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U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549



FORM 10-QSB



(MARK ONE)



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



For the quarterly period ended September 30, 2005



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



For the transition period from
 to



Commission File Number 333-118255



GRAY PEAKS, INC.

(Exact Name of
Small Business Issuer as Specified in Its Charter)



|                                                              |  |                                     
|------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                      |  | 38-3692822                          
|(State or Other Jurisdiction ofIncorporation or Organization) |  | (I.R.S. Employer Identification No.)
|                                                              | 
|1320 Tower Road, Schaumburg, IL                               |  | 60173                               
|(Address of Principal Executive Offices)                      |  | (Zip Code)                          



847-598-3750

(Issuers Telephone Number, Including Area Code)



Shiwana, Inc.

(Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report)



Check whether the issuer: (1) has 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 issuer was required to file
such reports) and (2) has been subject to such filing requirements for the past 90 days.    YES ̈NO  x



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



State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practical date:



Common Stock, $.01 Par Value - shares outstanding 8,905,105 as of September 30, 2005



Transitional Small Business Disclosure Format (check one):

YES ̈NO  x



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##### Table of Contents

FORM 10-QSB



GRAY PEAKS, INC.



CONTENT



|                                                                                                                                                                                            |  |     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                                                                                            |  | Page
|PART I. FINANCIAL INFORMATION                                                                                                                                                               |  |     
|                                                                                                                                                                                            | 
|Item 1. Financial Statements                                                                                                                                                                |  |     
|                                                                                                                                                                                            | 
|Cautionary Statement Regarding Forward Looking Statements                                                                                                                                   |  | 3   
|                                                                                                                                                                                            | 
|Unaudited Balance Sheets - as of September 30, 2005 and December 31, 2004                                                                                                                   |  | 4   
|                                                                                                                                                                                            | 
|Unaudited Statements of Operations - Three and nine months ended September 30, 2005 and September 30, 2004 and for the period from November 25, 2003 (Inception) through September 30, 2005 |  | 5   
|                                                                                                                                                                                            | 
|Unaudited Statements of Cash Flows - Nine months ended September 30, 2005 and September 30, 2004 and for the period from November 25, 2003 (Inception) through September 30, 2005           |  | 6   
|                                                                                                                                                                                            | 
|Unaudited Statements of changes in stockholders equity (deficit)  Nine months ended September 30, 2005 and for the period from November 25, 2003 (Inception) through September 30, 2005   |  | 7   
|                                                                                                                                                                                            | 
|Notes to Unaudited Condensed Financial Statements                                                                                                                                           |  | 8-11
|                                                                                                                                                                                            | 
|Item 2. Managements Discussion and Analysis                                                                                                                                                |  | 12  
|                                                                                                                                                                                            | 
|Item 3. Controls and Procedures                                                                                                                                                             |  | 14  
|                                                                                                                                                                                            | 
|PART II. OTHER INFORMATION                                                                                                                                                                  |  | 15  
|                                                                                                                                                                                            | 
|Item 5. Other Information                                                                                                                                                                   |  | 15  
|                                                                                                                                                                                            | 
|Item 6. Exhibits                                                                                                                                                                            |  | 16  
|                                                                                                                                                                                            | 
|Signatures                                                                                                                                                                                  |  | 17  



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CAUTIONARY STATEMENT REGARDING

FORWARD LOOKING STATEMENTS



Certain statements included in this quarterly report on Form 10-QSB which are not statements
of historical fact are intended to be, and are hereby identified as, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company cautions readers that forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievement expressed or implied by
such forward-looking statements. Such factors include, among others, the following: the Companys inability to secure adequate capital to fund operating losses, working capital requirements, advertising and promotional expenditures and
principal and interest payments on debt obligations; factors related to increased competition from existing and new competitors including new product introduction, price reduction and increased spending on marketing; limitations on the
Companys opportunities to enter into and/or renew agreements with international partners, the failure of the Company or its partners to successfully market, sell and deliver its product in international markets, and risks inherent in doing
business on an international level, such as unexpected changes in the regulatory requirements, political risks, export restrictions, tariffs and other trade barriers and fluctuations in currency exchange rates; the Companys inability to manage
its growth and to adapt its administrative, operational and financial control systems to the needs of the expanded entity and the failure of management to anticipate, respond to and manage changing business conditions; the loss of the services of
executive officers and other key employees and the Companys continued ability to attract and retain highly-skilled and qualified personnel; the costs and other effects of litigation, governmental investigations, legal and administrative cases
and proceedings, settlements and investigations; and developments or assertions by or against the Company relating to intellectual property rights.



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##### Table of Contents

PART 1 FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------



Gray Peaks, Inc.

(A Development Stage Enterprise)

(unaudited)



