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

                                   FORM 10-KSB

{X} Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934

                   For the fiscal year ended December 31, 2004

{ } Transition Report Pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934

           For the transition period from ___________ to ____________

                         Commission file number: 0-28007

                          GOLFGEAR INTERNATIONAL, INC.
              ----------------------------------------------------
              (Exact name of small business issuer in its charter)

            NEVADA                                      43-1627555
-------------------------------          ---------------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
 incorporation or organization)

                 11562 Knott Ave, Suite 9 Garden Grove, CA 92841
          ------------------------------------------------------------
          (Address of principal executive offices, including zip code)

Issuer's telephone number, including area code:  (714) 892-8889

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

                         Common Stock, $0.001 par value
                         ------------------------------
                                (Title of Class)

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

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

The issuer's net sales for the fiscal year ended December 31, 2004 were $729,863

The aggregate  market value of the issuer's common stock held by  non-affiliates
of the Company as of August 15, 2005, was $638,780.

As of August 15, 2005, the issuer had  42,203,966  shares of Common Stock issued
and outstanding. Transitional Small Business Disclosure Format: Yes { } No {X}

<PAGE>

                                TABLE OF CONTENTS

Part I........................................................................2

   Item 1:     Business.......................................................2

   Item 2:     Properties....................................................12

   Item 3:     Legal Proceedings.............................................13

   Item 4:     Submission Of Matters To A Vote Of Security Holders...........13

Part II......................................................................14

   Item 5:     Market For Registrant's Common Stock And Related
               Shareholder Matters...........................................14

   Item 6:     Management's Discussion And Analysis Of Financial
               Condition And Results Of Operations...........................15

   Item 7:     Financial Statements..........................................20

   Item 8:     Changes In And Disagreements With Accountants
               On Accounting And Financial Disclosure........................21

   Item 8a:    Controls And Procedures.......................................21

   Item 8b:    Other Information.............................................21

Part III.....................................................................22

   Item 9:     Directors And Executive Officers Of The Registrant............22

   Item 10:    Executive Compensation........................................23

   Item 11:    Security Ownership Of Certain Beneficial
               Owners And Management.........................................24

   Item 12:    Certain Relationships And Related Transactions................24

   Item 13:    Exhibits......................................................25

   Item 14:    Principal Accountant Fees And Services........................26

                                       1

<PAGE>

PART I

ITEM 1: BUSINESS

         GolfGear  International,  Inc.  ("GolfGear" or the "Company")  designs,
develops  and  markets  innovative  premium  golf clubs  intended to improve the
quality and  performance  of a golfer's  game.  Utilizing  patented  forged face
insert  technology,  the Company has created a new generation of metal woods and
irons.  The Company  believes  that the concept of  producing a golf head with a
forged face metal insert affixed to the body of an investment  cast shell (head)
is a significant improvement in the approach to making a wood or iron head.

         The  Company  believes  that its forged  face metal wood  combines  the
accuracy and  forgiveness  of the  investment  cast metal wood with the feeling,
strength and power that can only come from solid forged  metal.  The Company has
also applied this same technology to irons,  creating a state-of-the-art  forged
face  iron  that  features  the same  forged  face  metal  insert  affixed  to a
cavity-back, investment-cast club head. This technology produces clubs that have
a solid sweet spot,  producing  maximum energy transfer,  which in turn provides
consistent distance and accuracy, even if miss-hit.

         The  Company  sells a full  line of  patented  metal  woods  and  irons
marketed under various  names,  including  Tsunami(R)  Titanium  drivers,  first
introduced  in 1997 and updated  and revised  during  2003.  The Company  offers
drivers in several  sizes  ranging  from 360 cc to 450 cc. All of the  Company's
drivers  have passed the test for  spring-like  effect and been  approved by the
USGA for play.  The Company is attempting to utilize its patented  technology to
position itself as a major brand name in the golf industry.

         All of the  Company's  products  are  intended  to  offer  retailers  a
significant  profit margin, in contrast to many of the competitive golf products
currently offered for sale at off-course  retailers and discounters.  Several of
the major  companies in the golf hardware  industry have moved to capture market
share by selling their products  through  discounters and warehouse stores that,
in turn,  sacrifices  their retailer's  margins.  The Company believes that this
situation  offers a  substantial  area of  opportunity,  since  its  proprietary
products can provide better margins to retailers.

         The Company's objective is to become a leading manufacturer of drivers,
fairway woods, irons, and wedges and putters utilizing,  wherever possible,  its
proprietary  forged face  insert  technology.  To achieve  this  objective,  the
Company is focusing  its market  strategy on  enhancing  the  reputation  of its
products,   increasing  market  penetration  of  its  products,  continuing  the
development of innovative clubs, and refining and improving existing technology.
An integral  part of this  strategy  involves  the  expansion  of the  Company's
marketing  and  advertising  efforts to target both  domestic and  international
sales.  Domestically,  the Company intends to create product  awareness  through
various  channels,   including  direct  response  programs,  print  advertising,
television commercials and other promotional activities including on-course golf
pro shop  demonstrations  ("demo days").  The Company will also seek to contract
with touring professional golfers on all tours to endorse Company products.  The
Company expects these  professional  golfers to demonstrate the effectiveness of
forged face technology and provide valuable  exposure.  The Company also intends
to  expand  its  line  of  clubs  by  developing,  acquiring  or  licensing  its
technologies  to  other  golf  manufacturers.  The  ability  of the  Company  to
implement  its  marketing  strategy is subject to the Company  having  access to
adequate capital.

         During  the  third  quarter  of  2004,  the  Company  suspended  normal
operations,  including  expanding  brands and product  offerings,  new marketing
programs, and direct marketing to customers,  due to a lack of operating working
capital resources.  To the extent that the Company is unable to secure financing
in 2005, the Company's  liquidity and ability to continue to conduct  operations
will be impaired.

Industry Background

         There are between 26 and 30 million golfers in the United States today,
with  approximately  5-6 million  categorized as avid golfers  (defined as those
golfers playing 25 or more rounds per year).  The sport is popular with both men
and women.  Its  popularity  is gaining  around the world.  It is one of the few
sports in which players spend more money, as they get older.

         According  to Golf Digest the United  States golf  equipment  market is
continuing to grow. Key factors fueling sales include the increasing  popularity
of premium-priced  oversized  drivers,  higher quality fairway woods,  oversized
irons,  new  innovations in putter design and  continuing  interest in the sport
among new players.

                                       2

<PAGE>

         The industry comprises several types of golfers:  avid, medium, new and
casual. Avid golfers play frequently and spend significantly  larger amounts for
brand  name  equipment.  Medium  golfers  play less  frequently,  are less brand
conscious and play with either  graphite or steel shafted clubs.  Casual golfers
play several  games a year and  represent  the largest  group with the potential
upward movement from one category to another. New golfers as beginners typically
use lower cost unbranded  clubs in many cases bought in a "boxed set" that comes
with all the clubs in a set and a bag.

         Market  leaders  follow a similar  pattern.  Each  established a market
niche. Callaway introduced the oversize metal wood to the market. Cobra followed
with oversize  perimeter  weighted  irons.  Each  incorporated  brand  identity,
product  innovation and tour  validation,  from the PGA Tour to the LPGA Tour to
the Senior Tour.

         The  Company's  niche in the  marketplace  is  producing  clubs using a
forged face metal  titanium  insert.  Over the past  several  years,  clubs have
become larger, longer and lighter. Inserts offer a more consistent,  dense sweet
spot, superior weight distribution and cutting-edge technology. Titanium drivers
have become common because of the move to the larger size heads. However,  there
is a cost factor involved in this transition. Two basic ways of manufacturing an
all titanium driver has been developed:  four piece forgings and investment cast
body with a forged-face  insert.  Of the two ways to  manufacture a driver,  the
four piece  forgings  have many welded  seams that  produce  inconsistencies  in
strength and weight  distribution,  the cast body with a forged face  produces a
much more consistent club head and hitting  surface.  The Company holds a patent
and  produces  all of its  drivers  utilizing  the  desirable  cast  body with a
forged-face technology.

         The Company  believes  that the market for golf clubs is cyclical,  and
that the consumer is now ready for  something  new. Most of the sets sold by the
major  club  manufacturers  in the last ten  years  are now aging and there is a
substantial  replacement  market  developing.  Even the average  golfer needs to
upgrade and replace  certain clubs on a regular  basis.  Some  competitors  have
experienced  tremendous  growth  throughout the 1990s by riding this cycle.  The
Company believes that it has the opportunity to be a major candidate to fill the
product that will be sold in this next growth cycle.  The  Company's  brand name
remains  underdeveloped  while  other  brands have begun to erode as a result of
having sold their popular models "down market". Large established brands such as
Callaway  and  TaylorMade  will  continue  to do well based on their  ability to
heavily promote their products on various  professional  tours and through major
retailers and television advertising campaigns.

Competition

         There  have  been  many  established  brands  in the golf  market.  The
competitive  nature  of the golf  business  has  altered  the  market  share and
ownership  of  many  of  these  brands.  Spalding,   MacGregor,  and  Hogan  are
well-recognized  old-line names in golf  equipment.  Each of these has undergone
significant  changes in the past few years.  Callaway has purchased Spalding and
Hogan out of bankruptcy and MacGregor has been reorganized  under new ownership.
Names  currently  dominating the industry's  premium-brand  sector are Callaway,
Titleist,  Cobra,  TaylorMade  and to a lesser extent Ping and  Cleveland  Golf.
Companies  such as Callaway,  Karsten  Manufacturing  (Ping) and Fortune  Brands
(Titleist/Cobra)  are leading a wave of golf-focused  idealism among  consumers.
The dominating  golf companies  concentrate on innovation,  create new equipment
categories or rely on  established  market  leadership  position in a particular
category, such as oversized metal woods or irons.

         The Company  competes  in the  competitively  priced,  technology-based
segment of the golf club  manufacturing  industry that includes  companies  with
substantial  financial  resources.  The Company  believes  that its  technology,
product  quality  standards,  and  competitive  pricing  structure can provide a
competitive edge in the market.

Business Strategy

         The Company  introduced the new over-sized  Tsunami(R)  line at the PGA
show in  Orlando  in January  of 2002.  During  the third  quarter of 2004,  the
Company  suspended  normal  operations,  including  expanding brands and product
offerings,  new marketing programs, and direct marketing to customers,  due to a
lack of operating working capital  resources.  To the extent that the Company is
able to secure sufficient financing in 2005 the Company will reintroduce the new
over-sized  Tsunami(R)  line  using  the  Company's   infomercial.   The  entire
Tsunami(R)  product line has been  positioned at the high end of the golf market
from a technology  standpoint  and are very  competitively  priced.  The Company
received  notice from the USGA that its 450cc and 400cc  drivers have passed the
test for  spring-like  effect and are approved for play. The Company  intends to
increase its market visibility  throughout Asia as well as Europe and Canada. It
is currently  evaluating existing  international  distributor  relationships and
considering new affiliations.

                                       3

<PAGE>

Overall Marketing Strategy

         The Company  intends to  concentrate  its  marketing  efforts in direct
marketing techniques,  including direct response programs, which have evolved in
recent years as a successful  medium for marketing golf products.  The Company's
ability  to  aggressively  pursue  these  marketing  efforts  is  subject to the
availability  of adequate  operating  capital.  The Company  has  completed  and
successfully tested a thirty-minute  direct response program designed to promote
the entire line of Tsunami(R)  drivers. It is expected that the program will run
on The Golf Channel,  ESPN,  ESPN2 and Fox Sports West. The program is hosted by
Rick Dees,  the nationally  recognized DJ and host of the world-wide  syndicated
"Weekly Top 40", and features  independent  testing results,  testimonials  from
professional  and  amateur  golfers,   interviews  with  Company  engineers  and
scientists and run approximately thirty minutes. Shorter spots consisting of 30,
60 and 90 second run times will also be aired during the same time frame and may
be "tagged"  along with the  Company's  key  retailers.  The  Company  will also
utilize current marketing trends which allow greater access to the golf consumer
including direct advertising as well as to the on and off course shops.

