
------------------

On October 26, 2000, the Board of Directors adopted the Advanced Technology
Industries, Inc. 2000 Stock Option Plan ("Plan"). During 2002, the Board of
Directors and the majority stockholders amended the Plan to increase the number
of shares that are subject to Incentive Stock Options, from 3,000,000 to
5,000,000.

<TABLE>
<S>     <C>
                                                                             WEIGHTED             NON-           WEIGHTED
                                                          INCENTIVE           AVERAGE           QUALIFIED         AVERAGE
                                                            STOCK            EXERCISE             STOCK          EXERCISE
                                                           OPTIONS             PRICE             OPTIONS           PRICE
                                                      -----------------------------------------------------------------------

ATI Options outstanding at date of
  merger of ATI and LTDN
  (December 15, 2004)                                      470,000             $0.34            1,242,777          $0.28
                                                      -----------------------------------------------------------------------

Outstanding 12/31/04 and 12/31/05                          470,000             $0.34            1,242,777          $0.28
                                                      ================== ================== ================== ==============

Composition at 12/31/05:
2000 stock option plan                                     470,000             0.34              305,000           $0.34
Options granted outside the plan                                --              --               937,777            0.22
                                                      -----------------------------------------------------------------------

                                                      =======================================================================
Outstanding 12/31/05                                       470,000             $0.34            1,242,777          $0.28
                                                      =======================================================================
Total Number and Potential Proceeds Assuming
    All Exercised                                          470,000           $159,800           1,242,777          $310,011
                                                      =======================================================================
</TABLE>

The incentive stock options expire in 2010 and the non-qualified stock options
expire in 2009.


                                      F-29
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 9 - STOCKHOLDERS' EQUITY (CONTINUED)

Warrants
--------

At December 31, 2005, there were outstanding warrants to purchase 1,000,000
shares of Common Stock at $0.165 per share (the "Old Warrants"), there were
outstanding Warrants issued to the LTDN shareholders (the "LTDN Warrants") to
purchase 166,781,157 shares of Common Stock at an exercise price of $0.04 per
share and there were outstanding Debenture Warrants to purchase 39,214,285
shares of Common Stock at an exercise price of $0.10 per share. Each Old Warrant
is exercisable until December 19, 2008. The exercise period with respect to the
LTDN Warrants will expire on June 18, 2006. Each Debenture Warrant is
exercisable until the second anniversary of the effective date of the
registration statement registering the shares of Common Stock issuable upon
exercise of the Debenture Warrants.

<TABLE>
<S>     <C>
                                                                                                        WEIGHTED
                                              COMPENSATORY        DEBENTURE           LTDN              AVERAGE
                                                WARRANTS          WARRANTS          WARRANTS         EXERCISE PRICE
                                              -------------     -------------     -------------      ---------------

     Balance - 01/01/04                                  --                --       195,161,200      $          .04

     ATI warrants outstanding at date of
       merger of ATI and LTDN
       (December 15, 2004)                        1,000,000                --                --                 .165
                                              -------------     -------------     -------------      ---------------

     Balance - 12/31/04                           1,000,000                --       195,161,200                  .04

     Issued - 2005                                       --        39,214,285                --                  .10

     Exercised - 2005                                    --                --       (28,380,043)                 .04
                                              -------------     -------------     -------------      ---------------

     Balance - 12/31/05 (All exercisable)         1,000,000        39,214,285       166,781,157      $           .05
                                              =============     =============     =============      ===============

     Potential Proceeds Assuming
       all exercised                          $     165,000     $   3,921,429     $   6,671,000      $    10,757,429
                                              =============     =============     =============      ===============
</TABLE>


                                      F-30
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 9 - STOCKHOLDERS' EQUITY (CONTINUED)

Earnings Per Share
------------------

Securities that could potentially dilute basic earnings per share ("EPS") in the
future that were not included in the computation of diluted EPS because to do so
would have been anti-dilutive for the periods presented consist of the
following:

<TABLE>
<S>     <C>
                                                                    Based on          Based on April
                                                                December 31, 2005        30, 2006
                                                                  Quoted Market        Quoted Market
                                                                      Price                Price
                                                              -----------------------------------------

                 Convertible Debentures                       (a)    45,750,000       (b)183,000,000
                 Options to purchase Common Stock                     1,712,777            1,712,777
                 Warrants to purchase Common Stock                  206,995,442          206,995,442
                                                              -----------------------------------------