Balance Sheets

September 30, 2005 and December 31, 2004



|                                                                                                                |  |               |            |   |                  |   |            |  
|--------------------------------------------------------------------------------------------------------------- |  | ------------- | ---------- | - | ---------------- | - | ---------- | -
|                                                                                                                |  | Sept. 30,2005 |            |   | December 31,2004 |  
|Assets                                                                                                          |  |               |            |   |                  |   |            |  
|Current Assets                                                                                                  |  |               |            |   |                  |   |            |  
|Cash                                                                                                            |  | $             | 429,211    |   |                  | $ | 1,198      |  
|Prepaid expenses and other current assets                                                                       |  |               |           |   |                  |   | 44,696     |  
|                                                                                                                |  |               |            |   |                  |   |            |  
|Total current assets                                                                                            |  |               | 429,211    |   |                  |   | 45,894     |  
|Equipment, net                                                                                                  |  |               | 1,618      |   |                  |   | 2,311      |  
|                                                                                                                |  |               |            |   |                  |   |            |  
|Total assets                                                                                                    |  | $             | 430,829    |   |                  | $ | 48,205     |  
|                                                                                                                |  |               |            |   |                  |   |            |  
|Liabilities and Stockholders Equity (Deficit)                                                                  |  |               |            |   |                  |   |            |  
|Current Liabilities                                                                                             |  |               |            |   |                  |   |            |  
|Accounts payable                                                                                                |  | $             | 66,909     |   |                  | $ | 87,425     |  
|Notes payable                                                                                                   |  |               | 15,344     |   |                  |   |           |  
|Accrued expenses                                                                                                |  |               | 313,900    |   |                  |   | 120,356    |  
|                                                                                                                |  |               |            |   |                  |   |            |  
|Total current liabilities                                                                                       |  |               | 396,153    |   |                  |   | 207,781    |  
|                                                                                                                |  |               |            |   |                  |   |            |  
|Stockholders Equity (Deficit)                                                                                  |  |               |            |   |                  |   |            |  
|Common stock, no par value, 20,000,000 shares authorized; 8,905,105 and 8,571,105 shares issued and outstanding |  |               | 89,051     |   |                  |   | 85,711     |  
|Less note receivable and accrued interest arising from the sale of common stock                                 |  |               | (10,376    | ) |                  |   | (12,450    | )
|Additional paid-in capital                                                                                      |  |               | 4,495,000  |   |                  |   | 3,798,653  |  
|Deferred stock-based compensation                                                                               |  |               | (786,367   | ) |                  |   | (933,802   | )
|Deficit accumulated during the development stage                                                                |  |               | (3,752,632 | ) |                  |   | (3,097,688 | )
|                                                                                                                |  |               |            |   |                  |   |            |  
|Total stockholders equity (deficit)                                                                            |  |               | 34,676     |   |                  |   | (159,576   | )
|                                                                                                                |  |               |            |   |                  |   |            |  
|Total liabilities and stockholders equity (deficit)                                                            |  | $             | 430,829    |   |                  | $ | 48,205     |  
|                                                                                                                |  |               |            |   |                  |   |            |  



See notes to unaudited
condensed financial statements.



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Gray Peaks, Inc.

(A Development Stage Enterprise)

(unaudited)



Statement of Operations
During the Development Stage

Three and nine months ended September 30, 2005 and September 30, 2004 and for the

period from November 25, 2003 (Inception) through September 30, 2005



|                                                       |  |                    |           |   |                   |   |           |                                                          |  |   |               |   |  |   |            |   |  |   |            |  
|------------------------------------------------------ |  | ------------------ | --------- | - | ----------------- | - | --------- | -------------------------------------------------------- |  | - | ------------- | - |  | - | ---------- | - |  | - | ---------- | -
|                                                       |  | Three months ended |           |   | Nine months ended |   |           | Period fromNovember 25, 2003(Inception) toSept. 30, 2005 | 
