UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                           --------------------------
                                   FORM 10K-SB

|X| Annual Report Under Section 13 or 15 of The Securities Exchange Act of 1934
                    For the fiscal year ended April 30, 2006

                                 --------------

                 |_| Transition Report Under Section 13 or 15 of
                      The Securities Exchange Act of 1934

                        Commission File number: 000-49896

                                Downside Up, Inc.
        (Exact name of small business issuer as specified in its charter)

                                    Colorado
         (State or other jurisdiction of Incorporation or organization)

                                   84-1493159
                        (IRS Employee Identification No.)

                                750 Broad Street
                          Shrewsbury, New Jersey 07702
                                 (732) 598-2543
                                 --------------
                    (Address of principal executive offices)

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

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:

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 issuer's revenues for its most recent fiscal year: None.

The aggregate market value of the voting stock held by non-affiliates shares
(230,000 of $0.001 par value Common Stock) was $0 as of June 30, 2006. The stock
price for computation purposes was $-0-, based on the fact that there is
presently no Market for the Company's securities. This value is not intended to
be a representation as to the value or worth of the Registrant's shares of
Common Stock. The number of shares of non-affiliates of the Registrant has been
calculated by subtracting shares held by persons affiliated with the Registrant
from outstanding shares.

Common Stock, $0.001 par value                     1,230,000
         (Class)                       (Outstanding as of June 30, 2006)


<PAGE>

                                Downside Up, Inc.
                                   Form 10K-SB

                                      Index

                                                            Page No:

PART I ......................................................... 3
ITEM 1.     DESCRIPTION OF BUSINESS............................. 3
ITEM 2.     DESCRIPTION OF PROPERTY............................. 12
ITEM 3.     LEGAL PROCEEDINGS................................... 12
ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY
            HOLDEDRS............................................ 12

PART II ........................................................ 12
ITEM 5.     MARKET FOR COMMON EQUITY AND RELATED
            STOCKHOLDER MATTERS................................. 12
ITEM 6.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
            OPERATIONS.......................................... 12
ITEM 7.     FINANCIAL STATEMENTS................................ 13
ITEM 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
            ON ACCOUNTING AND FINANCIAL
            DISCLOSURE.......................................... 14
ITEM 8A.    CONTROLS AND PROCEDURES ............................ 14
ITEM 8B.    OTHER INFORMATION................................... 14

PART III ....................................................... 14
ITEM 9.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
            CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF
            THE EXCHANGE ACT.................................... 14
ITEM 10     EXECUTIVE COMPENSATION.............................. 16
ITEM 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
            AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS...... 16
ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...... 16
ITEM 13.    EXHIBITS............................................ 17
ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES ............. 17

Signatures
Certifications


                                       2
<PAGE>

                                     Part I

Item 1. Description of Business.

FORWARD LOOKING STATEMENTS

The following discussion should be read in conjunction with our audited
financial statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward-looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward-looking
statements made by, or on our behalf. We disclaim any obligation to update
forward-looking statements.

OVERVIEW

(a) History of the Company

Downside Up, Inc. (the "Company" or the "Registrant"), is a Colorado
corporation. Our principal business address is 750 Broad Street, Shrewsbury, New
Jersey 07702. Our phone number is 973-598-2543.

We were organized under the laws of the State of Colorado on April 9, 1998 to
engage in any lawful corporate undertaking, including selected mergers and
acquisitions.

Our only activity to date has been to attempt to locate and negotiate with a
business entity for the merger of that target company into our Company.

(b) Current Operations

Our current operations consist solely of seeking merger or acquisition
candidates.

We will attempt to locate and negotiate with a business entity for the merger of
that target company into the Company or a wholly owned subsidiary of the Company
formed for the purpose of such a merger. In certain instances, a target company
may wish to become a subsidiary of the Company or may wish to contribute assets
to the Company rather than merge. No assurances can be given that the Company
will be successful in locating or negotiating a transaction with any target
company.

                                       3
<PAGE>

We have attempted to provide a method for a foreign or domestic private company
to become a reporting ("public") company whose securities are qualified for
trading in the United States secondary market.

We believe there are certain perceived benefits to being a reporting company
with a class of publicly-traded securities. These benefits are commonly thought
to include the following:

      *     the ability to use registered securities to acquire assets or
            businesses;
      *     increased visibility in the marketplace;
      *     ease of borrowing from financial institutions;
      *     improved stock trading efficiency;
      *     shareholder liquidity;
      *     greater ease in subsequently raising capital;
      *     compensation of key employees through stock options;
      *     enhanced corporate image;
      *     a presence in the United States capital market.

Target companies interested in a business combination with the Company may
include the following:

      * a company for whom a primary purpose of becoming public is the use of
its securities for the acquisition of other assets or businesses;
      * a company which is unable to find an underwriter of its securities or is
unable to find an underwriter of securities on terms acceptable to it;
      * a company which desires to become public with less dilution of its
common stock than would occur upon an underwriting;
      * a company which believes that it will be able to obtain investment
capital on more favorable terms after it has become public;
      * a foreign company which may wish an initial entry into the United States
securities market;
      * a special situation company, such as a company seeking a public market
to satisfy redemption requirements under a qualified Employee Stock Option Plan;
      * a company seeking one or more of the other mentioned perceived benefits
of becoming a public company.

A business combination with a target company will normally involve the transfer
to the target company of the majority of the issued and outstanding common stock
of the Company, and the election by the target business of its own management
and board of directors.