         The golf club industry has been highly  seasonal,  with most  companies
experiencing  the majority of sales  between  February and June.  There are also
additional sales occurring between October and December for the Christmas buying
season.

         Most  companies  have used demo day  programs to gain  exposure at golf
courses and private country clubs. The Company  currently in negotiations with a
noted PGA  professional  with plans to increase  its  exposure by becoming  more
active at key demo days. Technology driven, the Company is optimistic about this
marketing  strategy  since the  consumer  has shown a desire for more  technical
information at recent demo events. The Company has performed extremely well when
in direct competition with the biggest  competitors in the business,  outselling
the  competition  at several  events.  The demo day  programs  are  intended  to
supplement the Company's other promotional efforts.

Direct Response Programs and Other Marketing

         A direct response program is typically a thirty-minute program commonly
called  an  infomercial  that is used to  introduce,  brand,  market  and sell a
product at the same time. The direct response  program has been a popular way to
save years of conventional  marketing and selling  methods,  and is a faster and
more efficient way to provide the consumer with technical  information  that may
lead to a purchase.  In the early stages of a direct response program  campaign,
the advertising produces substantial revenue and in some cases actually produces
a profit.  Over its life, the direct response program becomes a self-liquidating
advertising  campaign.  A direct response  program campaign is also supported by
conventional selling methods.

         The value of direct response  programs lies in the creation of millions
of interested, informed and qualified prospects wanting to buy featured products
in stores. For every one buyer in a direct campaign there are up to eight buyers
that want the product but will not buy direct and will look for it in retail. In
addition to selling products from television, direct response programs can be an
excellent  source of leads for  telemarketing,  for  promoting a brand image and
"pushing"  the retail store  activity.  The Company has  completed  and tested a
30-minute  direct  response  program  designed to promote the Tsunami(R) line of
drivers and has invested over $600,000 for its production. It is anticipated the
program  will run on The Golf  Channel,  ESPN,  ESPN2 and Fox Sports  West.  The
program is hosted by Rick  Dees,  the  nationally  recognized  DJ, and  features
independent testing results, testimonials from professional and amateur golfers,
interviews with Company  engineers and scientists and run  approximately  thirty
minutes. Shorter spots consisting of 30, 60 and 90 second run times will also be
aired  during  the same time  frame.  The  airing of this  program is subject to
available financing.

         Along with the direct  response  program,  the Company intends to run a
print media campaign that may include placement in publications such as the Wall
Street  Journal and USA Today,  and leading  golfing  publications  such as Golf
Digest, subject to available financing.

Customers

         During  the  third  quarter  of  2004,  the  Company  suspended  normal
operations,  including  expanding  brands and product  offerings,  new marketing
programs, and direct marketing to customers,  due to a lack of operating working
capital resources. Subsequent to the suspension of normal operations the Company
has  continued  to sell to its  foreign  distributor.  Typically  during  normal
operations  the Company  sells to golf pro shops  ("green  grass")  accounts and
catalog  and  discount  retailers  ("off  course")  accounts.  The  Company  has
experienced some customer concentration in the past.

                                       4

<PAGE>

Employees

         On July 15, 2005, the Company  employed one (1) full-time  employee and
no  part-time  employees.  None of the  Company's  employees  are  covered  by a
collective bargaining agreement.

International Business

         The Company  distributes golf clubs  worldwide.  The Company intends to
generate a portion of its revenue in foreign markets.  This strategy  provides a
broader  market  opportunity  and  can  help  offset  the  effects  of  regional
recessions and market trends.  The Company sells its clubs through  distributors
in most  countries,  but in some cases the Company  sells  direct to  retailers.
International  direct  selling is  expected  to  increase  somewhat  in the near
future.

         The  Company  is  negotiating  with  potential  distributors  in Japan.
Currently  the Company has a  distribution  agreement  with Cloud Water of South
Korea.

Technology

         Most of the  Company's  clubs feature its  multi-patented,  forged-face
insert technology. The Company currently has ten (10) patents on its forged-face
insert technology and three (3) patents on its putter technology.

         In the early 1990's, the Company,  drawing on over twenty-five years of
research,  did what had never been done before: it installed a solid forged-face
metal insert into the hitting area of an  investment-cast  shell.  The Company's
forged-face  clubs  combined  the  density,  power and  distance of solid forged
metals with the weight  distribution,  forgiveness and accuracy possible only in
investment  cast  woods and irons.  The  result is a club that gives  measurably
superior  performance  because it has a much more solid  hitting  area with more
weight around the perimeter to provide an extra large sweet-spot.

         The Company had the foresight to begin patenting  insert  technology in
1989 in the United States and in major international markets, before the January
1, 1992 rule change by the United States Golf  Association  (USGA) and the Royal
and Ancient (R&A) Golf Club of St. Andrews,  Scotland,  which  legalized  insert
technology in both metal woods and irons. As a result, the Company believes that
its patent portfolio with respect to insert technology is the most comprehensive
intellectual  property  protection  package of any  participant in the golf club
industry.  The  Company  believes  that no other golf  manufacturing  company or
individual has secured more coverage,  either in the number of patents or in the
scope of  claims.  This  patent  technology  forms  the  basis of the  Company's
business plan to exploit insert technology as the next wave of golf club design.
The Company also expects that there will be an opportunity to generate royalties
by selectively  licensing this technology to major golf club manufacturers.  The
Company has identified and formally put on legal notice a significant  number of
potential infringers of its "Forged Insert Patents".

         By attaching a solid forged-face metal insert into the cavity of a cast
club, the Company believes that it has created the most solid hitting surface in
golf and has put  fifty  percent  more  club  head  mass  where it counts in the
hitting  area.  When more mass  meets the ball at impact and the mass is forged,
not  cast,   maximum  energy  is  transferred  to  the  ball  and  shots  travel
significantly  farther.  Forged metal can do this because it is denser and has a
more solid molecular structure than cast metals. Investment castings contain gas
voids and porosity  that can cause  hairline  cracks or cave-ins and create dead
spots. Also, their porous finish and inconsistent  internal structure can affect
playability.

         Management  believes  that its patents are strong  enough to eventually
make the Company a significant player in the golf industry.  On January 1, 1992,
the face of golf equipment  changed forever when a USGA and R&A rule was changed
to allow metal woods and irons with inserts.  The Company was founded in 1989 to
prepare for the changes it anticipated in golf equipment  design. In the opinion
of management,  the  introduction  of its patented  forged-face  woods and irons
marked  one of  the  most  significant  advancements  in  metal  innovation  and
technology since the invention of the original metal wood more than twenty years
earlier.

         After creating and patenting the solid steel  forged-face  insert,  the
Company has continued to stake out new ground,  securing  multiple  domestic and
international patents for designs and inserts in several other materials such as
forged  titanium,  steel,  aluminum,  beryllium  copper and related alloys.  The
Company's patents also include variable face thickness technology.

         Forged-face   insert   technology   offers   significant    performance
advantages.  The Company's  equipment  offers levels of performance that golfers
all over the world seek in a club,  including  greater  distance,  a large sweet
spot, pin-point control,  reduced vibration,  increased velocity,  accuracy, and
forgiveness, and product identity.

                                       5

<PAGE>

Product Line

         The Company's core product line is the Tsunami(R)  driver,  and fairway
woods.  The  drive and  feature  forged  titanium  inserts  that are inset  into
titanium or stainless  steel shells,  which  incorporate  the latest in graphite
shafts and grips.  The Tsunami(R)  driver,  offered in 400cc and 450cc volume is
the Company's entry into the super-size  driver  category.  The main body of the
all-titanium Tsunami(R) driver is cast from  aerospace-certified  6AL4V titanium
and the face is fitted with a solid forged Beta 10:2:3 titanium  insert.  All of
the Company's driver products conform to USGA regulations.

         The Company's  patented  insert  technology is unique because it can be
applied to any  anticipated new trend in golf clubs,  including  size,  shape or
material. The Company already has developed prototypes of a new driver and woods
using this technology. Although brand name golf equipment companies become known
by their general consumer acceptance, the Company's experience indicates golfers
today have a tendency to be attracted  more by  performance  and  technology and
less by a name brand. The Company is actively  developing new products that will
be complimentary to its existing product line.

Recent Financings

         From January 2004  through  July 2005, a director and  stockholder  has
advanced  approximately  $240,000 to the Company to be used for working capital.
The  Company has  received  these funds and  recorded  them as notes  payable to
stockholder of  approximately  $166,000 during 2004 and $74,000 during 2005. The
advances bear interest at 6% per annum and are due on demand.

         On October 7, 2003,  the Company  completed  the sale of $250,000 of 5%
convertible  debentures to MC Corporation,  a company  affiliated with a Company
director and stockholder  ("MC Corp").  These  debentures were  convertible into
common  stock at $0.09 per share for a period of three  months  from the date of
issuance.  For  each  share  of  common  stock  issued  upon  conversion  of the
debentures,  one  common  stock  purchase  warrant  will be  issued  and will be
exercisable for a period of twelve months at $0.045 per share. In December 2003,
these  debentures,  including  accrued  interest of $2,083,  were converted into
2,800,922 shares of common stock. The warrants expired unexercised.

         On December 30, 2003,  the Company  completed the sale of $1,000,000 of
5% convertible debentures to Quincy Investments Corp., a company affiliated with
Peter  Pocklington,  Chairman,  and MC Corp. These debentures were automatically
convertible  into  525,000  shares of Series A  preferred  stock of the  Company
within  ninety  days of the  date of  issuance.  Pursuant  to the  terms  of the
debenture  agreement,  if the Company was unable to convert the debentures  into
shares  of  Series  A  preferred  stock  within  ninety  days of  issuance,  the
debentures  would  become  immediately  due and payable in full,  with  interest
continuing  to  accrue  at the face  rate of  interest  of 5% per  annum.  As of
December  31,  2003,  the Company  had not  received  $100,000 in proceeds  from
Quincy,  and  accordingly,   recorded  $100,000  due  from  stockholder  in  its
consolidated  balance  sheet.  The amount was  subsequently  received in January
2004. As of August 1, 2005, the debentures are in default and are due on demand.

         Holders of the Series A  preferred  stock have the right to convert the
Series  A  preferred  stock  into  shares  of  common  stock of the  Company  at
conversion  rates of 158:1 for  Quincy  and  161:1 for MC Corp.  upon any of the
following:  (i)  eighteen  months  after the date of  issuance  of the  Series A
preferred stock,  (ii) a change of control,  as defined,  or (iii) upon the date
the Company is no longer  required to file report or financial  statements  with
the United States Securities and Exchange Commission.

Recent Changes in Management and the Board of Directors

         On July 9,  2004,  Daniel  C.  Wright  was  made  President  and  Chief
Operating Officer of the Company.  Daniel Wright has been with the Company since
May of 2001 serving as its Chief  Financial  Officer and a director.  Mr. Wright
has over  eleven  (11)  years in senior  management  positions  within  the golf
industry.  He began his career in the golf  industry with Tru-Form Golf as their
controller. Tru-Form Golf manufactured clubs and accessories originally severing
as the house  brand name for the Nevada Bob retail  chain.  After more then four
(4) years with  Tru-Form  Golf,  Mr.  Wright  joined Grip  Technology,  Inc.,  a
publicly traded company,  ("GTI") as their  controller and CFO. GTI manufactured
golf grips for both OEMs and retail  outlets.  GTI filed for bankruptcy in 1999.
In  addition  to Mr.  Wright's  golf  industry  experience  he has worked in the
medical and direct market  industries,  and he has several years experience with
local accounting firms. Mr. Wright has his bachelors in accounting and finance.