|                                                       |  | Sept. 30,2005      |           |   | Sept. 30,2004     |   |           | Sept. 30,2005                                            |  |   | Sept. 30,2004 |   | 
|Revenues                                               |  | $                  |          |   |                   | $ | 1,500     |                                                          |  | $ |              |   |  | $ | 3,300      |   |  | $ | 3,300      |  
|Development stage, operating expenses:                 |  |                    |           |   |                   |   |           |                                                          |  |   |               |   |  |   |            |   |  |   |            |  
|Selling, general and administrative:                   |  |                    |           |   |                   |   |           |                                                          |  |   |               |   |  |   |            |   |  |   |            |  
|Stock-Based compensation expense                       |  |                    | 81,832    |   |                   |   | 75,703    |                                                          |  |   | 245,496       |   |  |   | 2,362,405  |   |  |   | 2,683,604  |  
|Professional Services                                  |  |                    | 11,493    |   |                   |   | 92,446    |                                                          |  |   | 110,398       |   |  |   | 270,384    |   |  |   | 450,802    |  
|Payroll and payroll related expenses                   |  |                    | 84,564    |   |                   |   | 66,085    |                                                          |  |   | 245,210       |   |  |   | 205,627    |   |  |   | 477,115    |  
|Travel and entertainment expenses                      |  |                    | 10,070    |   |                   |   | 12,669    |                                                          |  |   | 23,182        |   |  |   | 42,978     |   |  |   | 93,165     |  
|Offices expenses                                       |  |                    | 7,246     |   |                   |   | 8,059     |                                                          |  |   | 27,091        |   |  |   | 23,054     |   |  |   | 54,076     |  
|Other                                                  |  |                    | 387       |   |                   |   | 633       |                                                          |  |   | 1,450         |   |  |   | 6,136      |   |  |   | 10,519     |  
|                                                       |  |                    |           |   |                   |   |           |                                                          |  |   |               |   |  |   |            |   |  |   |            |  
|                                                       |  |                    | 195,592   |   |                   |   | 255,595   |                                                          |  |   | 652,827       |   |  |   | 2,910,584  |   |  |   | 3,769,281  |  
|                                                       |  |                    |           |   |                   |   |           |                                                          |  |   |               |   |  |   |            |   |  |   |            |  
|Operating (loss)                                       |  |                    | (195,592  | ) |                   |   | (254,095  | )                                                        |  |   | (652,827      | ) |  |   | (2,907,284 | ) |  |   | (3,765,981 | )
|                                                       |  |                    |           |   |                  
|Nonoperating income:                                   |  |                    |           |   |                   |   |           |                                                          |  |   |               |   |  |   |            |   |  |   |            |  
|Gain on sale of short-term investments                 |  |                    |          |   |                   |   |          |                                                          |  |   |              |   |  |   | 17,680     |   |  |   | 17,680     |  
|Interest Income                                        |  |                    |          |   |                   |   | 395       |                                                          |  |   | 17            |   |  |   | 556        |   |  |   | 772        |  
|Interest Expense                                       |  |                    | (691      | ) |                   |   | (996      | )                                                        |  |   | (2,134        | ) |  |   | (2,115     | ) |  |   | (5,103     | )
|                                                       |  |                    |           |   |                   |   |           |                                                          |  |   |               |   |  |   |            |   |  |   |            |  
|                                                       |  |                    | (691      | ) |                   |   | (601      | )                                                        |  |   | (2,117        | ) |  |   | 16,121     |   |  |   | 13,349     |  
|                                                       |  |                    |           |   |                  
|Net (loss) accumulated during the development stage    |  | $                  | (196,283  | ) |                   | $ | (254,696  | )                                                        |  | $ | (654,944      | ) |  | $ | (2,891,163 | ) |  | $ | (3,752,632 | )
|                                                       |  |                    |           |   |                   |   |           |                                                          |  |   |               |   |  |   |            |   |  |   |            |  
|Net (loss) per share, basic and diluted                |  | $                  | (0.02     | ) |                   | $ | (0.03     | )                                                        |  | $ | (0.08         | ) |  | $ | (0.35      | ) |  | $ | (0.45      | )
|                                                       |  |                    |           |   |                   |   |           |                                                          |  |   |               |   |  |   |            |   |  |   |            |  
|Weighted average shares outstanding, basic and diluted |  |                    | 8,680,018 |   |                   |   | 8,571,105 |                                                          |  |   | 8,607,808     |   |  |   | 8,318,661  |   |  |   | 8,404,603  |  
|                                                       |  |                    |           |   |                   |   |           |                                                          |  |   |               |   |  |   |            |   |  |   |            |  