The proposed business activities described herein classify the Company as a
"blank check" company. The Securities and Exchange Commission and many states
have enacted statutes, rules and regulations limiting the sale of securities of
blank check companies. At the present time, there is no market for the Company's
securities.

                                       4
<PAGE>

(c) Risks Related to the Plan of Operation

The Company's business is subject to numerous risk factors, including the
following:

WE HAVE NO RECENT OPERATING HISTORY, NO OPERATING REVENUES, AND WE HAVE MINIMAL
ASSETS. The Company has had no operations nor any revenues or earnings from
operations. The Company has only limited assets and financial resources. The
Company will, in all likelihood, sustain operating expenses without
corresponding revenues, at least until the consummation of a business
combination. This may result in the Company incurring a net operating loss which
will increase continuously until the Company can consummate a business
combination with a target company. There is no assurance that the Company can
identify such a target company and consummate such a business combination.

THE SPECULATIVE NATURE OF OUR PROPOSED OPERATIONS. The success of the Company's
proposed plan of operation will depend to a great extent on the operations,
financial condition and management of the identified target company. While
management intends to seek business combinations with entities having
established operating histories, there can be no assurance that the Company will
be successful in locating candidates meeting such criteria. In the event the
Company completes a business combination the success of the Company's operations
may be dependent upon the management, operations, and financial condition of the
target company, and numerous other factors beyond the Company's control.

THERE IS A SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES AND
COMBINATIONS. The Company is and will continue to be an insignificant
participant in the business of seeking mergers with and acquisitions of business
entities. A large number of established and well-financed entities, including
venture capital firms, are active in mergers and acquisitions of companies which
may be merger or acquisition target candidates for the Company. Nearly all such
entities have significantly greater financial resources, technical expertise and
managerial capabilities than the Company. Consequently, the Company will be at a
competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination.

WE HAVE NO AGREEMENT FOR ANY BUSINESS COMBINATION OR OTHER TRANSACTION. The
Company has no arrangement, agreement or understanding with respect to engaging
in a merger with or acquisition of a business entity, other than a Letter of
Intent as set forth herein. There can be no assurance the Company will be
successful in identifying and evaluating suitable business opportunities or in
concluding a business combination. Management has not identified any particular
industry or specific business within an industry for evaluation by the Company.
There is no assurance the Company will be able to negotiate a business
combination on terms favorable to the Company. The Company has not established a
specific length of operating history or a specified level of earnings, assets,
net worth or other criteria which it will require a target business opportunity
to have achieved to consider a business combination with it. Accordingly, the
Company may enter into a business combination with a business entity having no
significant operating history, losses, limited or no potential for earnings,
limited assets, negative net worth or other negative characteristics.

                                       5
<PAGE>

OUR MANAGEMENT HAS ONLY A LIMITED TIME COMMITMENT TO THE COMPANY. Our CEO has
several business interests and will devote a limited amount of his time to the
Company's business. While seeking a business combination, our CEO anticipates
devoting up to ten hours per month to the business of the Company. The Company's
CEO has not entered into a written employment agreement with the Company and he
is not expected to do so in the foreseeable future. We have not obtained key man
life insurance on our CEO. Notwithstanding the combined limited experience and
time commitment of our CEO, loss of the services of this individual would
adversely affect development of the Company's business and its likelihood of
continuing operations.

OUR OFFICERS AND DIRECTORS MAY HAVE CONFLICTS OF INTEREST WITH THE BUSINESS OF
OUR COMPANY. The Company's officers and directors participate in other business
ventures, which may result in conflicts of interest and non- arms length
transactions arising in the future. Management has adopted a policy that the
Company will not seek a merger with, or acquisition of, any entity in which any
member of management serves as an officer, director or partner, or in which they
or their family members own or hold any ownership interest.

BEING A REPORTING COMPANY COMPLICATES AND COULD DELAY AN ACQUISITION. Section 13
of the Securities Exchange Act of 1934 (the "Exchange Act") requires us to
provide certain information about significant acquisitions including certified
financial statements for the company acquired covering one or two years,
depending on the relative size of the acquisition. The time and additional costs
that may be incurred by some target companies to prepare such statements may
significantly delay or essentially preclude consummation of an otherwise
desirable acquisition by the Company. Acquisition prospects that do not have or
are unable to obtain the required audited statements may not be appropriate for
acquisition so long as the reporting requirements of the Exchange Act are
applicable.

WE HAVE A LACK OF MARKET RESEARCH AND NO MARKETING ORGANIZATION. We have neither
conducted, nor have others made available to us, results of market research
indicating that market demand exists for the transactions contemplated by the
Company. Moreover, the Company does not have, and does not plan to establish, a
marketing organization. Even in the event demand is identified for the type of
merger or acquisition contemplated by the Company, there is no assurance the
Company will be successful in completing any such business combination.

CERTAIN REGULATIONS MAY APPLY TO OUR OPERATIONS. Although the Company will be
subject to regulation under the Exchange Act, management believes the Company
will not be subject to regulation under the Investment Company Act of 1940,
insofar as the Company will not be engaged in the business of investing or
trading in securities. In the event the Company engages in business
combinations, which result in the Company holding passive investment interests
in a number of entities, the Company could be subject to regulation under the
Investment Company Act of 1940. In such event, the Company would be required to
register as an investment company and could be expected to incur significant
registration and compliance costs. We have not obtained a formal determination
from the Securities and Exchange Commission as to the status of the Company
under the Investment Company Act of 1940. If we inadvertently violate such Act,
we could be subjected to material adverse consequences.