         On October 12, 2004,  the Company  received a  resignation  letter from
John  Pierandozzi  as a member of the Board of  Directors  of the  Company.  The
Company accepted his resignation upon his notice.

         In October 2004 the Company added Mr.  Donald Berry as a director.  Mr.
Berry is  regarded as one of Canada's  premier  health care sales and  marketing
executives.  In 1997 as the Vice President of Western Canada for Ingram and Bell
Medical,  where he drove the company from number three in market share to number
one  in  market  position.  While  at  Ingram  and  Bell  the  Western

                                       6

<PAGE>

Division  contributed more then 50% of the company's annual gross profit despite
the fact that  Western  Canada is less then 30% of the Canadian  population.  In
2002 Mr.  Berry  formed a  partnership  with  Medical  Mart  Supplies  West.  As
Executive  Vice  President  and  General  Manager  the  Company  has grown  from
negligible sales to over $7 million in a three-year period.

         In October 2004 the Company  added Mr.  Michael J Gobuty as a director.
Mr. Gobuty started with Victoria  Leather Garment MFG. Co. Ltd. in 1958. From an
entry  level  position  in the  receiving  department,  he worked  progressively
through  every job  description  in the  organization  to a position of complete
control of the  company.  One of the  largest  companies  of its kind in Canada,
Victoria  Leather  manufactured  and sold full  lines of leather  outerwear  and
sportswear.  Currently Mr. Gobuty is in dual control of Gobuty's & Son's,  where
he is responsible for the production and sourcing of  manufacturing in main land
China.

CAUTIONARY  STATEMENT  PURSUANT  TO  "SAFE  HARBOR"  PROVISIONS  OF THE  PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

         Except  for  historical  information,  the  Company's  reports  to  the
Securities  and Exchange  Commission on Form 10-KSB and Form 10-QSB and periodic
press  releases,  as a well as other public  documents and  statements,  contain
"forward-looking  statements" within the meaning of the federal securities laws.
Forward-looking  statements  are subject to risks and  uncertainties  that could
cause actual results to differ materially from those expressed or implied by the
statements. Among the Company's risks and uncertainties are the following:

Outstanding  options and  warrants  could  affect the market price of our common
stock.

         As of December  31, 2004 if all of the  outstanding  stock  options and
warrants were  exercised,  the 50 million  authorized  number of shares would be
exceeded.  Fully  diluted  shares would total  approximately  220  million.  The
exercise of such outstanding options, warrants, and debt conversions will dilute
the  percentage  ownership of the Company's  stockholders,  and any sales in the
public market of shares of Common Stock underlying such securities may adversely
affect prevailing market prices for the Common Stock.  Moreover,  the terms upon
which  the  Company  will be able to obtain  additional  equity  capital  may be
adversely  affected  since the  holders of such  outstanding  securities  can be
expected to exercise their respective  rights therein at a time when the Company
would,  in all  likelihood,  be able to obtain any needed  capital on terms more
favorable to the Company than those provided in such securities.

Our common shareholders may experience substantial dilution

         The sale of a  substantial  number of shares of our common stock in the
public  market,  or the prospect of such sales,  could  materially and adversely
affect the market price of our common  stock.  We are  currently  authorized  to
issue  up  to 50  million  shares  of  common  stock.  To  the  extent  of  such
authorization,  our Board of Directors  will have the ability,  without  seeking
stockholder  approval,  to issue additional shares of common stock in the future
for such  consideration as our Board of Directors may consider  sufficient.  The
issuance of additional  common stock in the future will reduce the proportionate
ownership  and voting power of our common  stock held by existing  stockholders.
Sales in the public market of substantial amounts of our common stock, including
sales of common stock  issuable  upon  exercise of options and  warrants,  could
depress  prevailing  market  prices  for the  common  stock.  The  existence  of
outstanding  options  and  warrants  may  prove  to  hinder  our  future  equity
financings.  Consistent  with EITF 00-19,  the  controlling  shareholders of the
Company have agreed to increase the authorized shares to 300 million.

Licensing of Technology/Products

         The  Company has plans to protect its  intellectual  properties  to the
full extent of the law. On August 21,  2002,  GolfGear  and Nike,  Inc.  jointly
announced  that Nike  Golf was  granted a  non-exclusive,  long-term,  worldwide
license to manufacture and sell golf clubs under GolfGear's patents covering its
proprietary  forged-face insert  technology.  The license agreement granted Nike
Golf the right to institute litigation against third parties for infringement of
GolfGear's  patents.  The Company began  receiving  royalty  payments during the
first quarter of 2003 on products shipped by Nike.

         The  Company  is in  discussions  with  a  number  of  other  potential
licensees for the licensing of its patented technology.

History of Losses; Accumulated Deficit; Working Capital Deficiency

         The Company has incurred a history of continuing losses. The likelihood
of the  success of the  Company  must be  considered  in light of the  problems,
expenses,  difficulties,  complications,  and delays  frequently  encountered in
connection with the expansion of a business and the  competitive  environment in
which the Company operates.  Unanticipated  delays,

                                       7

<PAGE>

expenses and other problems such as setbacks in product development,  and market
acceptance  are  frequently  encountered  in connection  with the expansion of a
business. (See "Significant Working Capital Requirements" below.) As a result of
the fixed nature of many of the Company's expenses, the Company may be unable to
adjust  spending in a timely manner to compensate for any  unexpected  delays in
the development  and marketing of the Company's  products or any capital raising
or revenue  shortfall.  Any such  delays or  shortfalls  will have an  immediate
adverse impact on the Company's business, operations and financial condition.

Significant Working Capital Requirements

         The working  capital  requirements  associated with the manufacture and
sale of the Company's golf clubs have been and will continue to be  significant.
The  Company  is  currently  not  generating  sufficient  cash  flow to fund its
operations  and growth is dependent on the proceeds  from the sale of its shares
to continue its operations and implement its sales and marketing  strategy.  The
Company will require  additional  operating  capital  during 2005 to establish a
comprehensive  marketing  plan,  to  maintain  operations  and  to  finance  the
expansion of its business.  In the event that the Company's  plans change or its
assumptions change or prove to be inaccurate or if the proceeds from the sale of
its  shares or cash  flow from  operations  proves  to be  insufficient  to fund
operations (due to unanticipated expenses,  technical  difficulties,  problem or
otherwise),  the Company would be required to seek additional  financing  sooner
than currently  anticipated or may be required to significantly curtail or cease
its operations.

Seasonal Business

         Quarterly  fluctuations occur as golf is primarily a warm weather sport
and the  purchasing  decisions of most  customers are typically made in the fall
and a vast  majority of sales are  expected to occur during the first six months
of the year.  In addition,  quarterly  results may vary from year to year due to
the  timing  of  new  product  introductions,   orders  and  sales,  advertising
expenditures,  promotional  periods and shipments.  Accordingly,  comparisons of
quarterly  information  of  the  Company's  results  of  operations  may  not be
indicative of the Company's overall annual performance.

Competition

         There  have  been  many  established  brands  in the golf  market.  The
competitive  nature  of the golf  business  has  altered  the  market  share and
ownership  of  many  of  these  brands.  Spalding,   MacGregor,  and  Hogan  are
well-recognized  old-line names in golf  equipment.  Each of these has undergone
significant  changes in the past few years.  Callaway has purchased Spalding and
Hogan out of bankruptcy and MacGregor has been reorganized  under new ownership.
Names  currently  dominating the industry's  premium-brand  sector are Callaway,
Titleist,  Cobra,  TaylorMade  and to a lesser extent Ping and  Cleveland  Golf.
Companies  such as Callaway,  Karsten  Manufacturing  (Ping) and Fortune  Brands
(Titleist/Cobra)  are leading a wave of golf-focused  idealism among  consumers.
The dominating  golf companies  concentrate on innovation,  create new equipment
categories or rely on  established  market  leadership  position in a particular
category, such as oversized metal woods or irons.

         The Company  competes  in the  competitively  priced,  technology-based
segment of the golf club  manufacturing  industry that includes  companies  with
substantial  financial  resources.  The Company  believes  that its  technology,
product  quality  standards,  and  competitive  pricing  structure can provide a
competitive edge in the market.

Uncertainty of Market Penetration

         Several  companies  that have strong brand name  recognition  currently
dominate the golf  equipment  industry.  As a result,  the market demand for new
products from new companies is subject to a high level of uncertainty. Achieving
significant  market  penetration  and  consumer  recognition  for the  Company's
products will require  significant  efforts and  expenditures  by the Company to
inform potential  customers about the Company's  products.  Although the Company
intends to use a  substantial  portion of its working  capital for marketing and
advertising,  there  can be no  assurance  that  the  Company  will  be  able to
penetrate existing markets for golf equipment and related accessories on a broad
basis, position its products to appeal to a broad base of customers, or that any
marketing efforts  undertaken by the Company will result in any increased demand
for or greater market acceptance of the Company's products.

Consumer Preferences and Industry Trends

         The golf equipment industry is characterized by frequent  introductions
of new  products and  innovations  and is subject to rapidly  changing  consumer
preferences and industry  trends such as the  introduction of titanium clubs and
oversized club heads,  which may adversely affect the Company's  ability to plan
for future design, development and marketing of its products. Because of rapidly
changing  consumer  preferences and industry  trends,  most golf club models and
designs have short product life cycles.  In addition,  new club models and basic
designs are frequently introduced and often rejected by customers. The Company's
success will depend on its ability to  anticipate  and respond to these  factors
and introduce products that meet or exceed consumer  expectations.  There can be
no assurance that the Company will be able to anticipate and respond to changing
consumer  preferences and industry trends or that  competitors  will not develop
and  commercialize  new  innovations  that  render  the  Company's   proprietary
technology or its golf clubs obsolete.

                                       8

<PAGE>

         The Company's future operating  results are also likely to be dependent
upon the continuing popularity of golf as a sport and leisure activity. Although
golf has gained increasing  popularity over the last several years, there can be
no assurance that its popularity as a sport and leisure  activity will continue.
Any  significant  decline in the popularity of golf could  materially  adversely
affect the Company.  Moreover,  golf,  as a leisure  activity,  is affected by a
number of factors relating to discretionary consumer spending, including general
economic conditions affecting disposable consumer income, such as employment and
business  conditions,  interest rates and taxation.  Any  significant  change in
general economic conditions or uncertainties regarding future economic prospects
that adversely affect  discretionary  consumer spending  generally,  and golfers
specifically could have a material adverse effect on the Company.

Source of Supply

         There are five primary  components that are necessary to produce a golf
club. The Company has access to several  manufacturers  that are able to produce
the same technology with the same quality  standards with  competitive  pricing.
The Company will  continue to test  components  produced by other  vendors.  The
Company is  constantly  working on new  materials  and  sources of supply in the
event that additional vendors are necessary.

Dependence on a Limited Number of Suppliers

         The Company does not  manufacture  the components  required to assemble
its golf  clubs.  The  Company  relies on several  suppliers  for club heads and
graphite  shafts.  The Company does not have binding  long-term supply contracts
with any of its  suppliers.  Therefore,  the  Company's  success  will depend on
maintaining its relationships with these suppliers and developing  relationships
with new suppliers.  Any  significant  delay or disruption in the supply of club
heads or  graphite  shafts  caused  by  manufacturers'  production  limitations,
material  shortages,  quality control problems,  labor  interruptions,  shipping
problems  or other  reasons  would  materially  adversely  affect the  Company's
business.  The delays in receiving such supplies from alternative  sources would
cause the  Company to sustain  at least  temporary  shortages  of  materials  to
assemble its clubs,  which could have a material adverse effect on the Company's
business, operating results and financial condition.