See notes to unaudited
condensed financial statements.



5



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##### Table of Contents

Gray Peaks, Inc.

(A Development Stage Enterprise)

(unaudited)



Statement of Cash Flows

Nine months ended September 30, 2005 and September 30, 2004 and for the

Period from November 25, 2003 (Inception) through September 30, 2005



|                                                                            |  |                   |          |   |                                                          |   |            |   |  |   |            |  
|--------------------------------------------------------------------------- |  | ----------------- | -------- | - | -------------------------------------------------------- | - | ---------- | - |  | - | ---------- | -
|                                                                            |  | Nine months ended |          |   | Period fromNovember 25, 2003(Inception) toSept. 30, 2005 |  
|                                                                            |  | Sept. 30,2005     |          |   | Sept. 30,2004                                            |   |           
|Cash Flows From Operating Activities                                        |  |                   |          |   |                                                          |   |            |   |  |   |            |  
|Net Loss accumulated during the development stage                           |  | $                 | (654,944 | ) |                                                          | $ | (2,891,162 | ) |  | $ | (3,752,632 | )
|                                                                            |  |                   |         
|Adjustments to reconcile net loss to net cash used in operating activities, |  |                   |          |   |                                                          |   |            |   |  |   |            |  
|Gain on sale of equity securities                                           |  |                   |         |   |                                                          |   | (17,680    | ) |  |   | (17,680    | )
|Depreciation expense                                                        |  |                   | 693      |   |                                                          |   | 231        |   |  |   | 1,155      |  
|Amortization of deferred stock-based compensation                           |  |                   | 245,496  |   |                                                          |   | 2,362,405  |   |  |   | 2,683,604  |  
|                                                                            |  |                   |         
|Changes in assets and liabilities:                                          |  |                   |          |   |                                                          |   |            |   |  |   |            |  
|(Increase) in prepaid expenses                                              |  |                   | 44,696   |   |                                                          |   | (22,040    | ) |  |   |           |  
|(Increase) in accounts receivable                                           |  |                   |         |   |                                                          |   | (1,500     | ) |  |   |           |  
|Increase in accounts payable                                                |  |                   | (20,516  | ) |                                                          |   | 81,347     |   |  |   | 66,909     |  
|Increase in accrued expenses                                                |  |                   | 193,544  |   |                                                          |   | 112,199    |   |  |   | 313,900    |  
|                                                                            |  |                   |          |   |                                                          |   |            |   |  |   |            |  
|Net cash used in operating activities                                       |  |                   | (191,031 | ) |                                                          |   | (376,200   | ) |  |   | (704,744   | )
|                                                                            |  |                   |         
|Cash Flows From Investing Activities                                        |  |                   |          |   |                                                          |   |            |   |  |   |            |  
|Purchase of equipment                                                       |  |                   |         |   |                                                          |   | (2,773     | ) |  |   | (2,773     | )
|Proceeds from notes receivable                                              |  |                   | 2,500    |   |                                                          |   | 12,829     |   |  |   | 17,984     |  
|Purchase of equity securities                                               |  |                   |         |   |                                                          |   | (56,590    | ) |  |   | (56,590    | )
|Proceeds from sale of equity securities                                     |  |                   |         |   |                                                          |   | 74,270     |   |  |   | 74,270     |  
|                                                                            |  |                   |          |   |                                                          |   |            |   |  |   |            |  
|Net cash provided by investing activities                                   |  |                   | 2,500    |   |                                                          |   | 27,736     |   |  |   | 32,891     |  
|                                                                            |  |                   |         
|Cash Flows From Financing Activities                                        |  |                   |          |   |                                                          |   |            |   |  |   |            |  
|Proceeds from sale of common stock,                                         |  |                   | 601,200  |   |                                                          |   | 425,520    |   |  |   | 1,085,720  |  
|Proceeds from the issuance of notes payable                                 |  |                   | 15,344   |   |                                                          |   | 11,000     |   |  |   | 26,344     |  
|Payments on notes payable                                                   |  |                   |         |   |                                                          |   | (11,000    | ) |  |   | (11,000    | )
|                                                                            |  |                   |          |   |                                                          |   |            |   |  |   |            |  
|Net cash provided by financing activities                                   |  |                   | 616,544  |   |                                                          |   | 425,520    |   |  |   | 1,101,064  |  
|                                                                            |  |                   |          |   |                                                          |   |            |   |  |   |            |  
|Net increase in cash and cash equivalents                                   |  |                   | 428,013  |   |                                                          |   | 77,056     |   |  |   | 429,211    |  
|Cash and cash equivalents at beginning of period                            |  |                   | 1,198    |   |                                                          |   | 49,009     |   |  |   |           |  
|                                                                            |  |                   |          |   |                                                          |   |            |   |  |   |            |  
|Cash and cash equivalents at end of period                                  |  | $                 | 429,211  |   |                                                          | $ | 126,065    |   |  | $ | 429,211    |  
|                                                                            |  |                   |          |   |                                                          |   |            |   |  |   |            |  
|Supplemental Disclosure of Noncash Financing Activities                     |  |                   |          |   |                                                          |   |            |   |  |   |            |  
|Issuance of common stock for note receivable                                |  | $                 |         |   |                                                          | $ | 12,070     |   |  | $ | 26,820     |  
|Interest added to note receivable                                           |  |                   | 426      |   |                                                          |   | 870        |   |  |   | 1,540      |  