                                       6
<PAGE>

THERE WILL BE A CHANGE IN MANAGEMENT. A business combination involving the
issuance of the Company's common stock will, in all likelihood, result in
shareholders of a target company obtaining a controlling interest in the
Company. Any such business combination may require our Management to sell or
transfer all or a portion of the Company's common stock held by them, and to
resign as directors and officers of the Company. The resulting change in control
of the Company will likely result in removal of the present officers and
directors of the Company and a corresponding reduction in or elimination of
their participation in the future affairs of the Company.

THE PLAN OF OPERATION PROVIDES FOR SUBSTANTIAL DILUTION TO OUR EXISTING
SHAREHOLDERS AS A RESULT OF A MERGER. Our plan of operation is based upon a
business combination with a business entity which, in all likelihood, will
result in the Company issuing securities to shareholders of such business
entity. The issuance of previously authorized and unissued common stock of the
Company would result in a reduction in percentage of shares owned by the present
shareholders of the Company and would most likely result in a change in control
or management of the Company.

WE MAY NOT BE ABLE TO ENGAGE IN A TAX FREE ACQUISITION. We intend to structure
any business combination so as to minimize the federal and state tax
consequences to both the Company and the target entity. However, there can be no
assurance that such a business combination will meet the statutory requirements
of a tax-free reorganization or that the parties will obtain the intended
tax-free treatment upon a transfer of stock or assets. A non-qualifying
reorganization could result in the imposition of both federal and state taxes
which may have an adverse effect on the parties to the transaction and therefore
the transaction itself.

THE REQUIREMENT OF AUDITED FINANCIAL STATEMENTS MAY DISQUALIFY BUSINESS
OPPORTUNITIES. Management of the Company will require any potential business
combination entity to provide audited financial statements. One or more
attractive prospects may choose to forego the possibility of a business
combination with the Company rather than incur the expenses associated with
preparing audited financial statements.

                                       7
<PAGE>

Such audited financial statements may not be immediately available. In such
case, the Company intends to obtain certain assurances as to the target
company's assets, liabilities, revenues and expenses prior to consummating a
business combination, with further assurances that an audited financial
statement will be provided after closing of such a transaction. Closing
documents relative thereto will include representations that the audited
financial statements will not materially differ from the representations
included in such closing documents.

(d) Plan of Operation

We intend to merge with or acquire a business entity in exchange for our
securities. We have no particular acquisition in mind and have not entered into
any negotiations regarding such an acquisition.

We anticipate seeking out a target business through solicitation. Such
solicitation may include newspaper or magazine advertisements, mailings and
other distributions to law firms, accounting firms, investment bankers,
financial advisors and similar persons, the use of one or more World Wide Web
sites and similar methods. No estimate can be made as to the number of persons
who will be contacted or solicited. Such persons will have no relationship to
management.

We have no full time employees. The Company's CEO and other officers have agreed
to allocate a portion of their time to the activities of the Company as
consultants. The President/CEO anticipates that the business plan of the Company
can be implemented by his devoting approximately 10 hours per month to the
business affairs of the Company and, consequently, conflicts of interest may
arise with respect to the limited time commitment by such officer.

The Articles of Incorporation of the Company provide that the Company may
indemnify officers and/or directors of the Company for liabilities, which can
include liabilities arising under the securities laws. Therefore, assets of the
Company could be used or attached to satisfy any liabilities subject to such
indemnification.

Our plan is to seek, investigate and, if such investigation warrants, acquire an
interest in a business entity which desires to seek the perceived advantages of
a corporation which has a class of securities registered under the Exchange Act.
The Company will not restrict its search to any specific business, industry, or
geographical location and the Company may participate in a business venture of
virtually any kind or nature. This discussion of the proposed business is not
meant to be restrictive of the Company's virtually unlimited discretion to
search for and enter into potential business opportunities.

We may seek a business opportunity with entities which have recently commenced
operations, or which wish to utilize the public marketplace in order to raise
additional capital in order to expand into new products or markets, to develop a
new product or service, or for other corporate purposes. The Company may acquire
assets and establish wholly-owned subsidiaries in various businesses or acquire
existing businesses as subsidiaries.

                                       8
<PAGE>

We anticipate that the selection of a business opportunity in which to
participate will be complex and extremely risky. Due to general economic
conditions, rapid technological advances being made in some industries and
shortages of available capital, management believes that there are numerous
firms seeking the perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for incentive
stock options or similar benefits to key employees, and providing liquidity for
shareholders and other factors. Business opportunities may be available in many
different industries and at various stages of development, all of which will
make the task of comparative investigation and analysis of such business
opportunities difficult and complex.

The Company has, and will continue to have, only limited capital with which to
provide the owners of business opportunities with any cash or other assets.
However, we believe the Company will be able to offer owners of acquisition
candidates the opportunity to acquire a controlling ownership interest in a
publicly registered company without incurring the cost and time required to
conduct an initial public offering. Management has not conducted market research
and is not aware of statistical data to support the perceived benefits of a
merger or acquisition transaction for the owners of a business opportunity.