                 Total as December 31, 2005                         254,458,219          391,708,219
                                                              =========================================

                Substantial issuances after December 31, 2005:

                New Convertible Debentures ($1,565,000 @$.015)                           104,333,333
                New Debenture Warrants                                                    22,357,143
                Common Stock issued to consultants                                        35,605,133
                Common Stock issued in connection with settlement agreements              21,795,061
                Proposed financing                                                        11,500,000

                           (a) $2,745,000 / $.06 ($.08 x 75% - Note 8)
                           (b) $2,745,000 / $.015 ($.02 x 75% - Note 8)
</TABLE>

NOTE 10 - COMMITMENTS AND OTHER MATTERS

Compensation agreement
----------------------

Pursuant to a 2005 compensation arrangement, the Company's Chief Executive
officer is being paid a salary of $275,000 per annum plus an expense allowance
of approximately $7,600 per month. Accrued amounts under this agreement total
$366,250 as of December 31, 2005.

Consulting Agreement - ERBC
---------------------------

By letter dated June 1, 1996, ATI engaged ERBC Holdings, LTD ("ERBC"), at the
time a related party, as a consultant to undertake all aspects of ATI's
operations in Russia. Pursuant to the letter agreement, ATI agreed to pay ERBC a
fee of $115,000 per year which was increased to $240,000 commencing in 2001. In
February 2005, the $1,015,176 balance outstanding under this agreement was
converted into 1,692,388 shares of Common Stock and 10,538 shares of Series A
Preferred Stock.

Consulting Agreement
--------------------

The Company has a one-year consulting agreement with a stockholder which
provides for monthly payments of approximately $12,000.


                                      F-31
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 10 - COMMITMENTS AND OTHER MATTERS (CONTINUED)

Russian Contracts For Research And Development
----------------------------------------------

ATI is a party to a research and development agreement with a Moscow-based State
Scientific Research Institute Scientific Production Company named Lutch pursuant
to which such entity has agreed to perform various contract research and
development services related to technology obtained by ATI from Nurescell for a
total price of $985,000. Through December 31, 2005, the Company paid $100,000
under this agreement. As a continued result of limited funding, no services have
been performed under this agreement to date. It is uncertain when or if any
services will eventually be completed under this contract.

ATI is a party to a research and development agreement with a branch of the
Ministry of the Atomic Energy of the Russian Federation pursuant to which such
entity has agreed to perform various contract research and development services
to develop an industrial fireproof swelling cable coating for a total price of
$462,000. As a result of limited funding of this contract, the performance of
services were rescheduled to occur commencing with the quarter ended December
31, 2003 and to be completed within one year. The work under the contracts has
not been completed as of December 31, 2005 and at this time the completion date
can not be determined as a continued result of limited funding.

Acquisition Of In-Process Technologies
--------------------------------------

In connection with an oral agreement, ATI has agreed to acquire the rights to
certain in-process technologies now held by a German bank, for an estimated
purchase price of $500,000 payable in cash and/or common stock. Management of
ATI has indicated that this transaction is expected to close during 2006
although there is no assurance it will be consummated. As of December 31, 2005,
LTDN has paid $352,089 in 2004 and $-0- in 2005 to the German bank as part of
this oral agreement.

Legal Disputes
--------------

During the quarter ended June 30, 2003, ATI was notified that Dr. Jurgen Lempert
intended to commence legal proceedings against ATI relating to his termination
as Chief Executive Officer of ATI Nuklear. A German court ruled that Dr. Lempert
is entitled to collect $69,629. As of December 31, 2005, the Company has accrued
such amounts.

A noteholder has threatened to sue ATI for repayment of an outstanding note. To
date, ATI has not been served with a lawsuit. In the event the noteholder does
sue ATI, ATI believes it has sufficient defenses for nonpayment of the note and
intends to vigorously defend itself against such claims.


James Cassidy and TPG Capital have filed for arbitration against ATI regarding a
purported reset provision in an agreement entered into during 1999. TPG believes
it is entitled to receive an additional 1,465,671 shares of Common Stock under
an agreement previously executed between the parties. Should litigation arise,
the Company believes that it has sufficient defenses and intends to vigorously
defend itself against such claims.

Dr. Alexander Kaul, former Chairman of the Supervisory Board of ATI Nuklear,
initiated legal proceedings against ATI for monies he believes are due him under
his terminated employment contract. A German court ruled that Dr. Kaul is
entitled to collect $67,808. As of December 31, 2005, the Company has accrued
such amounts.