See notes to unaudited
condensed financial statements.



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##### Table of Contents

Gray Peaks, Inc.

(A Development Stage Enterprise)



Statement of Changes in Stockholders Equity (Deficit)

Nine months ended September 30, 2005 and

Period from November 25, 2003 (Inception) through
September 30, 2005



|                                                                     |        |              |        |                 |        |  |                          |         |                                 |  |   |                                                |  |   |                                    |   |  |   |            |   |  |   |            |  
|-------------------------------------------------------------------- | ------ | ------------ | ------ | --------------- | ------ |  | ------------------------ | ------- | ------------------------------- |  | - | ---------------------------------------------- |  | - | ---------------------------------- | - |  | - | ---------- | - |  | - | ---------- | -
|                                                                     |        | Common Stock |        | NotesReceivable |        |  | AdditionalPaid-InCapital |         | DeferredStock-BasedCompensation |  |   | (Deficit)AccumulatedDuring theDevelopmentStage |  |   | TotalStockholdersEquity (Deficit) |  
|                                                                     | Shares |              | Amount |                 |        |  |                          |        
|Balance, November 25, 2003                                           |        |             |        | $               |       |  | $                        |        |                                 |  | $ |                                               |  | $ |                                   |   |  | $ |           |   |  | $ |           |  
|Issuance of common stock on November 25, 2003, for cash              |        | 5,702,164    |        |                 | 57,022 |  |                          |        |                                 |  |   | 1,978                                          |  |   |                                   |   |  |   |           |   |  |   | 59,000     |  
|Issuance of common stock on November 25, 2003, for a note receivable |        | 1,425,541    |        |                 | 14,255 |  |                          | (14,750 | )                               |  |   | 495                                            |  |   |                                   |   |  |   |           |   |  |   |           |  
|Interest on notes receivable                                         |        |             |        |                 |       |  |                          | (75     | )                               |  |   | 75                                             |  |   |                                   |   |  |   |           |   |  |   |           |  
|Net loss                                                             |        |             |        |                 |       |  |                          |        |                                 |  |   |                                               |  |   |                                   |   |  |   | (12,883    | ) |  |   | (12,883    | )
|                                                                     |        |              |        |                 |        |  |                          |         |                                 |  |   |                                                |  |   |                                    |   |  |   |            |   |  |   |            |  
|Balance, December 31, 2003                                           |        | 7,127,705    |        | $               | 71,277 |  | $                        | (14,825 | )                               |  | $ | 2,548                                          |  | $ |                                   |   |  | $ | (12,883    | ) |  | $ | 46,117     |  
|Issuance of common stock on February 4, 2004, for notes receivable   |        | 1,207,000    |        |                 | 12,070 |  |                          | (12,070 | )                               |  |   | 2,160,530                                      |  |   |                                   |   |  |   |           |   |  |   | 2,160,530  |  
|Issuance of common stock on April 28, 2004, for cash                 |        | 236,400      |        |                 | 2,364  |  |                          |         |                                 |  |   | 423,156                                        |  |   |                                   |   |  |   |           |   |  |   | 425,520    |  
|Interest on notes receivable                                         |        |             |        |                 |       |  |                          | (1,039  | )                               |  |   | 1,039                                          |  |   |                                   |   |  |   |           |   |  |   |           |  
|Payments on notes receivable                                         |        |             |        |                 |       |  |                          | 15,484  |                                 |  |   |                                               |  |   |                                   |   |  |   |           |   |  |   | 15,484     |  
|Deferred Stock-based compensation                                    |        |             |        |                 |       |  |                          |        |                                 |  |   | 1,211,380                                      |  |   | (1,211,380                         | ) |  |   |           |   |  |   |           |  
|Stock-based compensation                                             |        |             |        |                 |       |  |                          |        |                                 |  |   |                                               |  |   | 277,578                            |   |  |   |           |   |  |   | 277,578    |  
|Net loss                                                             |        |             |        |                 |       |  |                          |        |                                 |  |   |                                               |  |   |                                    |   |  |   | (3,084,805 | ) |  |   | (3,084,805 | )
|                                                                     |        |              |        |                 |        |  |                          |         |                                 |  |   |                                                |  |   |                                    |   |  |   |            |   |  |   |            |  
|Balance, December 31, 2004                                           |        | 8,571,105    |        | $               | 85,711 |  | $                        | (12,450 | )                               |  | $ | 3,798,653                                      |  | $ | (933,802                           | ) |  | $ | (3,097,688 | ) |  | $ | (159,576   | )
|                                                                     |        |              |        |                 |        |  |                          |         |                                 |  |   |                                                |  |   |                                    |   |  |   |            |   |  |   |            |  
|Issuance of common stock on September 1, 2005, for cash              |        | 334,000      |        |                 | 3,340  |  |                          |        |                                 |  |   | 597,860                                        |  |   |                                   |   |  |   |           |   |  |   | 601,200    |  
|Interest on notes receivable                                         |        |             |        |                 |       |  |                          | (426    | )                               |  |   | 426                                            |  |   |                                   |   |  |   |           |   |  |   |           |  
|Payments on notes receivable                                         |        |             |        |                 |       |  |                          | 2,500   |                                 |  |   |                                               |  |   |                                   |   |  |   |           |   |  |   | 2,500      |  
|Deferred Stock-based compensation                                    |        |             |        |                 |       |  |                          |        |                                 |  |   | 98,061                                         |  |   | (98,061                            | ) |  |   |           |   |  |   |           |  
|Stock-based compensation                                             |        |             |        |                 |       |  |                          |        |                                 |  |   |                                               |  |   | 245,496                            |   |  |   |           |   |  |   | 245,496    |  
|Net loss                                                             |        |             |        |                 |       |  |                          |        |                                 |  |   |                                               |  |   |                                    |   |  |   | (654,944   | ) |  |   | (654,944   | )
|                                                                     |        |              |        |                 |        |  |                          |         |                                 |  |   |                                                |  |   |                                    |   |  |   |            |   |  |   |            |  
|Balance, September 30, 2005 (unaudited)                              |        | 8,905,105    |        | $               | 89,051 |  | $                        | (10,376 | )                               |  | $ | 4,495,000                                      |  | $ | (786,367                           | ) |  | $ | (3,752,632 | ) |  | $ | 34,676     |  
|                                                                     |        |              |        |                 |        |  |                          |         |                                 |  |   |                                                |  |   |                                    |   |  |   |            |   |  |   |            |  



See notes to unaudited
condensed financial statements.



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GRAY PEAKS, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS



Note 1. Nature of Business and Significant Accounting Policies



Nature of business: Shiwana, Inc. was formed on November 25, 2003
(Inception), under the laws of the State of Delaware. On September 16, 2005, the Company changed its name from Shiwana, Inc. to Gray Peaks, Inc. The business of the Company is to provide sales execution solutions and related
services that help businesses improve their sales effectiveness, increase marketing efficiency, and increase revenues. The Company does this through customer relationship management solutions for companies of various sizes. The Company is currently
in the development stage and expects to commence active operations in the fourth quarter of 2005.



Basis of presentation: The accompanying September 30, 2005, financial statements are unaudited but in the opinion of management contain all the adjustments (consisting of those of a normal recurring
nature) considered necessary to present fairly the financial position and the results of operations and cash flow for the periods presented in conformity with generally accepted accounting principles for interim financial information.



Operating results for the three months ended September 30, 2005, are not necessarily
indicative of the results that may be expected in future years. For further information, refer to the financial statements and footnotes thereto for the year ended December 31, 2004 included in the Companys registration statement on Form
SB-2.



Significant accounting policies are as follows:



Stock-based compensation: The Company applied Statement of Financial Accounting
Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation Transition and Disclosure, an amendment to FASB Statement No. 123, which requires
entities to recognize as expense over the vesting period the fair value of stock-based awards on the date of grant or measurement date. For employee stock-based awards, however, SFAS Nos. 123 and 148 allow entities to continue to apply the intrinsic
value method under the provisions of Accounting Principles Board (APB) Opinion No. 25 and provide pro forma net earnings disclosures as if the fair value based method defined in SFAS No. 123 had been applied. The Company has elected to
apply the provisions of APB Opinion No. 25 and provide the pro forma disclosures of SFAS Nos. 123 and 148.