The analysis of new business opportunities will be undertaken by, or under the
supervision of the Company's CEO who is not a professional business analyst. In
analyzing prospective business opportunities, management will consider such
matters as available technical, financial and managerial resources; working
capital and other financial requirements; history of operations, if any;
prospects for the future; nature of present and expected competition; the
quality and experience of management services which may be available and the
depth of that management; the potential for further research, development, or
exploration; specific risk factors not now foreseeable, but which then may be
anticipated to impact the proposed activities of the Company; the potential for
growth or expansion; the potential for profit; the perceived public recognition
or acceptance of products, services, or trades; name identification; and other
relevant factors. Management will meet personally with management and key
personnel of the target business entity as part of its investigation. To the
extent possible, the Company intends to utilize written reports and personal
investigation to evaluate the above factors. The Exchange Act requires that any
merger or acquisition candidate comply with all certain reporting requirements,
which include providing audited financial statements to be included in the
reporting filings made under the Exchange Act. The Company will not acquire or
merge with any company for which audited financial statements cannot be obtained
at or within a reasonable period of time after closing of the proposed
transaction.

                                       9
<PAGE>

We will in all likelihood not be experienced in matters relating to the business
of a target company, and management will rely upon its own experience in
accomplishing the business purposes of the Company. Therefore, it is anticipated
that outside consultants or advisors may be utilized to assist us in the search
for and analysis of qualified target companies.

The Company will not restrict its search to any specific kind of firm, but may
acquire a venture which is in its preliminary or development stage, one which is
already in operation, or in a more mature stage of its corporate existence. The
acquired business may need to seek additional capital, may desire to have its
shares publicly traded, or may seek other perceived advantages which the Company
may offer. However, the Company does not intend to obtain additional funds to
finance the operation of any acquired business opportunity until such time as
the Company has successfully consummated the merger or acquisition transaction.

MANNER OF ACQUISITION
In implementing a structure for a particular business acquisition, the Company
may become a party to a merger, consolidation, reorganization, joint venture, or
licensing agreement with another entity. We also may acquire stock or assets of
an existing business. On the consummation of a transaction it is probable that
the present Management and shareholders of the Company will no longer be in
control of the Company. In addition, the Company's CEO and director, as part of
the terms of the acquisition transaction, likely will be required to resign and
be replaced by one or more new officers and directors without a vote of our
shareholders.

It is anticipated that any securities issued in any such reorganization would be
issued in reliance upon exemption from registration under applicable federal and
state securities laws. In some circumstances, however, as a negotiated element
of a transaction, the Company may agree to register all or a part of such
securities immediately after the transaction is consummated or at specified
times thereafter. If such registration occurs, of which there can be no
assurance, it will be undertaken by the surviving entity after the Company has
entered into an agreement for a business combination or has consummated a
business combination and the Company is no longer considered a blank check
company. Until such time as this occurs, the Company will not attempt to
register any additional securities. The issuance of substantial additional
securities and their potential sale into any trading market which may develop in
the Company's securities may have a depressive effect on that market.

While the actual terms of a transaction to which the Company may be a party
cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition as a "tax-free" reorganization under Sections
351 or 368 of the Internal Revenue Code of 1986, as amended.

With respect to any merger or acquisition, negotiations with target company
management are expected to focus on the percentage of the Company which the
target company shareholders would acquire in exchange for all of their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's shareholders will in all
likelihood hold a substantially lesser percentage ownership interest in the
Company following any merger or acquisition. The percentage ownership may be
subject to significant reduction in the event the Company acquires a target
company with substantial assets. Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the percentage
of shares held by the Company's shareholders at such time.

                                       10
<PAGE>

The Company will participate in a business opportunity only after the
negotiation and execution of appropriate agreements. Although the terms of such
agreements cannot be predicted, generally such agreements will require certain
representations and warranties of the parties thereto, will specify certain
events of default, will detail the terms of closing and the conditions which
must be satisfied by the parties prior to and after such closing, will outline
the manner of bearing costs, including costs associated with the Company's
attorneys and accountants, and will include miscellaneous other terms.

We are presently subject to all of the reporting requirements included in the
Exchange Act. Included in these requirements is the duty of the Company to file
audited financial statements as part of its Form 8-K to be filed with the
Securities and Exchange Commission upon consummation of a merger or acquisition,
as well as the Company's audited financial statements included in its annual
report on Form 10-K (or 10-KSB, as applicable). If such audited financial
statements are not available at closing, or within time parameters necessary to
insure the Company's compliance with the requirements of the Exchange Act, or if
the audited financial statements provided do not conform to the representations
made by the target company, the closing documents may provide that the proposed
transaction will be voidable at the discretion of the present management of the
Company.

COMPETITION
The Company will remain an insignificant participant among the firms which
engage in the acquisition of business opportunities. There are many established
venture capital and financial concerns which have significantly greater
financial and personnel resources and technical expertise than the Company. In
view of the Company's limited financial resources and limited management
availability, the Company may be at a competitive disadvantage compared to the
Company's competitors.

Subsequent Events

On May 4, 2006, the Company entered into a Letter of Intent, dated May 1, 2006,
with Protection Sciences, Inc. ("Protection"). Pursuant to the Letter of Intent,
at the time of the execution of a Definitive Stock Purchase Agreement and the
conclusion of the transaction between the parties, Protection (and any assignees
as set forth by them) shall be the owners of a total of 91.8% of the total
issued and outstanding shares of Downside. The current shareholders shall own
8.2% of the issued and outstanding shares.

                                       11
<PAGE>

Although there can be no assurance that the transaction will actually close it
is expected to close during the current fiscal quarter.

Item 2. Description of Property

We sublet a total 3100 square feet from Mortgage Loan Solutions. The rent is a
nominal amount, and is sufficient for the purposes of the Company at this time.

Item 3. Legal Proceedings.

No legal proceedings to which the Company is a party were pending during the
reporting period, and the Company knows of no legal proceedings of a material
nature, pending or threatened, or judgments entered against the Company.