Peter Goerke, a former Vice President of ATI, initiated legal proceedings
against ATI for the value of his remaining employment agreement, accrued wages
and expenses. A German court ruled that Mr. Goerke is not entitled to the
remaining value of his employment contract and is only entitled to collect
$197,486. At December 31, 2005, ATI has accrued such amounts. Mr. Goerke has
filed for a lien against certain assets of Cetoni Umwelttechnologie Entwicklungs
Gmbh ("Cetoni"), one of ATI's wholly owned subsidiaries.


                                      F-32
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 10 - COMMITMENTS AND OTHER MATTERS (CONTINUED)

Legal Disputes (Continued)
--------------

Cnet Networks, Inc. initiated proceedings against LTDN for amounts due it by a
former third party affiliate of LTDN. During June 2005, Cnet Networks, Inc.
received a judgment in the amount of $100,000 against LTDN. LTDN believes that
it is not liable for this amount and intends to appeal the verdict.
Additionally, LTDN believes that it has a cause of action against Cnet Networks,
Inc. relating to a breach of contract and other claims relating to a contract
between it and Cnet Networks, Inc. As of December 31, 2005, LTDN accrued
$100,000 related to this judgment.

A German court has suspended the corporate registration of Cetoni. The Company
does not intend to appeal this decision as it is consistent with the
restructuring of all German operations. The Company does not believe this ruling
will have a material impact on the Company's operations as Cetoni no longer has
any significant tangible or intangible assets.

The Company is also subject to various other matters of litigation during its
normal course of operations. Management believes that the eventual outcome of
these matters will not have a material adverse effect on the Company's
consolidated financial position, results of operations, or cash flows.

Facilities Rent
---------------

ATI and LTDN rent facilities under month-to-month rental agreements. Rent
expense for LTDN facilities for the years ended December 31, 2005 and 2004
amounted to $195,818 and $82,910, respectively.

Lien On Star Can Patents
------------------------

During June 2003, the Company became aware that a lien had been placed against
the patents relating to the Reseal Technology by Paxsys Ltd., a Bermuda
corporation, in connection with a failed financing. The Company continues to
dispute the validity of the claim.

Settlement Agreement
--------------------

On June 15, 2004, ATI entered into a settlement agreement with a law firm
previously engaged by ATI in connection with the settlement of various claims
between such parties. Such claims included a claim by such law firm that ATI
owed such law firm approximately $721,000 for legal services and interest on the
outstanding amount. Pursuant to such settlement agreement each party provided
the other with a general release for all claims arising prior to the date of
such settlement agreement and ATI agreed to issue to such law firm 2,250,000
shares of Common Stock.

Shares issued under these arrangements were valued at $405,000. As part of the
settlement agreement, the law firm was entitled to penalty shares in the event
certain shares were not registered on Form S-8 by July 1, 2004. As such, the law
firm received in 2004 65,590 shares of restricted Common Stock as a penalty. The
Settlement Agreement provides for the repricing of shares for a period of one
year in the event that the Common Stock trades below a price of $0.12 per share
for a period of 30 consecutive days. In the event that the repricing is
triggered, additional shares of Common Stock would be issuable as detailed in
the Settlement Agreement. During August 2005, the repricing mechanism was
triggered and the Company issued 70,000 shares of its restricted Common Stock
under the terms of the Settlement Agreement.

Settlement With Former LTD Shareholders
---------------------------------------

On January 26, 2006, the Company issued 21,795,061 shares of Common Stock in
connection with the settlement of claims made by certain former stockholders of
LTDN. These stockholders claimed that they were entitled to receive more shares
of Common Stock in connection with the merger with ATI. At December 31, 2005,
the Company recorded a liability of approximately $2,200,000 related to the
settlement of these claims.


                                      F-33
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 10 - COMMITMENTS AND OTHER MATTERS (CONTINUED)

Support Agreement
-----------------

In connection with a Support Agreement entered into on November 17, 2005 between
the Company and one of its stockholders, Aperchance Ltd. ("Aperchance"), in
consideration of inducing Aperchance to exercise their Warrants to purchase
4,841,200 shares of Common Stock, the Company provided Aperchance with certain
price protection on shares of Common Stock held by Aperchance. The price
protection terminated in February of 2006. As a result of stock price decline in
2006, the Company is required to issue an additional 5,630,075 shares of Common
Stock to Aperchance.