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The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value
recognition provision of SFAS No. 123 to stock-based employee compensation.



|                                                                                                                                            |  |                    |           |   |                   |   |           |                                                          |  |   |                |   |  |   |            |   |  |   |            |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | --------- | - | ----------------- | - | --------- | -------------------------------------------------------- |  | - | -------------- | - |  | - | ---------- | - |  | - | ---------- | -
|                                                                                                                                            |  | Three months ended |           |   | Nine months ended |   |           | Period fromNovember 25, 2003(Inception) toSept. 30, 2005 | 
|                                                                                                                                            |  | Sept. 30, 2005     |           |   | Sept. 30, 2004    |   |           | Sept. 30, 2005                                           |  |   | Sept. 30, 2004 |   | 
|Net Loss, as reported                                                                                                                       |  | $                  | (196,283  | ) |                   | $ | (254,696  | )                                                        |  | $ | (654,944       | ) |  | $ | (2,891,163 | ) |  | $ | (3,752,632 | )
|Stock based employee compensation expense included in reported net loss, net of related tax effects                                         |  |                    | 82,000    |   |                   |   | 76,000    |                                                          |  |   | 246,000        |   |  |   | 202,000    |   |  |   | 523,000    |  
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax
effects |  |                    | (150,000  | ) |                   |   | (76,000   | )                                                        |  |   | (451,000       | ) |  |   | (202,000   | ) |  |   | (728,000   | )
|                                                                                                                                            |  |                    |           |   |                   |   |           |                                                          |  |   |                |   |  |   |            |   |  |   |            |  
|Pro forma net loss                                                                                                                          |  | $                  | (264,283  | ) |                   | $ | (254,696  | )                                                        |  | $ | (859,944       | ) |  | $ | (2,891,163 | ) |  | $ | (3,957,632 | )
|                                                                                                                                            |  |                    |           |   |                   |   |           |                                                          |  |   |                |   |  |   |            |   |  |   |            |  
|Net (loss) per shares, basic and diluted                                                                                                    |  | $                  | (0.03     | ) |                   | $ | (0.03     | )                                                        |  | $ | (0.10          | ) |  | $ | (0.35      | ) |  | $ | (0.47      | )
|                                                                                                                                            |  |                    |           |   |                   |   |           |                                                          |  |   |                |   |  |   |            |   |  |   |            |  
|Weighted average shares outstanding, basic and diluted                                                                                      |  |                    | 8,680,018 |   |                   |   | 8,571,105 |                                                          |  |   | 8,607,808      |   |  |   | 8,318,661  |   |  |   | 8,404,603  |  
|                                                                                                                                            |  |                    |           |   |                   |   |           |                                                          |  |   |                |   |  |   |            |   |  |   |            |  



The weighted average fair value of
options granted during 2005 and 2004 were $1.63 and $1.79, respectively.



The
fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in 2005 and 2004: dividend yield of 0% for both periods, expected
volatility of 100% for both years; risk-free interest rate of 4.13% and 4.14%, respectively; and expected lives of 10 years for both periods.



Earnings per share (EPS): For purposes of calculating weighted-average shares outstanding, 8,680,018 and 8,571,105, common shares outstanding after the
Companys stock split are assumed to be outstanding for the three months ended September 30, 2005 and 2004, respectively, and 8,607,808 and 8,318,661 for the nine months ended September 30, 2005 and 2004, respectively, and 8,404,603
for the period from Inception to September 30, 2005.



Basic earnings
(loss) per share is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed using the weighted-average number of common shares outstanding plus the
number of additional common shares that would have been outstanding if dilutive common shares had been issued. For the three and nine months ending September 30, 2005 and for period from November 25, 2003 to September 30, 2005, the
Companys basic and fully diluted earnings per share are the same since the conversion of the Companys stock options would be antidilutive.



Note 2. Operations and Managements Plans



Substantially all of operations from inception on November 25, 2003 through September 30, 2005, were involved with organizing the Company.



During 2004, the Company raised $425,520 through additional funding sources as it begins to
package its suite of services and marketing collateral materials. The Company will also begin to invest in sales and product support for the services it will deliver.



On July 27, 2005, the Companys SB-2 filing became effective with the Security and Exchange Commission (SEC).



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In September 2005, the Company raised an additional $601,200 from the sale of 334,000 shares of its common stock to an
investor.



Management is currently planning final purchases of computer
equipment and software to run its service infrastructure. The capital expenditures associated with these plans are estimated to be $25,000.



The Company currently has available to sell an additional 378,770 shares of its common stock as a result of its SB-2 becoming effective. The Company is significantly
relying upon this offering to achieve its operational objectives.



Management
believes existing cash, proceeds from the potential sale of additional common stock discussed above, and cash flows from operations will be sufficient to meet operating requirements for the next 12 months. In the event additional financing becomes
necessary, management may choose to raise those funds through other forms of financing as appropriate.



Note 3. Stock-Based Compensation



On
January 27, 2004, the Company granted 675,000 options to purchase shares of common stock to employees at a weighted-average exercise price of $0.013 per share. Since these options were granted at an exercise price below fair value of $1.80 per
share, the Company recorded deferred stock-based compensation expense of $1,211,380 using the intrinsic value method. The Company is amortizing the deferred stock-based compensation over the vesting period of the options, which is four years. The
Company recognized stock-based compensation expense of $75,703 and $75,703 for the three months ended September 30, 2005 and 2004, respectively, and $227,109 and $201,875 for the nine months ended September 30, 2005 and 2004, respectively,
and $505,047 for the period from Inception to June 30, 2005.



On
February 4, 2004, the Company issued 1,207,000 shares of common stock in exchange for cash totaling $12,070. Since these shares were issued at a price below fair value of $1.80 per share, the Company recognized stock-based compensation expense
of $2,160,530 using the intrinsic value method.