Item 4. Submission of Matters To A Vote Of Security Holders

         None

                                     Part II

Item 5. Market for Common Equity and Related Stockholder Matters

(a) Principal Market or Markets. The Company's stock has not traded and, at the
present time, it has no trading symbol.

(b) Approximate Number of Holders of Common Stock. The number of holders of
record of the Company's Common Stock as of June 30, 2006 was approximately 50.

(c) Dividends. Holders of common stock are entitled to receive such dividends as
may be declared by the Company's Board of Directors. No dividends on the common
stock were paid by the Company during the periods reported herein nor does the
Company anticipate paying dividends in the foreseeable future.

(d) Recent Sales of Unregistered Securities. NOT APPLICABLE

Item 6. Management's Discussion and Analysis or Plan of Operations

Forward-Looking Statements


                                       12
<PAGE>

Certain statements contained in this annual report on Form 10-KSB including
without limitation, statements containing the words "believes," "anticipates,"
"estimates," "expects," and words of similar import, constitute "forward-looking
statements." You should not place undue reliance on these forward-looking
statements. Our actual results and the structure of transactions which may occur
in the future could differ materially from those described in these
forward-looking statements for many reasons, including those set forth in the
risk factors included herein and for other reasons including the demands of the
specific business entity with which the company may elect to engage in a
transaction.

Plan of Operation
See Part I, Item 1, "Description of Business-Plan of Operation."

Liquidity and Capital Resources

At April 30, 2006, the Company's fiscal year end, the Company had cash and cash
equivalents of $0, reflecting no change from April 30, 2005. While the Company
has no foreseeable capital commitments, it also has no present expectations of
generating any cash flow from operations until such time as it may successfully
complete the acquisition of the business, operations, or assets of an operating
entity. At present time, Management has no plans to raise additional funds
through borrowings or the issuance of debt or equity.

We believe that our current cash and equivalents will satisfy our expected
working capital requirements through fiscal 2007.

Item 7.           Financial Statements


                                       13
<PAGE>

                               DOWNSIDE UP, INC.
                         Index to Financial Statements

                                                                        Page
                                                                        ----

Report of Independent Registered Public Accounting Firm                 F-2

Balance Sheet at April 30, 2006                                         F-3

Statements of Operations for the years ended April 30, 2006 and 2005    F-4

Statement of Changes in Shareholders' Deficit for the period from
      May 1, 2004 through April 30, 2006                                F-5

Statements of Cash Flows for the years ended April 30, 2006 and 2005    F-6

Notes to Financial Statements                                           F-7

                                      F-1
<PAGE>

             Report of Independent Registered Public Accounting Firm

The Board of Directors and shareholders
Downside Up, Inc.:

We have audited the accompanying balance sheet of Downside Up, Inc. as of April
30, 2006, and the related statements of operations, changes in shareholders'
equity, and cash flows for the years ended April 30, 2006 and 2005. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Downside Up, Inc. as of April
30, 2006, and the results of its operations and its cash flows for the years
ended April 30, 2006 and 2005 in conformity with accounting principles generally
accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has incurred losses since inception and has a capital
deficit at April 30, 2006. These factors 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 financial statements do not
include any adjustments that might result from the outcome of this uncertainty.


Cordovano and Honeck LLP
Englewood, Colorado
July 10, 2006


                                      F-2
<PAGE>


                               DOWNSIDE UP, INC.
                                 Balance Sheet
                                 April 30, 2006

                                     Assets

Total assets                                                       $         --
                                                                   ============


                      Liabilities and Shareholders' Deficit
Current liabilities:
     Accrued liabilities                                           $      6,000
                                                                   ------------
                        Total current liabilities                         6,000
                                                                   ------------

Shareholders' deficit:
     Preferred stock, no par value;                                   5,000,000
         shares authorized,
         -0- shares issued and outstanding                                   --
     Common stock, no par value;                                     20,000,000
         shares authorized,
         1,230,000 shares issued and outstanding                          2,672
     Additional paid-in capital                                          20,071
     Accumulated deficit                                                (28,743)
                                                                   ------------
                        Total shareholders'                              (6,000)
                        deficit
                                                                   ------------

Total liabilities and shareholders' deficit                        $         --
                                                                   ============

                 See accompanying notes to financial statements

                                      F-3
<PAGE>

                               DOWNSIDE UP, INC.
                            Statements of Operations

                                                   For the Years Ended
                                                       April 30,
                                               --------------------------
                                                   2006           2005
                                               -----------    -----------
Costs and expenses:
     Contributed rent (Note 2)                 $     1,200    $     1,200
     Other general and administrative costs          3,500          4,720
                                               -----------    -----------

                    Total costs and expenses         4,700          5,920
                                               -----------    -----------

                    Loss before income taxes        (4,700)        (5,920)

Income tax provision (Note 3)                           --             --
                                               -----------    -----------

                    Net loss                   $    (4,700)   $    (5,920)
                                               ===========    ===========

Basic and diluted loss per common share        $     (0.00)   $     (0.00)
                                               ===========    ===========

Weighted average common shares outstanding       1,230,000      1,230,000
                                               ===========    ===========

                 See accompanying notes to financial statements

                                      F-4
<PAGE>

                               DOWNSIDE UP, INC.
                 Statement of Changes in Shareholders' Deficit

<TABLE>
<CAPTION>
                                             Preferred Stock           Common Stock         Additional
                                         --------------------     -----------------------     paid-in     Accumulated
                                          Shares      Amount       Shares         Amount      capital      Deficit        Total
                                         --------   ---------     ---------     ---------    ---------    ---------     ---------
<S>                                      <C>        <C>           <C>           <C>          <C>          <C>           <C>
Balance at May 1, 2004                         --   $      --     1,230,000     $   2,672    $  13,801    $ (18,123)    $  (1,650)