Periodic Filings
----------------

Under a 2005 rule change, OTC Bulletin Board ("OTCBB") issuers that are cited
for filing delinquency three times in a 24-month period and those removed for
failure to file two times in a 24-month period will be ineligible for quotation
by an NASD member. Following removal under this new rule, an issuer's securities
would again become eligible for quotation on the OTCBB when the issuer has filed
periodic reports for one year in a timely manner.

The Company has been late in two of its periodic filings with the Securities and
Exchange Commission ("SEC") during 2006. Accordingly, the Company may be
ineligible for quotation by an NASD member if it is delinquent one more time in
its periodic filings with the SEC during the applicable 24-month period.

NOTE 11 - SEGMENT REPORTING

The Company's business is organized on a geographic basis, and the Company's
Chief Operating Decision Maker assesses performance and allocates resources on
this basis. The information provided in the following section is representative
of the information used by the Chief Operating Decision Maker in deciding how to
allocate resources and in assessing performance.

The Company has three geographic reportable segments: United States of America
(U.S.A.), Australia and Germany. The accounting policies of the segments are the
same as described in the summary of significant accounting policies. The Company
evaluates segment performance based on net income (loss).

Segment results for the years ended December 31, 2005 and 2004 are as follows:

<TABLE>
2005:                                    U.S.A.         Australia         Germany        Eliminations      Consolidated
--------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>             <C>               <C>              <C>              <C>
Net income (loss)                    $  5,554,533    $   (3,684,736)   $    (118,804)   $          --    $     1,750,993
                                     ====================================================================================

Depreciation and amortization        $         --    $       32,276    $      52,164    $          --    $        84,440
                                     ====================================================================================

Identifiable assets                  $     44,281    $    1,019,507    $       1,098    $          --     $    1,064,886
                                     ====================================================================================

2004:
------------------------------------

Net loss                             $         --    $   (5,323,039)   $ (23,224,695)   $          --      $ (28,547,734)
                                     ====================================================================================

Depreciation and amortization        $         --    $       31,089    $          --    $          --      $     (31,089)
                                     ====================================================================================
</TABLE>


                                      F-34
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 12 - SUBSEQUENT EVENTS

Conversion of Convertible Debentures
------------------------------------

During the period from January 1, 2006 through May 11, 2006, $1,714,600
principal amount of Convertible Debentures including related accrued interest
were converted and 60,328,950 number of Common shares were issued pursuant to
these conversions.

Exercise of Warrants
--------------------

During the period from January 1, 2006 through May 11, 2006, various holder of
LTDN warrants exercised warrants and purchased 9,026,716 shares of the Company's
common stock resulting in proceeds of $368,490.

Debt Issued - February
----------------------

In February 2006 the Company issued to an investor $100,000 aggregate principal
amount of its 9% Convertible Debentures and warrants to purchase 1,428,571
shares of Common Stock at a per share exercise price of $.10 per share. The
terms of these securities are substantially the same as the securities described
in Note 6.

Debt Issued - March
-------------------

In March 2006 the Company issued to an investor $300,000 aggregate principal
amount of its 9% Convertible Debentures and warrants to purchase 4,285,714
shares of Common Stock at a per share exercise price of $.10 per share. The
terms of these securities are substantially the same as the securities described
in Note 6.

In March 2006 the Company issued to an investor $350,000 aggregate principal
amount of its 9% Convertible Debentures (the "New Debentures") and warrants (the
"New Debenture Warrants") to purchase 5,000,000 shares of Common Stock at a per
share exercise price of $.07 per share. In addition, subject to certain
conditions such investor has agreed to purchase (i) at least three days prior to
the filing of the registration statement registering the shares of Common Stock
issuable upon the conversion of such New Debentures and the exercise of such New
Debenture Warrants, an aggregate of $250,000 principal amount of New Debentures
and New Debenture Warrants to purchase 3,571,428 shares of Common Stock for an
aggregate purchase price of $250,000 and (ii) at least three days prior to the
effective date of such registration statement, an aggregate of $600,000
principal amount of such New Debentures and New Debenture Warrants to purchase
8,571,428 shares of Common Stock for an aggregate purchase price of $600,000.
The New Debentures bear interest at 9% per annum on a simple non-compounded
basis and are due and payable on March 24, 2007. The New Debentures are
convertible, at the holder's option, into shares of Common Stock at a conversion
rate equal to the lesser of $0.07 (subject to adjustment for subsequent lower
price issuances by the Company and other customary events including stock
splits, reverse stock splits, dividends of Common Stock and spin-offs) and 75%
of the average of the 5 lowest closing bid prices of the Common Stock for the 30
trading days immediately preceding the applicable date of conversion. If a
holder elects to convert all or a portion of the New Debentures and the
conversion price is less than $0.07 (subject to adjustment for subsequent lower
price issuances by the Company and other customary events including stock
splits, reverse stock splits, dividends of Common Stock and spin-offs), in lieu
of effecting such conversion, the Company may elect to redeem the amount of the
New Debentures requested to be so converted at a purchase price equal to 150% of
the principal amount of the New Debentures plus accrued and unpaid interest to
the date of redemption. The holder may accelerate the maturity date of the New
Debentures following the occurrence of customary events of default, including,
without limitation, payment defaults, breaches of certain covenants and
representations, certain events of bankruptcy, certain judgment defaults and the
suspension of the Common Stock from trading on the Over the Counter Bulletin
Board.