         The Company  currently  purchases its club heads from two sources,  its
shafts from two sources and its grips from three sources.  The Company purchases
its components  pursuant to purchase orders placed from time to time and, except
for those  purchase  orders,  none of its  suppliers  is  obligated  to  deliver
specified  quantities of components or to deliver  components  for any specified
period.  Accordingly,  the Company is substantially  dependent on the ability of
its  suppliers to provide  adequate  inventories  of golf club  components  on a
timely basis and on  acceptable  terms.  The  Company's  suppliers  also produce
components  for  certain of the  Company's  competitors,  as well as other large
customers,  and  there  can be no  assurance  that any such  supplier  will have
sufficient  production capacity to satisfy the Company's inventory or scheduling
requirements  during any period of sustained demand or that the Company will not
be subject to the risk of price  fluctuations and periodic delays.  Although the
Company believes that its relationships  with its suppliers are satisfactory and
that alternative sources of each of the components are currently available,  the
loss of the services of a supplier or substantial  price increases  imposed by a
supplier could result in production  delays,  thereby  causing  cancellation  of
orders by customers  and/or price  increases  resulting in reduced  revenues and
margins, respectively.

Dependence on Certain Suppliers; Foreign Suppliers

         The Company imports its club heads from companies in Asia. As a result,
the supply of the materials  required to assemble the Company's clubs is subject
to  additional  cost and risk  factors,  many of which are out of the  Company's
control,  including political  instability,  import duties,  trade restrictions,
work stoppages,  epidemics and foreign currency fluctuations. An interruption or
material  increase in the cost of supply would  materially  adversely affect the
Company's business, operating results and financial condition.

Dependence on a Few Major Customers

         During  the  third  quarter  of  2004,  the  Company  suspended  normal
operations,  including  expanding  brands and product  offerings,  new marketing
programs, and direct marketing to customers,  due to a lack of operating working
capital resources. Subsequent to the suspension of normal operations the Company
has  continued  to sell to its  foreign  distributor.  Typically  during  normal
operations  the Company  sells to golf pro shops  ("green  grass")  accounts and
catalog  and  discount  retailers  ("off  course")  accounts.  The  Company  has
experienced some customer concentration in the past.

                                       9

<PAGE>

Patents and Know-How

         The Company's ability to compete  effectively with other golf companies
may be  dependent,  to a  large  degree,  upon  the  proprietary  nature  of its
technologies.  The  Company  has eight (8)  United  States  patents  and two (2)
international  patents  relating  to the forged  face  technology  and three (3)
patents relating to the Company's putter technology.  Titanium is now recognized
throughout the industry as a superior metal for use in golf clubs.  The patented
putters include several devices that provide an alignment mechanism.  A "virtual
ball" marker allows the user to visualize the hit before the club is swung. This
enables  the club to be aligned to the ball,  allowing  the user to hit from the
sweet  spot of the  club.  Additionally,  the  putter  clubs  have  heel and toe
weighting to minimize club head rotation on impact, ensuring a straighter shot.

         The Company  received  its eighth  (8th)  domestic  patent  (Patent No.
5,720,673)  on insert  technology  on  February  4, 1998.  This  patent  further
broadens the scope of the Company's insert patent  portfolio.  This patent has a
primary function of providing a means of affixing the face insert to a cast club
head.  The insert is set into a recess,  and locked into place by material being
pushed over the edge of the insert,  thus locking it permanently into place. The
Company  has also  received a patent  issued in Taiwan.  The Company has several
other patents pending both domestically as well as internationally.  The Company
will continue to focus on expanding its patent coverage on insert technology.

         The Company  recently  received a patent in Japan that  covers  "Forged
Insert  Technology".  The patent has several claims on forged insert  technology
including a variable forged face insert thickness.  The insert may be thicker in
the heel and toe areas to enhance weight distribution and density throughout the
entire hitting area.

         The Company plans on filing additional patents in the future.

Uncertainty Regarding Patents and Proprietary Rights

         The Company seeks patent  protection for its  proprietary  products and
technologies  where  appropriate.  The  Company  currently  has eight (8) United
States  patents and two (2)  international  patents  relating to its forged face
technology and three (3) patents  relating to the Company's  putter  technology.
The Company also has several  foreign  patents  pending.  Corresponding  foreign
patent  applications  with  respect  to  the  Company's  pending  United  States
applications have been filed in the appropriate foreign jurisdictions.  However,
there can be no assurance that the Company's  pending patents will be awarded or
will  provide the  Company  with  significant  protection  against  competitors.
Litigation  has been necessary and may be necessary in the future to protect the
Company's patents,  and there can be no assurance that the Company will have the
financial  or  managerial  resources  necessary  to pursue  such  litigation  or
otherwise  to protect its patent  rights.  The Company has  recently put various
manufacturers  on  notice  that  the  Company  believes  the  manufacturers  are
infringing on Company patents.  There is no guarantee that the Company will have
adequate resources to pursue litigation against these  manufacturers or that the
Company would succeed in any ensuing litigation.  In addition to pursuing patent
protection  in  appropriate  cases,  the  Company  also  relies on trade  secret
protection for its un-patented  proprietary  technology.  However, trade secrets
are difficult to protect.  There can be no assurance  that other  companies will
not independently develop substantially  equivalent proprietary  information and
techniques or otherwise gain access to the Company's  trade  secrets,  that such
trade secrets will not be disclosed or that the Company can effectively  protect
its rights to un-patented trade secrets.  The Company pursues a policy of having
its  employees  and   consultants   execute   non-disclosure   agreements   upon
commencement of employment or consulting  relationships with the Company,  which
agreements provide that all confidential  information developed or made known to
the individual during the course of employment shall be kept confidential except
in  specified  circumstances.  There can be no  assurance,  however,  that these
agreements will provide meaningful protection for the Company's trade secrets or
other proprietary information.

Dependence on Relationships with Retailers

         The  Company   principally  relies  upon  its  relationships  with  its
retailers to market the  Company's  products.  During the third quarter of 2004,
the Company suspended normal operations,  including expanding brands and product
offerings,  new marketing programs, and direct marketing to customers,  due to a
lack of operating working capital resources.  Previously,  the Company's account
base consisted of select golf shops (on and off course retailers) throughout the
United States.  The Company maintained its relationship with such retailers both
directly and through its independent sales representatives.  International sales
are  generally  conducted  through the use of foreign  distributors  in specific
countries. Although the Company intends to market its products competitively and
to develop business relationships with new retailers, there can be no assurances
that the Company can successfully expend its retailer base to a level sufficient
to reach profitable operations.

                                       10

<PAGE>

Technological Innovation; New Products; USGA Regulation

         The technology  utilized in the Company's golf clubs is relatively new,
compared to the majority of golf clubs  currently  being  marketed.  The Company
believes it has extensive patent protection for most of its golf club heads, but
there  can be no  assurance  that it  will be  successful  in  defending  and/or
exploiting  such  patents.  Efforts to develop new  technology  and new products
similar to or better  than the  Company's  clubs are  continuing  to evolve at a
rapid pace. It is expected that competitors will attempt to develop  alternative
golf clubs that apply existing  and/or new  technology.  Such new  technological
innovations  could have an adverse impact on the Company's  business,  operating
results and financial condition.  There is no assurance that the Company will be
able to design  technologically  innovative  golf  clubs or golf  products  that
achieve market acceptance.  Further, the Company's existing clubs that have been
designed and marketed may be rendered  obsolete within a relatively short period
of time.

         The design and sales of golf clubs are also greatly  influenced  by the
rules and regulations of the United States Golf Association  ("USGA").  Although
the USGA's  equipment  standards  only apply to USGA  sanctioned  events,  it is
critical for new clubs and existing clubs to comply with USGA standards.  To the
extent that the Company's clubs are ruled  ineligible by the USGA, the Company's
business,   operating  results  and  financial  condition  would  be  materially
adversely affected.  Although the Company believes that all of its current clubs
comply with USGA standards and its  proprietary  technology is not  inconsistent
with USGA  standards,  there is no assurance that any newly developed clubs will
be deemed to comply with USGA  standards or that  existing  USGA  standards  and
regulations will not be amended to make the Company's  existing clubs ineligible
for use in USGA sanctioned events.

         The Company has designed and plans to sell,  certain  clubs  outside of
North  America  that  comply  with the  rules and  regulations  of the Royal and
Ancient Golf Club of St. Andrews, Scotland. These clubs may not comply with USGA
rules and regulations and will not be sold in North America.

Influence of Other External Factors

         The  golf  hardware  industry  in  general  is  a  speculative  venture
necessarily  involving  some  substantial  risk.  There is no certainty that the
expenditures  to be made by the Company will result in  commercially  profitable
business. The marketability of its products will be affected by numerous factors
beyond the control of the Company.  These factors  include market  fluctuations,
and the general state of the economy (including the rate of inflation, and local
economic conditions),  which can affect peoples' discretionary spending. Factors
that leave less money in the hands of  potential  customers  of the Company will
likely have an adverse effect on the Company.  The exact effect of these factors
cannot be accurately predicted,  but the combination of these factors may result
in the Company not receiving an adequate return on invested capital.

Reliance on Management

         The Company's  success is dependent on its key  management,  especially
Peter H.  Pocklington  and  Daniel  Wright,  the loss of  whose  services  could
significantly  impede  the  achievement  of the  Company's  planned  development
objectives.  The Company  currently  does not maintain key man life insurance on
any of these individuals. In addition, none of the officers or directors, or any
of the other key personnel,  except for Mr. Wright has any employment  agreement
with the Company.  The success of the Company's business objectives will require
substantial  additional  expertise in such areas as finance,  manufacturing  and
marketing,   among  others.  Competition  for  qualified  personnel  among  golf
companies is intense,  and the loss of key personnel or the inability to attract
and retain the additional,  highly skilled personnel  required for the expansion
of the  Company's  activities,  could  have a  material  adverse  effect  on the
Company's business and results of operations.

         In addition, exclusively the officers and directors of the Company will
make all decisions with respect to the management of the Company. Investors will
only have rights associated with minority  ownership  interest to make decisions
that affect the Company.  The success of the Company,  to a large  extent,  will
depend on the quality of the directors and officers of the Company.

Control of the Company by Officers and Directors

         The Company's  officers and directors  beneficially  own  approximately
eighty-nine  percent (89%) of the  outstanding  shares of the common stock. As a
result, such persons,  acting together, have the ability to exercise significant
influence over all matters requiring stockholder approval. Accordingly, it could
be difficult for the investors  hereunder to effectuate control over the affairs
of the Company.  Therefore,  it should be assumed that the officers,  directors,
and principal common shareholders who control the majority of voting rights will
be able, by virtue of their stock holdings,  to control the affairs and policies
of the Company.

                                       11

<PAGE>

Limitations on Liability, and Indemnification, of Directors and Officers

         The  Company's   Articles  of  Incorporation   include   provisions  to
eliminate,  to the fullest extent permitted by the Nevada Revised Statutes as in
effect from time to time, the personal liability of directors of the Company for
monetary  damages arising from a breach of their fiduciary  duties as directors.
The Bylaws include provisions to the effect that the Company may, to the maximum
extent permitted from time to time under applicable law, indemnify any director,
officer, or employee to the extent that such  indemnification and advancement of
expense is  permitted  under such law, as it may from time to time be in effect.
Any  limitation  on  the  liability  of  any  director,  or  indemnification  of
directors, officer, or employees, could result in substantial expenditures being
made by the Company in covering any liability of such persons or in indemnifying
them.

Conflicts of Interest

         The officers and  directors  have other  interests to which they devote
time, either individually or through partnerships and corporations in which they
have an interest, hold an office, or serve on boards of directors, and each will
continue to do so notwithstanding the fact that management time may be necessary
to the business of the Company.  As a result,  certain conflicts of interest may
exist  between the Company and its  officers  and/or  directors  that may not be
susceptible to resolution.