Expense paid on behalf of the Company
     by an officer (Note 2)                    --          --            --            --        3,870           --         3,870
Contributed rent (Note 2)                      --          --            --            --        1,200           --         1,200
Net loss                                       --          --            --            --           --       (5,920)       (5,920)
                                         --------    --------      --------     ---------    ---------    ---------     ---------

Balance at April 30, 2005                      --          --     1,230,000         2,672       18,871      (24,043)       (2,500)

Contributed rent (Note 2)                      --          --            --            --        1,200           --         1,200
Net loss                                       --          --            --            --           --       (4,700)       (4,700)
                                         --------   ---------     ---------     ---------    ---------    ---------     ---------

Balance at April 30, 2006                      --   $      --     1,230,000     $   2,672    $  20,071    $ (28,743)    $  (6,000)
                                         ========   =========     =========     =========    =========    =========     =========
</TABLE>

                 See accompanying notes to financial statements

                                      F-5
<PAGE>

                               DOWNSIDE UP, INC.
                            Statements of Cash Flows

                                                             For the Years Ended
                                                                  April 30,
                                                             ------------------
                                                               2006      2005
                                                             -------    -------
Cash flows from operating activities:
     Net loss                                                $(4,700)   $(5,920)
     Adjustments to reconcile net loss to net cash
        used by operating activities:
           Office space contributed by an affiliate (Note 2)   1,200      1,200
           Expenses paid on behalf of the Company by
              an officer (Note 2)                                 --      3,870
           Changes in operating assets and liabilities:
                 Accrued liabilities                           3,500        850
                                                             -------    -------
Net cash used in operating activities                             --         --
                                                             -------    -------

                       Net change in cash                         --         --

Cash:
     Beginning of year                                            --         --
                                                             -------    -------

     End of year                                             $    --    $    --
                                                             =======    =======

Supplemental disclosure of cash flow information:
Cash paid during the year for:

        Income taxes                                         $    --    $    --
                                                             =======    =======
        Interest                                             $    --    $    --
                                                             =======    =======

                 See accompanying notes to financial statements


                                      F-6
<PAGE>

                                DOWNSIDE UP, INC.
                          Notes to Financial Statements

(1)   Summary of Significant Accounting Policies

Organization and Basis of Presentation

Downside Up, Inc. (the "Company") was incorporated under the laws of Colorado on
April 9, 1998 to engage in any lawful corporate undertaking. The Company has no
revenue producing operations to date. The Company is classified as a "blank
check" company. The Company's business plan is to evaluate, structure and
complete a merger with or acquisition of, a privately owned corporation.

On June 2, 2005, two of the Company's major shareholders completed a Stock
Purchase Agreement with Atlantic Capital E & F, LLC ("Atlantic"), resulting in a
change of control of the Company (see Note 5).

Going concern

The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the accompanying
financial statements, the Company has incurred losses since inception and has a
capital deficit at April 30, 2006. These factors, among others, may indicate
that the Company will be unable to continue as a going concern for reasonable
period of time.

The financial statements do not include any adjustments relating to the
recoverability and classification of liabilities that might be necessary should
the Company be unable to continue as a going concern. The Company's continuation
as a going concern is dependent upon its ability to complete a merger or
acquisition with an operating entity and ultimately to attain profitability. The
Company intends to evaluate, structure and complete a merger with, or
acquisition of, a privately owned operating entity. There is no assurance that
the Company will ever be successful in completing a merger or acquisition.

Cash and Cash Equivalents

For financial accounting purposes and the statements of cash flows, the Company
considers all highly liquid debt instruments purchased with original maturities
of three months or less when acquired to be cash equivalents. The Company had no
cash equivalents at April 30, 2006.

Fair Value of Financial Instruments

The Company has determined, based on available market information and
appropriate valuation methodologies, the fair values of its financial
instruments approximate carrying values. The carrying amounts of current
liabilities approximate fair value.

Use of Estimates

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

Income Taxes

The Company accounts for income taxes under the provisions of SFAS No. 109,
Accounting for Income Taxes. SFAS No. 109 requires recognition of deferred tax
liabilities and assets for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined based on the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.


                                      F-7
<PAGE>

Earnings (Loss) per Common Share

Basic net income per share is computed by dividing the net income available to
common shareholders (the numerator) for the period by the weighted average
number of common shares outstanding (the denominator) during the period. The
computation of diluted earnings is similar to basic earnings per share, except
that the denominator is increased to include the number of additional common
shares that would have been outstanding if potentially dilutive common shares
had been issued.

At April 30, 2006, there was no variance between basic and diluted loss per
share as there were no potentially dilutive common shares outstanding.

Expenses Paid by Officer

Expenses that are paid on behalf of the Company by its officer are recorded by
the Company as an expense with a corresponding credit to "Additional paid-in
capital".

(2) Related Party Transactions

During the years ended April 30, 2006 and 2005, a Company officer paid
professional and filing fees on behalf of the Company totaling $-0- and $3,870,
respectively. These transactions are included as expenses and contributed
capital in the accompanying financial statements.

An affiliate provided free office space to the Company, on an as needed basis,
for all periods presented in the accompanying financial statements. The
Company's Board of Directors valued this service at approximately $100 per
month, based on prevailing local market conditions. The accompanying financial
statements include a charge to "Contributed rent" and a credit to "Additional
paid-in capital" of $1,200 and $1,200, respectively, for the years ended April
30, 2006 and 2005.