                                      F-35
<PAGE>

               BRILLIANT TECHNOLOGIES CORPORATION AND SUBSIDIARIES
        (Formerly Advanced Technology Industries, Inc. and Subsidiaries)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 12 - SUBSEQUENT EVENTS (CONTINUED)

Debt Issued - March, continued
------------------------------

The New Debenture Warrants are exercisable at a per share exercise price of
$0.07, such exercise price subject to adjustment for subsequent lower price
issuances by the Company and other customary events including stock splits,
reverse stock splits, dividends of Common Stock and spin-offs. Each New
Debenture Warrant is exercisable until the second anniversary of the effective
date of the registration statement registering the shares of Common Stock
issuable upon the conversion of such New Debentures and the exercise of such New
Debenture Warrants. If the average of the closing bid prices of the Common Stock
during any period of 20 consecutive trading days is equal to or greater than
$0.50 and the closing bid price of the Common Stock is equal to or greater than
$0.50 for at least 10 trading days during such period then with respect to each
New Debenture Warrant that the holder does not exercise during the 15 trading
day period following the receipt by the holder of a notice from the Company that
such average price and closing bid prices have occurred, the exercise price for
such New Debenture Warrants will each be adjusted to $0.25 per share (subject to
adjustment for customary events including stock splits, reverse stock splits,
dividends of Common Stock and spin-offs). Holders of Debenture Warrants are
entitled to effect a cashless exercise of the New Debenture Warrants if such
registration statement has not been declared effective prior the first
anniversary of the issuance of the New Debenture Warrants. The Company has
agreed to file a registration statement to register the shares of Common Stock
issuable upon the conversion of the New Debentures and the exercise of the New
Debenture Warrants.

Debt Issued - April
-------------------

In April 2006, the Company issued to a group of investors $575,000 aggregate
principal amount of its 9% Convertible Debentures and warrants to purchase
8,214,285 shares of Common Stock at a per share exercise price of $.07 per
share. The terms of these securities are substantially the same as the New
Debentures and the New Denture Warrants.

Debt Issued - May
-----------------

In May 2006, the Company issued to a group of investors $240,000 aggregate
principal amount of its 9% Convertible Debentures due May 2, 2007 and Warrants
to purchase 2,857,143 shares of Common Stock at a per share exercise price of
$.07 per share. The terms of these securities are substantially the same as the
New Debentures and the New Debenture Warrants.

In addition, the two Securities Purchase Agreements related to such 9%
Convertible Debentures provide that upon the first occurrence of the failure by
the Company to file with the Securities and Exchange Commission an Annual Report
on Form 10-KSB by May 17, 2006, or a Quarterly Report on Form 10-QSB following
the required time periods (including any permitted extensions) provided in the
Securities Exchange Act of 1934 for such filing, the Company shall issue to the
applicable investor thereto an additional 9% Convertible Debenture at the end of
such time period in the principal amount equal to the lesser of (x) $100,000 and
(y) the remaining outstanding principal amount of such original 9% Convertible
Debenture held by such investor as of the end of such time period.

Consulting Agreements
---------------------

During the quarter ended March 31, 2006, the Company issued 35,605,133 shares of
its Common Stock pursuant to various one-year consulting agreements with sixteen
of its stockholders.

Proposed Financing
------------------

On May 9, 2006, the Company issued 11,500,000 shares of Common Stock to a group
of investors. The Company has not yet received the proceeds from such sale and
intends to cancel such shares.


                                      F-36