         In  addition,  conflicts of interest may arise in the area of corporate
opportunities that cannot be resolved through arm's length negotiations.  All of
the potential  conflicts of interest  will be resolved only through  exercise by
the directors of such judgment as is consistent with their  fiduciary  duties to
the Company. It is the intention of management,  so as to minimize any potential
conflicts  of  interest,  to  present  first to the  Board of  Directors  to the
Company, any proposed investments for its evaluation.

No Assurance of Continued Public Trading Market; Risk of Low Priced Securities

         Since December 9, 1997, there has been only a limited public market for
the Common  Stock of the  Company.  The Common Stock of the Company is currently
quoted on the Over the Counter Bulletin Board. As a result, an investor may find
it difficult to dispose of, or to obtain  accurate  quotations  as to the market
value of the Company's securities.  In addition,  the Common Stock is subject to
the low-priced  security or so called "penny stock" rules that impose additional
sales practice  requirements on  broker-dealers  who sell such  securities.  The
Securities  Enforcement  and  Penny  Stock  Reform  Act of 1990  ("Reform  Act")
requires  additional  disclosure in connection with any trades involving a stock
defined as a penny stock (generally,  according to recent regulations adopted by
the U.S.  Securities  and Exchange  Commission,  any equity  security that has a
market  price of less than  $5.00 per share,  subject  to  certain  exceptions),
including the delivery,  prior to any penny stock  transaction,  of a disclosure
schedule  explaining the penny stock market and the risks associated  therewith.
The regulations governing low-priced or penny stocks sometimes limit the ability
of broker-dealers to sell the Company's Common Stock and thus,  ultimately,  the
ability of the investors to sell their securities in the secondary market.

Effects of Failure to Maintain Market Makers

         If the Company is unable to maintain National Association of Securities
Dealers,  Inc.  member  broker/dealers  as market  makers,  the liquidity of the
Common Stock could be impaired, not only in the number of shares of Common Stock
which could be bought and sold, but also through  possible  delays in the timing
of  transactions,  and lower  prices for the Common  Stock than might  otherwise
prevail.  Furthermore,  the lack of market  makers could result in persons being
unable to buy or sell shares of the Common Stock on any secondary market.  There
can be no assurance the Company will be able to maintain such market makers.

Cash Dividends Unlikely

         The Company has never  declared or paid  dividends  on its Common Stock
and currently  does not anticipate or intend to pay cash dividends on its Common
Stock in the future.  The payment of any such cash  dividends in the future will
be subject to available  retained  earnings and will be at the discretion of the
Board of Directors.

ITEM 2: PROPERTIES

         The  Company  leases a 2,100  square  foot  facility  located in Garden
Grove,  CA under the terms of a one-year  lease,  expiring  August 31, 2005. The
lease   contains  no  renewal   options  and  calls  for  monthly   payments  of
approximately  $1,740.  The Company believes that its facilities are adequate to
maintain its existing business activities.

                                       12

<PAGE>

ITEM 3: LEGAL PROCEEDINGS

Recent Litigation and Settlement

         On December 18, 2003,  the Company  received a resignation  letter from
Donald A.  Anderson as a member of the Board of  Directors  of the  Company.  On
December 19, 2003, Mr. Anderson also resigned as Chief Executive  Officer of the
Company.  Prior to his  resignation,  on or about November 8, 2003, Mr. Anderson
was  suspended  pending  an  investigation  into  possible   violations  of  his
employment  contract with the Company and breach of fiduciary  duty. On November
18, 2003, Mr.  Anderson  filed a complaint  against the Company and its officers
for breach of written contract,  wrongful termination of employment and slander.
Subsequently,  the Company  filed a cross  complaint  against Mr.  Anderson for,
among other things, breach of fiduciary duty and breach of written contract.

         On June 23, 2004, the Company,  its officers and Mr.  Anderson  entered
into a Settlement Agreement (the "Settlement  Agreement"),  wherein, among other
things,  the Company  withdrew its  allegation  that Mr.  Anderson  breached his
fiduciary duties. Pursuant to the terms of the Settlement Agreement, the Company
agreed to (i) pay Mr. Anderson $165,000 in varying  installments through January
30,  2006,  (ii)  transfer  title of a 1996  Ford  custom  tour van owned by the
Company to Mr.  Anderson,  and remove Mr.  Anderson as a guarantor  from certain
Company  debt  obligations.  In return,  Mr.  Anderson  returned  to the Company
994,110   shares  of  the  Company's   common  stock  owned  by  him  valued  at
approximately  $30,000  (fair  market  value  of  the  Company's  stock  on  the
settlement  date). As of December 31, 2003, the Company recorded a net liability
of  approximately  $142,000  related  to the  settlement  of this  lawsuit.  Mr.
Anderson  also  agreed to  convert  $60,000  in  debentures,  including  accrued
interest,  held by him into shares of the Company's common stock at a conversion
rate of $0.095 per share. These debentures were converted into 753,000 shares of
the Company's common stock on February 23, 2005.

         The Company is  currently  in default for payment of amounts due to Mr.
Anderson under the  Settlement  Agreement.  On February 15, 2005,  Mr.  Anderson
received a judgment  for  $76,310  due to him under the terms of the  Settlement
Agreement.  Pursuant to the Settlement Agreement,  the Company agreed to issue a
new  stock  certificate  to Mr.  Anderson  for a stolen  stock  certificate  for
2,642,625  shares of the  Company's  common  stock.  As of August 1,  2005,  the
Company has not issued this stock  certificate.  Mr.  Anderson  will dismiss the
lawsuit upon the Company's full performance of the Settlement Agreement.

         In March  2004,  holders in the  amount of  $200,000  of the  Company's
convertible  debentures  filed suit  against the Company  claiming,  among other
things,  breach of written  contract and default  under  security  agreement and
possession of collateral.  The plaintiffs are seeking repayment of the principal
amount of the debentures,  including accrued interest,  which matured on January
6, 2004,  and possession of the  intellectual  property,  including  patents and
trademarks,  which  collateralized  the  debentures.  The parties are  currently
attempting to reach agreement on resolving this action in its entirety.

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

         There has been no submission  of matters to a vote of security  holders
during the fiscal year ended December 31, 2004.

                                       13

<PAGE>

PART II

ITEM 5: MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS

         The  Company's  Common  Stock is traded on  NASDAQ's  Over the  Counter
Bulletin Board using the symbol "GEAR".  The following  table sets forth for the
years  ended  2004,  2003 and 2002  quarterly  high and low sales  prices of the
Company's common stock as reported on NASDAQ for the periods indicated.

                                                 High            Low
                                                ------         ------
Year Ending December 31, 2004
      First Quarter                             $ 0.07         $ 0.04
      Second Quarter                            $ 0.05         $ 0.02
      Third Quarter                             $ 0.05         $ 0.05
      Fourth Quarter                            $ 0.04         $ 0.03

Year Ended December 31, 2003
      First Quarter                             $ 0.19         $ 0.26
      Second Quarter                            $ 0.22         $ 0.16
      Third Quarter                             $ 0.19         $ 0.07
      Fourth Quarter                            $ 0.10         $ 0.06

Year Ended December 31, 2002
      First Quarter                             $ 0.27         $ 0.02
      Second Quarter                            $ 0.70         $ 0.17
      Third Quarter                             $ 0.45         $ 0.20
      Fourth Quarter                            $ 0.31         $ 0.14

         As of August 15, 2005, there were  approximately  204 holders of record
of the Company's Common Stock.

Dividends

         The Company has never paid any cash  dividends  on its common stock and
has no present intention of doing so.

Stock Option Plan

         In October  1997,  the Board of Directors  of the Company  approved the
GolfGear International,  Inc. 1997 Stock Option Plan (the "1997 Plan"). The 1997
Plan is  intended  to  allow  designated  officers  and  employees  and  certain
non-employees  of the Company to receive stock options to purchase the Company's
common  stock  and  to  receive  grants  of  common  stock  subject  to  certain
restrictions,  as more  fully  described  in the 1997  Plan.  The 1997  Plan has
reserved 2,642,625 shares of the Company's common stock, subject to adjustments,
to be issued under the 1997 Plan.

         The  1997  Plan  provides  for the  granting  to  employees  (including
employees who are also directors and officers) of options intended to qualify as
incentive  stock  options  within the  meaning of  Section  422 of the  Internal
Revenue Code of 1986, as amended,  and for the granting of  non-statutory  stock
options to directors,  employees and consultants.  The Board of Directors of the
Company currently administers the 1997 Plan.

         The exercise price per share of incentive  stock options  granted under
the 1997  Plan must be at least  equal to the fair  market  value of the  common
stock on the date of the grant.  With respect to any participant who owns shares
representing  more than 10% of the voting power of all classes of the  Company's
outstanding  capital stock, the exercise price of any incentive or non-statutory
stock  options  must be equal to at least 110% of the fair  market  value of the
grant date, and the maximum term of the option must not exceed five years.  Upon
a merger  of the  Company,  the  options  outstanding  under  the 1997 Plan will
terminate  unless  assumed or substituted  by the successor  corporation.  As of
December 31, 2004, 1,138,330 options have been granted and 1,504,295 options are
available for grant under the 1997 Plan.

                                       14

<PAGE>

ITEM 6: MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

         This Annual Report on Form 10-KSB for the year ended  December 31, 2004
contains  "forward-looking"  statements within the meaning of Section 27A of the
Securities Act of 1933, as amended,  including statements that include the words
"believes",   "expects",    "anticipates",   or   similar   expressions.   These
forward-looking  statements  include,  among others,  statements  concerning the
Company's expectations regarding its working capital requirements, gross margin,
results  of  operations,  business,  growth  prospects,  competition  and  other
statements of expectations,  beliefs,  future plans and strategies,  anticipated
events or  trends,  and  similar  expressions  concerning  matters  that are not
historical facts. The forward-looking  statements included in this Annual Report
on Form 10-KSB for the year ended  December 31, 2004  involve  known and unknown
risks,  uncertainties  and other  factors  that could cause the actual  results,
performance  or  achievements  of the  Company to differ  materially  from those
expressed in or implied by the forward-looking statements contained herein.

Overview

         The  Company  designs,  develops  and  markets  premium  golf clubs and
related golf products.  The Company utilizes its proprietary  forged face insert
technology  to  offer a full  line  of  golf  equipment.  The  Company's  patent
portfolio   with  respect  to  insert   technology   is  the  largest  and  most
comprehensive  in the golf  industry,  with nine  domestic  and foreign  patents
issued  related to forged face insert  technology.  These patents  incorporate a
wide  variety of forged face insert  materials,  including  titanium,  beryllium
copper, stainless steel, carbon steel, aluminum, and related alloys thereof, and
include  technology  relating to varying the face  thickness of the insert.  The
Company operates in one business segment.  The Company sells to customers in the
United States and the Far East.

         The  consolidated  financial  statements  include  the  accounts of the
Company and its wholly owned  subsidiaries,  GGI,  Inc.,  GearFit Golf  Company,
Pacific  Golf  Holdings,  Inc.,  Bel Air Players  Group,  Inc.  and Leading Edge
Acquisition,   Inc.  All  intercompany   transactions  and  balances  have  been
eliminated in consolidation.

         During  the  third  quarter  of  2004,  the  Company  suspended  normal
operations,  including  expanding  brands and product  offerings,  new marketing
programs, and direct marketing to customers,  due to a lack of operating working
capital resources.

         The Company is currently  attempting  to raise  additional  capital but
there can be no  assurances  that the Company will be successful in this regard.
To the extent that the Company is unable to secure the capital necessary to fund
its future cash requirements on a timely basis and/or under acceptable terms and
conditions,  the Company may have to  substantially  reduce its  operations to a
level consistent with its available working capital resources.