(3) Income Taxes

Following are reconciliations of U.S. statutory federal income tax rate to the
effective rate:

                                                           Years Ended
                                                            April 30,
                                                      ----------------------
                                                        2006         2005
                                                      ---------    ---------
U.S. statutory federal rate                              15.00%       15.00%
State income tax rate, net of federal benefit             3.94%        3.94%
Contributed rent                                         -4.84%       -3.84%
Net operating loss (NOL) for which no tax
    benefit is currently available                      -14.10%      -15.10%
                                                      ---------    ---------

                                                          0.00%        0.00%
                                                      =========    =========

At April 30, 2006, deferred taxes consisted of a net tax asset of $3,608 due to
operating loss carryforwards of $19,043, which were fully allowed for, in the
valuation allowance of $3,608. The valuation allowance offsets the net deferred
tax asset for which there is no assurance of recovery. The change in the
valuation allowance for the years ended April 30, 2006 and 2005 were $663 and
$894, respectively. Net operating loss carryforwards will expire through 2026.

                                      F-8
<PAGE>

The valuation allowance will be evaluated at the end of each year, considering
positive and negative evidence about whether the asset will be realized. At that
time, the allowance will either be increased or reduced; reduction could result
in the complete elimination of the allowance if positive evidence indicates that
the value of the deferred tax asset is no longer impaired and the allowance is
no longer required.

Should the Company undergo an ownership change, as defined in Section 382 of the
Internal Revenue Code, the Company's tax net operating loss carryforwards
generated prior to the ownership change will be subject to an annual limitation
which could reduce or defer the utilization of those losses.

(4) Shareholders' Equity

Preferred stock

The preferred stock may be issued in series as determined by the Board of
Directors. As required by law, each series must designate the number of shares
in the series and each share of a series must have identical rights of (1)
dividend, (2) redemption, (3) rights in liquidation, (4) sinking fund provisions
for the redemption of the share, (5) terms of conversion and (6) voting rights.

Stock Purchase Agreement

On June 2, 2005, two of the Company's major shareholders completed a Stock
Purchase Agreement with Atlantic Capital E & F, LLC ("Atlantic"), whereby
Atlantic purchased 750,000 shares of the Company's issued and outstanding common
stock for $80,000. The 750,000 shares constituted approximately 61% of the
Company's issued and outstanding common stock, which resulted in a change of
control.

Changes in officers/directors

On June 17, 2005, following the closing of the Stock Purchase Agreement, Mr.
James B. Wiegand, who had been serving as the Company's sole director and
officer, resigned from his positions as director and officer. Michael Cavaleri
was subsequently appointed the Company's director and executive officer.

(5) Subsequent Events

On May 1, 2006 the Company entered into a Letter of Intent with Protection
Sciences, Inc. ("PSI"), whereby the Company would acquire all of the issued and
outstanding common shares of PSI in exchange for 91.8% of the Company's total
issued and outstanding common shares. The transaction would result in a change
in control of the Company. The transaction had not closed as of July 10, 2006.


                                      F-9
<PAGE>

Item 8 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure

The Company did not have any disagreements on accounting and financial
disclosures with its past or present accounting firm during the reporting
period.

Item 8A. Controls and Procedures
Within the ninety-day period preceding the filing of this report, our management
evaluated the effectiveness of the design and operation of its disclosure
controls and procedures (the "Disclosure Controls") as of the end of the period
covered by this Form 10-KSB and (ii) any changes in internal controls over
financial reporting that occurred during the last quarter of our fiscal year.
This evaluation ("Controls Evaluation") was done under the supervision and with
the participation of management, including the Chief Executive Officer /Chief
Financial Officer ("CEO/CFO"), who joined the registrant in June 2005.

Limitations on the Effectiveness of Controls
A control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, have been detected. Because of
the inherent limitations in a cost effective control system, misstatements due
to error or fraud may occur and not be detected. We will conduct periodic
evaluations of our internal controls to enhance, where necessary, our procedures
and controls.

Item 8B  Other Information

         Not Applicable

                                    Part III

Item 9 Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act

The following individuals have been appointed by to our Board of Directors,
effective June 21, 2005, to serve until the next annual meeting of the
shareholders of the registrant or until their successors are elected and
qualified or appointed:


                                       14
<PAGE>

Name                       Age     Position
-------------------        ---     ---------------------------------------------
Michael J. Cavaleri        50      Director, CEO/CFO
Angelo Luca                48      Director, Vice President, Corporate Secretary

Michael J. Cavaleri was appointed Director, Chief Executive Officer and Chief
Financial Officer by the controlling shareholder until the next annual meeting
of the shareholders of the Company, or until his successor is elected or
appointed and qualified. Mr. Cavaleri has since 1990 been the Chief Financial
Officer of Commercial Data Processing, Inc., of Fairfield, NJ, where he has
directed the financial affairs, including the coordination of the fiscal
policies and budgets, been involved with the reporting and analysis of financial
results as well as improving profitability, contract and lease negotiations, and
coordination of outside legal, accounting and tax functions. improved
reliability of financial management through the introduction and implementation
of a department specific financial reporting system, automated the daily
accounting system facilitating timely and accurate billing and accounts
receivable management, directed the effort to implement EDI for client billing,
developed a gross profit analysis program to ensure optimum profitability by
customer, negotiated leases for office space and multi-year customer contracts
worth in excess of $10 million with Fortune 100 companies, being involved in the
acquisition of a subsidiary including the negotiation of financing, negotiate
outsourcing arrangements with both domestic and international organizations,
negotiate banking arrangements and lines of credit and provide guidance in
raising capital through debt and equity opportunities, represented and
negotiated over 20 financial contracts with various suppliers obtaining the best
value on behalf of the company and its customer base, proactively manage the
company's cash flow and capital expenditures, review all potential bid proposals
for financial accuracy allowing the company to maintain a stable financial
environment and coordinate and communicate all financial requests and results
with the Senior Leadership Team, Board of Directors and external stakeholders to
ensure all are aware of any and all potential and actual financial impacts.