On January 6, 2005, the
Company issued 60,000 options to purchase shares of common stock to 3 non-employees at a price of $1.80 per share. The Company recorded deferred stock-based compensation expense of $98,061, and the Company is amortizing the deferred stock-based
compensation over the vesting period of the options, which is four years. The Company recognized stock-based compensation expense of $6,129 and $0 for the three months ended September 30, 2005 and 2004, respectively, and $18,387 and $0 for the
nine months ended September 30, 2005 and 2004, respectively, and $18,387 for the period from Inception to September 30, 2005.



Note 4. Related Party Transactions



On January 6, 2004, the Company entered into a consulting agreement with a stockholder to provide transfer agent and other consulting services for a period of three
years. The Company is to pay $5,000 each year due in quarterly installments beginning on March 31, 2004.



On January 6, 2004, the Company entered into an $11,000 note payable agreement with a company owned by the majority stockholder. The note payable was due including interest at 5% in quarterly installments
beginning on March 31, 2004, and was unsecured. During the nine months ended September 30, 2004, the Company repaid the note payable.



During the three months ended March 31, 2005, the Company received funds from a company owned by the majority shareholder in order to repay shareholder advances
totaling $44,696 at December 31, 2004. Additional



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funds totaling $39,512 were loaned to the Company to cover operating expenses. During the three months ending September 30, 2005, the Company paid off
$39,288 of this note. As of September 30, 2005, the balance on this note was $15,344. The note payable is due, including interest at a rate of 5% per annum and is unsecured.



Note 5. Commitments



The Company has entered into Employment Agreements with certain key employees. With respect to the Companys Employment Agreements with the Co-Chief Executive
Officers, the Company will be required to make a lump sum payment totaling $5,000,000 to the Co-Chief Executive Officers in the event of termination of their respective Employment Agreements by the Company without cause (or constructive termination
by the Company without cause), or due to the death or disability of either of them. With respect to the Companys Employment Agreement with the Companys President, the Company will be required to make a lump sum payment totaling
$1,000,000 in the event of termination of such Employment Agreement by the Company without cause (or constructive termination by the Company without cause) or due to the death or disability of the President.



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|Item 2. | Managements Discussion and Analysis
|------- | ------------------------------------



Plan of operation:



Our plans are to move from development stage to full operations in the fourth quarter of 2005. We anticipate having the capital resources available to support the Company running on a breakeven basis by December of
2005. At year-end, we will evaluate how we have executed against our plans and determine what capital resources will be required to continue to fund our growth. Since we are a sales-driven company, it is anticipated that future capital will be
required to support sustainable growth in revenue and we will have alternative financing sources. If there is a need for short-term financing, the Company may, as it has done in the past, obtain this short-term financing from a company owned by the
majority stockholder of the Company, or other sources if they are available.



Our initial go-to-market strategy is to use networking, speaking engagements, public relations, direct mail and our website to identify and communicate with potential customers. Our costs associated with these promotional activities are
covered in sales and marketing expenses. We expect sales and marketing expenses to increase in absolute dollars as we expand our direct sales force and promotional efforts and as we began to build our sales and marketing organization to support
growth.



We currently anticipate that we will spend $50,000 in the next 12
months for the acquisition and development of internal software and applications designed to increase our product and service delivery efficiencies. We expect these costs will increase in both absolute dollars and as a percentage of revenues in the
near term as we seek to enhance our competitive position. Most of our research and innovation expenses related to the development of our proprietary on-demand services will occur in 2005 and 2006.



RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2005 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 2004



Revenues



The Company did not report any revenues during the three months ended September 30,
2005. This compares to $1,500 of revenue reported for the three months ended September 30, 2004.



Selling, General and Administrative Expenses



Selling, general and administrative expenses consist mainly of stock based compensation expense, payroll and payroll related expenses and professional fees. For the three months ended September 30, 2005 the selling, general and
administrative expenses totaled $195,592, a decrease of $60,003 versus the three months ended September 30, 2004. This decrease was mainly the result of lower professional fees paid to outside companies.



Operating loss



The operating loss for the three months ended September 30, 2005 was $195,592, compared to an operating loss of $254,095 for the three
months ended September 30, 2004. The decrease in the operating loss was as a direct result of the decrease in selling, general and administrative expenses, since the Company did not have any revenues in the periods reported.



Interest income



Interest income is earned from the Companys cash balances that are held at various financial institutions. For the three months ending
September 30, 2005 the company did not earn any interest income, compared to $395 earned in the three months ending September 30, 2004.



Interest expense



For the three months ending September 30, 2005, the Company had $691 of interest expense, compared to $996 for the three months ended September 30, 2004. This expense relates to a loan from one of the
Companys



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founders and interest on outstanding balances on a credit card that is used by the Companys Chairman of the Board for business travel and entertainment
expenses.



RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 COMPARED TO
THE SIX MONTHS ENDED SEPTEMBER 30, 2004



Revenues



The Company did not report any revenues during the nine months ended September 30,
2005. This compares to reported revenues of $3,300 for the nine months ended September 30, 2004.



Selling, General and Administrative Expenses



Selling, general and administrative expenses consist mainly of stock based compensation expense, payroll and payroll related expenses and professional fees. For the nine months ended September 30, 2005 the selling, general and
administrative expenses total $652,827, a decrease of $2,254,457 versus the nine months ended September 30, 2004. This decrease was mainly the result of lower stock based compensation expense, since during the nine months ending
September 30, 2004, the Company recorded a large non-recurring expense of $2,160,530 for cheap stock.