         On January 14, 2005, the Company secured a commitment for a $10,000,000
private placement  offering whereby a third party investor (the "Investor") will
purchase up to  $10,000,000  of the  Company's  common stock over a  twenty-four
month period to provide the Company with operating  capital.  Funding is subject
to, among other things,  the Company  filing a  registration  statement with the
U.S.  Securities  and Exchange  Commission  with respect to the resale of common
stock sold in the private placement  offering.  The Company is currently working
towards  satisfying all conditions  precedent to closing the funding,  but there
can be no assurance  that the Company will be  successful  in  satisfying  these
terms. In connection with the funding commitment, the Company paid a structuring
fee of $10,000 and issued  2,000,000 shares of the Company's common stock to the
Investor as a commitment fee.

Results of Operations

Years Ended December 31, 2004 and 2003

         Net sales  decreased  to $729,863 in 2004 from  $1,973,135  in 2003,  a
decrease of $1,243,272. The decrease in net sales in 2004 as compared to 2003 is
a result of the Company's lack of inventory and marketing  efforts.  The Company
lacked  the  financial  resources  necessary  to  acquire  inventory  or sustain
marketing efforts.

         Gross profit  decreased to $463,515 in 2004 from $561,904 in 2003,  and
increased as a percentage of net sales to 63.5% in 2004 from 28.5% in 2003.  The
increase  in gross  profit  as a  percentage  of net sales in 2004 is due to the
Company negotiating better pricing from its suppliers and selling off previously
written off obsolete inventory.

         Selling and marketing  expenses decreased to $107,668 in 2003 (14.8% of
net sales) from $1,061,355 in 2003 (53.8% of net sales), a decrease of $953,687.
In 2004,  the  Company  lacked  the  financial  resources  necessary  to acquire
inventory or sustain marketing efforts.

         Tour and pro  contract  expenses  decreased  to  $72,320  in 2004  from
$75,760 in 2003, a decrease of $3,440.  Tour and pro contract  expenses remained
relatively  equivalent  in  2004  as  compared  to 2003  as a  result  of  prior
contractual obligation.

         General and administrative  expenses decreased to $900,799 in 2004 from
$1,795,546  in 2003,  a decrease of $894,747.  In 2004,  the  Company's  limited
resources  required  reducing  non-essential  expenses,  including  reduction in
personnel.

                                       15

<PAGE>

         Depreciation and amortization decreased to $24,437 in 2004 from $58,274
in 2003,  a decrease  of  $33,837.  The  decrease  is a result of the  Company's
downsizing and disposal of certain non-essential assets.

         Interest  expense  decreased to $1,147,364  in 2004 from  $1,667,801 in
2003.  Interest  expense in 2003 was  primarily  due to the increase in interest
expense related to the $2,100,000  convertible  debenture financing which closed
in June 2002. In connection with the financing,  the Company  incurred  deferred
financing costs and recorded a debt discount related to a beneficial  conversion
feature  and the  estimated  fair  value of  warrants  issued  in as part of the
financing. The deferred financing costs were amortized over the 18-month term of
the convertible  debentures and were recorded as interest expense.  The interest
expense  in 2004  was  primarily  due to the  interest  expense  related  to the
$1,000,000 convertible debenture financing in December 2003.

         Net  loss  was  $1,796,613  for  2004  as  compared  to a net  loss  of
$4,157,599  for 2003.  The decrease in the net loss is primarily  related to the
downsizing of the business activities.

Liquidity and Capital Resources

         The  consolidated  financial  statements  as of and for the year  ended
December 31, 2004 have been prepared  assuming that the Company will continue as
a  going  concern,   which  contemplates  the  realization  of  assets  and  the
satisfaction  of  liabilities  in the normal  course of  business.  The carrying
amounts  of assets  and  liabilities  presented  in the  consolidated  financial
statements do not purport to represent the realizable or settlement  values. The
Company  has  suffered  recurring   operating  losses  and  requires  additional
financing to continue  operations.  For the year ended  December  31, 2004,  the
Company  incurred  a  loss  from  operations  of  $641,709  and  a net  loss  of
$1,796,613;  operating  activities used cash of $111,289;  had a working capital
deficit of $3,970,902 and a stockholders' deficit of $3,882,288.  As a result of
these  factors,  among others,  there is  substantial  doubt about the Company's
ability to continue as a going concern.

         The  Company  will  require   additional   capital  to  fund  operating
requirements.  The  Company  is  exploring  various  alternatives  to raise this
required capital,  including convertible debentures,  private infusion of equity
and various collateralized debt instruments, but there can be no assurances that
the Company will be successful in this regard. To the extent that the Company is
unable to secure the capital necessary to fund its future cash requirements on a
timely basis and/or under acceptable terms and conditions,  the Company may have
to substantially  reduce its operations to a level consistent with its available
working capital resources. The Company may also be required to consider a formal
or informal restructuring or reorganization.

         The Company has financed its working  capital  requirements  during the
past few years principally from the private placement of securities.  Such funds
have  periodically  been  supplemented  with  short-term  borrowings  under  the
Company's  bank line of credit and other private  sources.  The  Company's  bank
lines of credit paid in full and closed in 2004. The Company is actively seeking
an  investment  of additional  capital.  If adequate  funds are not available on
acceptable  terms,  the Company may be unable to continue  operations,  develop,
enhance and market  products,  retain  qualified  personnel,  take  advantage of
future opportunities,  or respond to competitive  pressures,  any of which could
have a material  adverse effect on the Company's  business,  operating  results,
financial condition or liquidity.

Operating Activities

         The Company's  operations  used cash of $111,289  during the year ended
December 31, 2004,  as compared to  utilizing  cash of $998,762  during the year
ended December 31, 2003.  The decrease in cash utilized in operating  activities
in 2004 as  compared to 2003 was  primarily  a result of the Company  suspending
normal  operations,  including  expanding  brands  and  product  offerings,  new
marketing  programs,  and  direct  marketing  to  customers,  due to a  lack  of
operating  working  capital  resources.  At  December  31,  2004,  cash was zero
representing a decrease of $60,339, as compared to $60,339 at December 31, 2003.
The Company had a working capital deficit of $3,970,902 at December 31, 2004, as
compared to a working capital deficit of $2,243,712 at December 31, 2003.

Investing Activities

         During the years ended  December  31,  2004 and 2003,  net cash used in
investing activities was $6,250 and $41,746,  respectively. In 2003, the Company
opened a fitting center in Rancho Mirage,  California  and  capitalized  various
leasehold  improvements.  The fitting  center  never met the  Company's  revenue
projections  and was closed in early 2004.  Due to the  closure,  the  leasehold
improvements  were deemed  impaired at December 31, 2003,  and are  reflected in
loss on disposal of assets in the  consolidated  statement of operations for the
year ended December 31, 2003.

                                       16

<PAGE>

Financing Activities

         During the year ended December 31, 2002, the Company sold $2,100,000 in
the form of convertible  debentures.  The debentures are convertible into common
stock at $0.25 per share for a period of twelve  months  commencing  six  months
after the initial  sale of the  debentures.  The  Company's  patents  secure the
debentures.  For each  share of  common  stock  issued  upon  conversion  of the
debentures,  one common stock  purchase  warrant  will be issued,  which will be
exercisable for a period of eighteen months at $0.10 per share.  The Company has
repaid a total of $900,000 in principal related to these convertible debentures.

         On December  16, 2002,  the  Company's  board of  directors  approved a
modification to the warrants whereby the holder, without the prior conversion of
the debenture,  could exercise the warrant.  As a result of the  modification to
the warrants, in the first quarter of 2003 debenture holders exercised 2,800,000
warrants at $.10 per share  resulting  in the  issuance of  2,800,000  shares of
common stock for $280,000 in gross proceeds.

         On October 7, 2003,  the  Company  completed  the sale of  $250,000  of
convertible  debentures.  The  debentures are  convertible  into common stock at
$0.09  per share for a period of three  months  for each  share of common  stock
issued upon conversion of the debentures, one common stock purchase warrant will
be issued, which will be exercisable for a period of twelve months at $0.045 per
share. This debenture,  including accrued interest, was converted into 2,800,922
shares of common stock during 2003.

         On December 30, 2003,  the Company  completed the sale of $1,000,000 of
convertible   debentures.   The  debentures  are  automatically  converted  into
Preferred  Stock at $1.00 per share within  ninety days of the date of issuance.
Holders of the  preferred  stock shall have the right to convert  the  Preferred
stock into shares of Common Stock of the Company at  conversion  rates of 158:1,
and  161:1.  The  preferred  stock is  convertible  upon  any of the  following:
eighteen  months after the issuance of the preferred  stock, a change in control
or upon the date the Company is no longer  required to file reports or financial
statements with the United States Securities Exchange Commission. If the Company
is not able to convert this  Debenture  into shares of Preferred  within  ninety
days from the date of issuance,  the Debentures shall become immediately due and
payable in full,  with interest  accruing on the face amount at a rate of 5% per
annum.  Currently the  debentures  are in default,  but the holders have made no
demands at this time.

         As of December 31, 2004 the Company has no further borrowings under its
secured line of credit  arrangements  with banks as the arrangements  expired in
2004.

        From January 2004  through  July 2005, a director and  stockholder  has
advanced  approximately  $240,000 to the Company to be used for working capital.
The  Company has  received  these funds and  recorded  them as notes  payable to
stockholder  of  approximately  $166,000 in 2004 and $74,000  during  2005.  The
advances bear interest at 6% per annum and are due on demand.

         On January 14, 2005, the Company secured a commitment for a $10,000,000
private placement  offering whereby a third party investor (the "Investor") will
purchase up to  $10,000,000  of the  Company's  common stock over a  twenty-four
month period to provide the Company with operating  capital.  Funding is subject
to, among other things,  the Company  filing a  registration  statement with the
U.S.  Securities  and Exchange  Commission  with respect to the resale of common
stock sold in the private placement  offering.  The Company is currently working
towards  satisfying all conditions  precedent to closing the funding,  but there
can be no assurance  that the Company will be  successful  in  satisfying  these
terms.

         Funds from these transactions have been used for working capital, sales
and marketing,  tour promotion,  inventory purchases,  accounts payable,  patent
development,  completion of the direct  response  program and general  operating
expenses.

Critical Accounting Policies

         The  Company's   consolidated  financial  statements  are  prepared  in
accordance with accounting  principles  generally accepted in the United States,
which require  management  to make  estimates  and  assumptions  that affect the
reported  amounts  of  assets  and  liabilities  at the  date  of the  financial
statements,  the  disclosure  of  contingent  assets  and  liabilities,  and the
reported  amounts of revenues and expenses during the reporting  period.  Actual
results could differ from those  estimates.  We believe the  following  critical
accounting  policies affect our more significant  estimates and assumptions used
in the preparation of our  consolidated  financial  statements.  Our significant
estimates and assumptions are reviewed and any required adjustments are recorded
on a quarterly basis.

Allowance for Doubtful Accounts

         The Company  performs  ongoing credit  evaluations of its customers and
generally  does not require  collateral.  The  Company  regularly  monitors  its
customer collections and payments and maintains a provision for estimated credit
losses based upon the Company's historical  experience and any specific customer
collection  issues  that have been  identified.  While such  credit  losses have
historically been within the expectations and the provisions  established by the
Company,  there can be no assurance that the Company will continue to experience
the same credit loss rates that have been experienced in the past.

                                       17

<PAGE>

Inventories

         Inventories consist of materials,  labor and manufacturing overhead and
are  stated  at lower of cost  (first-in,  first-out)  or  market.  The  Company
periodically  reviews  its  inventory  to  evaluate  it for excess and  obsolete
products.  The difference between the market value of products and their cost is
either  written off as a direct  charge to cost of goods sold or included in the
reserve allowance.  The loss from the liquidation or destruction of obsolete and
excess  inventory is applied against the reserve  allowance.  Once  established,
write-downs of  inventories  are  considered  permanent  adjustments to the cost
basis of the obsolete or excess inventories.