Angelo Luca was appointed Director, and Vice-President and Corporate Secretary
by the controlling shareholder until the next annual meeting of the shareholders
of the Company, or until his successor is elected or appointed and qualified.
From 2000 until 2004 Mr. Luca was Director of Production for Early Warning, Inc.
of New York City, where he held the title of Director of Production where he as
involved with and worked closely with CEO and President on all managing aspects
of 100 million dollar company, developed, approved and purchased fabrics, trims
and hardware for domestic and overseas production, directed staff to meet
deadlines and insure on-time deliveries, followed-up through execution of
production schedules utilizing bi-lingual ability, re-organized structure of
production department to enhance effectiveness of information flow, generated
and finalized production schedules and account status reports , organized
information needed to manage resources, arranged and process proper
documentation for various clients, maintained daily communication with vendors
and suppliers and resolved issues in all areas of production.


                                       15
<PAGE>

On June 30, 2005, which transaction was completed on or about July 1, 2005,
control of the Registrant was assumed by Atlantic Capital E & F, LLC, of 750
Broad Street, Shrewsbury, New Jersey 07702, with the purchase from James B.
Wiegand and Max Gould, equally, of a total of 750,000 shares of common stock of
the Registrant.

The Control Person(s) of Atlantic E & F Capital, LLC are: Elliot Bauer and
Francesca Anello.

The transaction involved the payment of a total of $80,000 for the 750,000
amount of shares, previously owned by James B. Wiegand and Max Gould. The source
of the funds used in this transaction was the funds of the purchaser.

Item 10. Executive Compensation

Our Officers and Directors do not receive compensation at this time.

Item 11. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters

The following table sets forth, as of June 30, 2006, each person known by the
Company to be the beneficial owner of five percent or more of the Company's
Common Stock, all directors individually and all directors and officers of the
Company as a group. Except as noted, each person has sole voting and investment
power with respect to the shares shown.

                                            Amount and Nature
Name and Address                            of Beneficial            Percentage
of Beneficial Owner                         Ownership                 of Class

Corporate Management Services, Inc. (1)     250,000                    20.3%
1823 S Quincy Street
Tulsa, OK 74120

Atlantic Capital E & F LLC                  287,000                    23.3%
750 Broad Street
Shrewsbury, New Jersey 07702

Innovative Marketing Concepts               176,000                    14.3%

Roadwings Financial Services, LLC           287,000                    23.3%

Michael J. Cavaleri                             -0-                      -0-
CEO of the Company

Angelo Luca                                     -0-                      -0-
Vice President

All Executive Officers
and Directors as a Group (2 Persons)            -0-                      -0-


                                       16
<PAGE>

Item 12. Certain Relationships and Related Transactions

         Not Applicable

Item 13.          Exhibits

      3.1   Articles of Incorporation of the Registrant, as amended*
      3.2   By-laws of the Registrant, as amended*
      31.1  Section 302 Certification of Chief Executive Officer and Chief
            Accounting/Financial Officer (1)
      31.2  Section 302 Certification of Vice-President (1)
      32.1  Section 906 Certification of Chief Executive Officer and Chief
            Accounting/Financial Officer (1)
      32.2  Section 906 Certification of Vice-President (1)
         ------------
* Previously filed as an exhibit to the Company's Form 10-SB filed on June 28,
2002
(1)   Filed herewith

Item 14.          Principal Accountant Fees And Services

Audit and audit-Related Fees

During the year ended April 30, 2005, the Company's principal accountant billed
$3,550 in fees that were directly associated with the preparation of annual
audit reports and quarterly review reports.

During the year ended April 30, 2006, the Company's principal accountant billed
$3,500 in fees that were directly associated with the preparation of annual
audit reports and quarterly review reports.

Tax Fees

The Company's principal accountant did not bill any tax fees during the years
ended April 30, 2006 and 2005.

                                       17
<PAGE>

All Other Fees

The Company's principal accountant did not bill any other fees during the years
ended April 30, 2006 and 2005.

The officers and directors of Downside Up have determined that the services
provided by our Company's principal accountant, as referred to in the above
paragraphs, are compatible with maintaining the principal accountant's
independence.

Audit Committee's Pre-Approval Policies and Procedures

Due to the fact that Downside Up had only two active officers and directors at
the present time, the Company does not have an audit committee at this time.

Percentage of Hours Expended

All hours expended on the principal accountant's engagement to audit the
registrant's financial statements for the most recent fiscal year were
attributable to work performed by persons that are the principal accountant's
full-time, permanent employees.

Signatures

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Date: July 10, 2006                     Downside Up, Inc.


                                         /s/ Michael J. Cavaleri
                                        ----------------------------------------
                                        Michael J. Cavaleri, Chief Executive
                                        Officer and Chief Financial Officer


                                         /s/ Angelo Luca
                                        ----------------------------------------
                                        Angelo Luca, Vice President and
                                        Corporate Secretary


                                       18