Operating loss



The operating loss for
the nine months ended September 30, 2005 was $652,827, compared to an operating loss of $2,907,284 for the nine months ended September 30, 2004. The decrease in the operating loss was as a direct result of the decrease in selling, general
and administrative expenses, since the Company did not have any significant revenues in the periods reported.



Gain on sale of short-term investments



During the nine months ending September 30, 2005, the Company did not have any gains or losses on the sale of short-term investments, this compares to a one-time gain on the sale of short-term investments in the nine months ended
September 30, 2004 of $17,680.



Interest income



Interest income is earned from the Companys cash balances that are held at various
financial institutions. For the nine months ending September 30, 2005 the company earned $17 in interest income. This compares to $556 earned in the nine months ending September 30, 2004. The decrease of $539 was due to a lower level of
investable funds available to the Company in the nine months ended September 30, 2005 versus September 30, 2004.



Interest expense



For the nine months ending September 30, 2005, the Company had $2,134 of interest expenses. This compares to $2,115 for the nine months ended September 30, 2004. This expense relates to a loan from one of
the Companys founders and interest on outstanding balances on a credit card that is used by the Companys Chairman of the Board for business travel and entertainment expenses.



Liquidity and Capital Resources



Historically, since its inception, the Company has incurred cash operating losses relating to expenses to start and organize the Company. The Company has funded these
operating losses, in large part, through the sale of common stock or the issuance of notes payable.



Net cash used by operations was $191,031 for the nine months ended September 30, 2005 compared to $376,200 used by operation for the nine months ended September 30, 2004.



The Company did not have any Accounts Receivables as of September 30, 2005 as compared
to an Accounts Receivable balance of $1,500 on September 30, 2004.



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There were no capital expenditures during the nine months ended September 30, 2005 compared to $2,773 during the
nine months ended September 30, 2004.



On September 1, 2005, the
Company sold shares of its common stock for an aggregate of $601,200. The Company has available to sell an additional 378,770 shares of its common stock. The Company is continuing to try to sell these additional shares and will use the additional
funds raised to support the Companys operations for at least the next 12 months.



If the Company is unable to raise adequate financing, the Company may be required to modify its current strategic growth plans.



Inflation



Although the Company cannot accurately determine the precise effect of inflation, the Company has experienced increased costs of product, supplies, salaries and benefits, and increased selling, general and
administrative expenses. Historically, the Company has absorbed increased costs and expenses without increasing selling prices.



|Item 3. | Controls and Procedures
|------- | -----------------------



Disclosure Controls and Procedures



As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Companys
management, including the Companys Chief Executive Officers and the Companys Principal Accounting Officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based on this evaluation, the Companys Chief Executive Officers and Principal Accounting Officer concluded that the Companys disclosure controls and
procedures were effective, except as discussed below, in timely alerting them to material information relating to the Company required to be included in the Companys periodic filings with the Securities and Exchange Commission. It should be
noted that in designing and evaluating the disclosure controls and procedures, management recognized that any control and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control
objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company has designed its disclosure controls and procedures to reach a level of reasonable
assurance of achieving desired control objectives and, based on the evaluation described above, the Companys Chief Executive Officer and Principal Accounting Officer concluded that the Companys disclosure controls and procedures were
effective at reaching that level of reasonable assurance.



Changes in Internal Control over Financial Reporting



There was no change in the Companys internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities and Exchange Act of 1934, as amended) during the Companys most recently completed
fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.



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PART II. OTHER INFORMATION



|Item 5. | Other Information
|------- | -----------------



None



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##### Table of Contents

|Item 6. | Exhibits
|------- | --------



|     |  |                                                           
|---- |  | ----------------------------------------------------------
|3.1  |  | Certificate of Incorporation of Shiwana, Inc., as amended 
|     | 
|3.2  |  | Bylaws*                                                   
|     | 
|10.1 |  | Material Contracts  2004 Stock Option Plan No. 1*        
|     | 
|10.2 |  | Material Contracts  Option Agreements*                   
|     | 
|10.3 |  | Material Contracts  Consulting Agreements*               
|     | 
|10.4 |  | Material Contracts  Employment Agreements*               
|     | 
|31.1 |  | Certificate of Tim R. Sensenig, Co-Chief Executive Officer
|     | 
|31.2 |  | Certificate of Bary Bertiger, Co-Chief Executive Officer  
|     | 
|31.3 |  | Certificate of Bernard Asher, Principal Financial Officer 
|     | 
|32.1 |  | Certificate of Tim R. Sensenig, Co-Chief Executive Officer
|     | 
|32.2 |  | Certificate of Bary Bertiger, Co-Chief Executive Officer  
|     | 
|32.3 |  | Certificate of Bernard Asher, Principal Financial Officer 



|* | Incorporated by reference from registrants registration statement Form SB-2, Registration Statement 333-118255.
|- | ----------------------------------------------------------------------------------------------------------------



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Signatures



Pursuant to the requirements of the
Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                        |  |  |  |                                           
|----------------------- |  |  |  | ------------------------------------------
|                        |  |  |  | Gray Peaks, Inc.                          
|                        |  | 
|Date: November 15, 2005 |  |  |  | /s/    TIM R. SENSENIG                    
|                        |  |  |  | Tim R. Sensenig Co-Chief Executive Officer
|                        |  | 
|Date: November 15, 2005 |  |  |  | /s/    BARY BERTIGER                      
|                        |  |  |  | Bary Bertiger Co-Chief Executive Officer  



17