Long-Lived Assets

         In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 144,  "Accounting for the Impairment or Disposal of Long-Lived  Assets," the
Company  evaluates  the  carrying  value of  long-lived  assets  for  impairment
whenever events or changes in  circumstances  indicate that such carrying values
may not be  recoverable.  Under SFAS No. 144, the Company  estimates  the future
undiscounted  cash  flows  derived  from an asset  to  assess  whether  or not a
potential  impairment exists when events or circumstances  indicate the carrying
value of a long-lived  asset may differ.  An impairment  loss is recognized when
the  undiscounted  future  cash  flows are less than its  carrying  amount.  The
Company uses its best judgment based on the most current facts and circumstances
surrounding its business when applying these  impairment  rules to determine the
timing of the  impairment  test,  the  undiscounted  cash  flows  used to assess
impairments  and the fair  value of a  potentially  impaired  asset.  Changes in
assumptions used could have a significant impact on the Company's  assessment of
recoverability.  At December 31, 2004 the Company  determined that no impairment
loss was  necessary.  There can be no  assurance,  however,  that demand for the
Company's products will continue, which could result in impairment of long-lived
assets in the future.

Revenue Recognition

         The Company  recognizes revenue when products are shipped to a customer
and the risks and rewards of ownership  and title have passed based on the terms
of sale. The Company records a provision for sales returns and claims based upon
historical experience. Actual returns and claims in any future period may differ
from the Company's estimates.

         Amounts billed to customers for shipping and handling fees are included
in net sales,  and freight costs incurred  related to these fees are included in
cost of goods sold in accordance  with Emerging Issues Task Force ("EITF") Issue
No.
00-01, "Accounting for Shipping and Handling Fees and Costs."

         Licensing  revenue is  recognized  when earned per the terms of royalty
agreements. Occasionally, licensees pay royalties in advance, which are recorded
as deferred  licensing revenue in the accompanying  consolidated  balance sheets
until such time they are earned.

Advertising

         The Company  expenses  advertising  costs as incurred,  except  certain
direct-response   advertising  costs.   Direct-response  advertising  costs  are
capitalized as incurred and then expensed when the related  advertising  program
is aired.

Recent Accounting Pronouncements

         In May 2003,  the FASB  issued SFAS No.  150,  "Accounting  for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." SFAS
No. 150 establishes  standards for the classification and measurement of certain
financial  instruments with characteristics of both liabilities and equity. SFAS
No. 150 also includes required disclosures for financial  instruments within its
scope. For the Company,  SFAS No. 150 was effective for instruments entered into
or modified  after May 31, 2003 and otherwise will be effective as of January 1,
2004,  except  for  mandatory  redeemable  financial  instruments.  For  certain
mandatory redeemable financial  instruments,  SFAS No. 150 will be effective for
the  Company  on  January  1,  2005.  The  Company  currently  does not have any
financial instruments that are within the scope of SFAS No. 150.

         In November 2004, the FASB issued SFAS No. 151,  "Inventory  Costs,  an
amendment of ARB No. 43, Chapter 4." The amendments made by SFAS No. 151 clarify
that abnormal amounts of facility expense,  freight,  handling costs, and wasted
materials (spoilage) should be recognized as current-period  charges and require
the allocation of fixed  production  overheads to inventory  based on the normal
capacity of the production  facilities.  The guidance is effective for inventory
costs incurred during fiscal years beginning after June 15, 2005. The Company is
in the process of  evaluating  whether the  adoption of SFAS No. 151 will have a
significant  impact on the Company's  overall results of operations or financial
position.

         In  December  2004,  the FASB  issued  SFAS  No.  123  (revised  2004),
"Share-Based  Payment,"  to  provide  investors  and  other  users of  financial
statements  with more complete and neutral  financial  information  by requiring
that the  compensation  cost relating to  share-based  payment  transactions  be
recognized in financial statements. That cost will be measured based on the fair
value of the equity or liability instruments issued. Statement No. 123(R) covers
a wide range of share-based  compensation  arrangements including share options,
restricted share plans, performance-based awards, share appreciation rights, and
employee  share  purchase  plans.  SFAS No.  123(R)  replaces  SFAS No.  123 and
supersedes  APB Opinion No. 25.  SFAS No.  123,  as  originally  issued in 1995,
established   as  preferable  a   fair-value-based   method  of  accounting  for
share-based  payment  transactions  with  employees.   However,  that  statement
permitted entities the option of continuing to apply the guidance in APB Opinion
No. 25, as long as the  footnotes to  financial  statements  disclosed  what net
income would have been had the preferable fair-value-based method been used. The
Company  will be  required  to apply  SFAS No.  123(R)  as of the  first  annual
reporting  period that begins after  December  15,  2005.  The Company is in the
process of  evaluating  whether  the  adoption  of SFAS No.  123(R)  will have a
significant  impact on the Company's  overall results of operations or financial
position.

                                       18

<PAGE>

         In  December  2004,  the  FASB  issued  SFAS  No.  153,  "Exchanges  of
Nonmonetary  Assets  - an  amendment  of APB  Opinion  No.  29,  Accounting  for
Nonmonetary Transactions." This statement amends APB Opinion No. 29 to eliminate
the  exceptions  for  nonmonetary  exchanges  of similar  productive  assets and
replaces it with a general exception for exchanges of nonmonetary assets that do
not have commercial  substance.  A nonmonetary exchange has commercial substance
if the future cash flows of the entity are expected to change significantly as a
result of the  exchange.  The  provisions  for SFAS No.  153 are  effective  for
nonmonetary  asset  exchanges  incurred during fiscal years beginning after June
15, 2005. The Company is currently  evaluating  the effect,  if any, of adopting
SFAS No. 153.

                                       19







<PAGE>

ITEM 7: FINANCIAL STATEMENTS

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

         Report of Independent Registered Public Accounting Firm...........F-1

         Consolidated Balance Sheets at December 31, 2004 and 2003.........F-2

         Consolidated Statements of Operations
             for the years ended December 31, 2004 and 2003................F-3

         Consolidated Statements of Stockholders' Deficit
             for the years ended December 31, 2004 and 2003................F-4

         Consolidated Statements of Cash Flows
             for the years ended December 31, 2004 and 2003................F-5

         Notes to Consolidated Financial Statements........................F-7

                                       20

<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
GolfGear International, Inc.:

We have  audited  the  accompanying  consolidated  balance  sheets  of  GolfGear
International, Inc. and subsidiaries (the "Company") as of December 31, 2004 and
2003,  and the related  consolidated  statements  of  operations,  stockholders'
deficit and cash flows for the years then ended.  These  consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in  all  material   respects,   the  financial   position  of  GolfGear
International,  Inc. and  subsidiaries  as of December 31, 2004 and 2003 and the
results of their  operations  and their cash flows for the years then ended,  in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has incurred recurring losses and
requires additional  financing to continue operations.  These conditions,  among
others,  raise  substantial  doubt about the Company's  ability to continue as a
going concern.  Management's plans in regard to these matters are also described
in Note 2. The consolidated  financial statements do not include any adjustments
relating to the  recoverability and classification of assets carrying amounts or
the amount and  classification of liabilities that may result should the Company
be unable to continue as a going concern.


CORBIN & COMPANY, LLP

Irvine, California
August 1, 2005


                                      F-1

<PAGE>

                  GOLFGEAR INTERNATIONAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                           2004            2003
                                                                       ------------    ------------
<S>                                                                    <C>             <C>
ASSETS
Current assets:
     Cash                                                              $         --    $     60,339
     Accounts receivable, net of allowance for doubtful accounts
         of $37,784 and $49,713, respectively                                11,189         131,395
     Due from stockholder for convertible debenture financing                    --         100,000
     Inventories                                                                 --         169,379
     Prepaid expenses                                                            --          74,995
                                                                       ------------    ------------
Total current assets                                                         11,189         536,108

Property and equipment, net                                                  19,552          34,049
Other assets:
     Intangible assets, net                                                  61,938          71,591
     Deposits                                                                 7,124           7,770
                                                                       ------------    ------------
Total assets                                                           $     99,803    $    649,518
                                                                       ============    ============

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
     Accounts payable and accrued expenses                             $  1,189,229    $    900,873
     Accrued product warranties                                              90,713          91,683
     Accrued interest payable                                               302,549         172,339
     Bank lines of credit                                                        --         109,223
     Notes payable                                                           33,177          33,177
     Notes payable to stockholder                                           166,423              --
     Convertible debentures due to related parties, net of
         debt discount of $977,788 at December 31, 2003                   1,000,000          22,222
     Convertible debentures                                               1,200,000       1,400,000
     Deferred licensing revenue                                                  --          50,303
                                                                       ------------    ------------
Total current liabilities                                                 3,982,091       2,779,820
                                                                       ------------    ------------

Commitments and contingencies

Stockholders' deficit:
     Preferred stock, $.001 par value; 10,000,000 shares authorized;
         none issued and outstanding                                             --              --
     Common stock, $.001 par value; 50,000,000 shares authorized;
         40,445,076 shares issued and outstanding                            40,445          40,445
     Additional paid-in capital                                          14,275,837      14,275,837
     Deferred compensation                                                  (22,314)        (66,941)
     Accumulated deficit                                                (18,176,256)    (16,379,643)
                                                                       ------------    ------------
Total stockholders' deficit                                              (3,882,288)     (2,130,302)
                                                                       ------------    ------------
Total liabilities and stockholders' deficit                            $     99,803    $    649,518
                                                                       ============    ============
</TABLE>

         See report of independent registered public accounting firm and
                   notes to consolidated financial statements

                                      F-2

<PAGE>

                  GOLFGEAR INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     YEARS ENDED DECEMBER 31, 2004 and 2003

<TABLE>
<CAPTION>
                                                                2004            2003
                                                            ------------    ------------
<S>                                                         <C>             <C>
Net sales                                                   $    729,863    $  1,973,135
Cost of goods sold                                               266,348       1,411,231
                                                            ------------    ------------
     Gross profit                                                463,515         561,904
Operating expenses:
     Selling and marketing                                       107,668       1,061,355
     Tour and pro contracts                                       72,320          75,760
     General and administrative                                  900,799       1,795,546
     Depreciation and amortization                                24,437          58,274
                                                            ------------    ------------
        Total operating expenses                               1,105,224       2,990,935
                                                            ------------    ------------
Loss from operations                                            (641,709)     (2,429,031)

Other income (expense):
     Interest income                                                  --          17,603
     Interest expense                                         (1,147,364)     (1,667,801)
     Loss on settlement of stock purchase note receivable             --        (150,000)
     Loss on disposal of assets                                       --         (87,587)
     Gain on settlement of accounts payable                           --         131,691
     Other, net                                                   (5,140)         29,926
                                                            ------------    ------------
        Total expense, net                                    (1,152,504)     (1,726,168)
                                                            ------------    ------------
Loss before provison for income taxes                         (1,794,213)     (4,155,199)

Provision for income taxes                                         2,400           2,400
                                                            ------------    ------------
Net loss                                                    $ (1,796,613)   $ (4,157,599)
                                                            ============    ============
Loss per common share - basic and diluted                   $      (0.04)   $      (0.11)
                                                            ============    ============
Weighted average number of common shares outstanding -
     basic and diluted                                        40,445,076      37,222,102
                                                            ============    ============
</TABLE>

         See report of independent registered public accounting firm and
                   notes to consolidated financial statements

                                      F-3

<PAGE>

                  GOLFGEAR INTERNATIONAL, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                                         Common Stock
                                           Common Stock        Additional     Deferred   Purchase Note  Accumulated
                                         Shares    Amount   Paid-in Capital Compensation   Receivable      Deficit          Total
------------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>         <C>       <C>            <C>           <C>           <C>            <C>
Balance, January 1, 2003               34,794,154  $ 34,794  $ 12,748,905   $ (100,409)   $ (945,164)   $ (12,222,044) $   (483,918)
Common stock issued for
    exercise of warrants                2,800,000     2,800       277,200                                                   280,000
Common stock issued for
    exercise of options                    50,000        50           450                                                       500
Interest income on stock
    purchase note                                                                            (15,234)                       (15,234)
Convertible debt converted to
    common stock                        2,800,922     2,801       249,282                                                   252,083
Beneficial conversion feature
    of convertible debentures                                   1,000,000                                                 1,000,000
Amortization of deferred
    compensation                                                                33,468                                       33,468
Settlement of stock
    purchase note                                                                            960,398                        960,398
Net loss                                                                                                   (4,157,599)   (4,157,599)
                                       ----------  --------  ------------    ---------       -------    -------------  ------------
Balance, December 31, 2003             40,445,076    40,445    14,275,837      (66,941)           --      (16,379,643)   (2,130,302)
Amortization of deferred
    compensation                                                                44,627                                       44,627
Net loss                                                                                                   (1,796,613)   (1,796,613)
                                       ----------  --------  ------------    ---------       -------    -------------  ------------
Balance, December 31, 2004             40,445,076  $ 40,445  $ 14,275,837    $ (22,314)      $    --    $ (18,176,256) $ (3,882,288)
                                       ==========  ========  ============    =========       =======    =============  ============
</TABLE>

         See report of independent registered public accounting firm and
                   notes to consolidated financial statements

                                      F-4

<PAGE>

                 GOLFGEAR INTERNATIONAL, INC., AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                   2004           2003
                                                               -----------    -----------
<S>                                                            <C>            <C>
Cash flows from operating activities:
     Net loss                                                  $(1,796,613)   $(4,157,599)
     Adjustments to reconcile net loss to net cash used in
         operating activities:
     Amortization of debt discounts                                977,778      1,181,961
     Amortization of deferred compensation                          44,627         33,468
     Depreciation and amortization                                  24,437         58,274
     Accrued interest on stock purchase note receivable                 --        (15,234)
     Write off of deferred advertising costs                            --        602,364
     Amortization of deferred financing costs                           --        270,193
     Provision for bad debts                                            --         31,668
     Gain on settlement of accounts payable                             --       (131,691)
     Loss on settlement of stock purchase note receivable               --        150,000
     Loss on disposal of assets                                      5,963         87,587
     Changes in operating assets and liabilities:
     (Increase) decrease in:
         Accounts receivable                                       120,206        139,153
         Inventories                                                69,379        323,525
         Prepaid expenses                                           74,995        (16,942)
         Deferred advertising costs and deposits                       646           (600)
     Increase (decrease) in:
         Accounts payable and accrued expenses                     288,356        394,544
         Accrued product warranties                                   (970)       (24,419)
         Accrued interest payable                                  130,210         99,683
         Deferred licensing revenue                                (50,303)       (24,697)
                                                               -----------    -----------
     Net cash used in operating activities                        (111,289)      (998,762)
                                                               -----------    -----------
Cash flows used in investing activities:
     Purchases of property and equipment                            (6,250)       (41,746)
                                                               -----------    -----------
Cash flows from financing activities:
     Proceeds from execise of options and warrants                      --        280,000
     Proceeds from sale of convertible debentures                  100,000      1,150,000
     Collection of common stock purchase note receivable                --        225,000
     Repayment of convertible debt                                (100,000)      (700,000)
     Repayment of notes payable                                         --        (10,000)
     Proceeds from notes payable to stockholder                    166,423             --
     (Repayments) borrowings under bank lines of credit, net      (109,223)        38,329
     Proceeds from exercise of stock options                            --            500
                                                               -----------    -----------
     Net cash provided by financing activities                      57,200        983,829
                                                               -----------    -----------
Net decrease in cash                                               (60,339)       (56,679)

Cash, beginning of year                                             60,339        117,018
                                                               -----------    -----------
Cash, end of year                                              $        --    $    60,339
                                                               ===========    ===========
</TABLE>

         See report of independent registered public accounting firm and
                   notes to consolidated financial statements

                                      F-5

<PAGE>

                 GOLFGEAR INTERNATIONAL, INC., AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
(Continued)                                                                  2004         2003
                                                                          ---------   ----------
<S>                                                                      <C>          <C>
Supplemental disclosures of cash flow information:
       Cash paid for interest                                             $  39,376   $  110,444
                                                                          =========   ==========
       Cash paid for income taxes                                         $      --   $       --
                                                                          =========   ==========
Supplemental disclosure of non-cash investing and financing activities:
       Settlement of convertible debenture with transfer of inventories   $ 100,000   $       --
                                                                          =========   ==========
       Conversion of debt to common stock                                 $      --   $  252,083
                                                                          =========   ==========
       Settlement of stock purchase not receivale for transfer of
            accounts payable, notes payable and accrued interest          $      --   $  585,398
                                                                          =========   ==========
       Due from stockholder for convertible debenture financing           $      --   $  100,000
                                                                          =========   ==========
       Beneficial conversion feature related to convertible debentures    $      --   $1,000,000
                                                                          =========   ==========
</TABLE>

         See report of independent registered public accounting firm and
                   notes to consolidated financial statements

                                      F-6

<PAGE>

                     GOLFGEAR INTERNATIONAL AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

1.       ORGANIZATION AND DESCRIPTION OF BUSINESS

         GolfGear  International,   Inc.  and  its  subsidiaries  (collectively,
         "GolfGear" or the "Company")  designs,  develops and markets golf clubs
         and related golf products.

2.       LIQUIDITY AND MANAGEMENT'S PLANS

         During  the  third  quarter  of  2004,  the  Company  suspended  normal
         operations,  including  expanding  brands and  product  offerings,  new
         marketing programs, and direct marketing to customers, due to a lack of
         operating working capital resources.  To the extent that the Company is
         unable to secure financing in 2005, the Company's liquidity and ability
         to continue to conduct operations will be impaired.

         The accompanying  consolidated  financial statements have been prepared
         assuming  that the  Company  will  continue as a going  concern,  which
         contemplates   the  realization  of  assets  and  the  satisfaction  of
         liabilities  in the normal  course of business.  Since  inception,  the
         Company has incurred  recurring losses and requires  additional capital
         to  finance  continuing  operations.  The  Company  incurred  losses of
         $1,796,613  and  $4,157,599  for the years ended  December 31, 2004 and
         2003, respectively.  As of December 31, 2004, the Company has a working
         capital   deficit  of  $3,970,902  and  a   stockholders'   deficit  of
         $3,882,288.  These factors, among others, raise substantial doubt about
         the Company's ability to continue as a going concern.  The accompanying
         consolidated  financial  statements  do  not  include  any  adjustments
         relating to the  recoverability  and  classification  of asset carrying
         amounts or the amount and classification of liabilities that may result
         should the Company be unable to continue as a going concern.

         The Company is attempting to increase  revenues  through various means,
         including  expanding  brands  and  product  offerings,   new  marketing
         programs,  and possibly direct  marketing to customers,  subject to the
         availability of operating working capital resources. To the extent that
         the Company is unable to increase  revenues in the next few years,  the
         Company's  liquidity and ability to continue to conduct  operations may
         be impaired.

         The  Company  will  require   additional   capital  to  fund  operating
         requirements.  The Company is exploring  various  alternatives to raise
         this  required  capital,  including  convertible  debentures,   private
         infusion of equity and various  collateralized  debt  instruments,  but
         there can be no assurance  that the Company will be  successful in this
         regard.  To the  extent the  Company  is unable to secure  the  capital
         necessary to fund its future cash requirements on a timely basis and/or
         under  acceptable  terms  and  conditions,  the  Company  may  have  to
         substantially  reduce its  operations  to a level  consistent  with its
         available working capital  resources.  The Company may also be required
         to consider a formal or informal restructuring or reorganization.

         As  discussed  in Note 15, the Company has secured a  commitment  for a
         $10,000,000  private placement  offering whereby a third party investor
         will purchase up to  $10,000,000  of the Company's  common stock over a
         twenty-four month period to provide the Company with operating capital.
         Funding is  subject  to,  among  other  things,  the  Company  filing a
         registration  statement with the United States  Securities and Exchange
         Commission  with  respect  to the  resale of common  stock  sold in the
         private  placement  offering.  The Company is currently working towards
         satisfying all conditions  precedent to closing the funding,  but there
         can be no assurance  that the Company will be  successful in satisfying
         these terms.

3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Principles of Consolidation

         The accompanying consolidated financial statements include the accounts
         of the Company and its wholly owned  subsidiaries,  GGI, Inc.,  GearFit
         Golf Company,  Pacific Golf Holdings, Inc., Bel Air Players Group, Inc.
         and Leading Edge  Acquisition,  Inc. All intercompany  transactions and
         balances have been eliminated in consolidation.

                                      F-7

<PAGE>

                     GOLFGEAR INTERNATIONAL AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

         Use of Estimates

         The  preparation of financial  statements in conformity with accounting
         principles  generally accepted in the United States of America requires
         management to make estimates and  assumptions  that affect the reported
         amounts of assets and liabilities,  disclosure of contingent assets and
         liabilities  at the date of the financial  statements  and the reported
         amounts  of  revenues  and  expenses   during  the  reporting   period.
         Significant  estimates  made  by  management  are,  among  others,  the
         realizability of accounts receivable and inventories, recoverability of
         long-lived assets, and valuation of deferred tax assets. Actual results
         could differ from those estimates.

         Concentration of Credit Risk

         Cash

         The  Company  maintains  its cash in bank  deposit  accounts  which are
         insured by the Federal  Deposit  Insurance  Corporation  ("FDIC") up to
         $100,000.  As of  December  31,  2004,  the  Company had no deposits in
         excess of FDIC limits.

         Accounts Receivable

         The Company  performs  ongoing credit  evaluations of its customers and
         generally does not require  collateral.  The Company regularly monitors
         its customer  collections  and payments and  maintains a provision  for
         estimated credit losses based upon the Company's historical  experience
         and any specific customer  collection issues that have been identified.
         While such credit losses have historically been within the expectations
         and  the  provisions  established  by  the  Company,  there  can  be no
         assurance  that the Company will continue to experience the same credit
         loss rates that have been experienced in the past.

         Inventories

         Inventories consist of materials,  labor and manufacturing overhead and
         are  stated  at lower of cost  (first-in,  first-out)  or  market.  The
         Company  periodically  reviews its  inventory to evaluate it for excess
         and  obsolete  products.  The  difference  between the market  value of
         products  and their cost is either  written  off as a direct  charge to
         cost of goods sold or included in the reserve allowance.  The loss from
         the  liquidation  or  destruction  of obsolete and excess  inventory is
         applied against the reserve allowance. Once established, write-downs of
         inventories are considered  permanent  adjustments to the cost basis of
         the obsolete or excess inventories.

         Property and Equipment

         Property and equipment are stated at cost.  Depreciation is computed on
         the straight-line  method over the estimated useful lives of the assets
         that  range  from  five to  seven  years.  Leasehold  improvements  are
         amortized on the straight-line method over the term of the lease or the
         useful life of the asset, whichever is shorter. Maintenance and repairs
         are charged to expense as  incurred.  Renewals  and  improvements  of a
         major  nature  are  capitalized.  At the  time of  retirement  or other
         disposition  of  property  and  equipment,  the  cost  and  accumulated
         depreciation  are removed from the accounts and any resulting  gains or
         losses are reflected in operations.


                                      F-8

<PAGE>

                     GOLFGEAR INTERNATIONAL AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

         Intangible Assets

         Intangible  assets include the cost of patents and trademarks,  and are
         being amortized on the straight-line  basis over their estimated useful
         lives, which vary from two to seventeen years.

         Long-Lived Assets

         In  accordance  with SFAS No. 144,  "Accounting  for the  Impairment or
         Disposal of  Long-Lived  Assets,"  the Company  evaluates  the carrying
         value of long-lived assets for impairment  whenever events or change in
         circumstances   indicate   that  such   carrying   values  may  not  be
         recoverable.  Under SFAS No.  144,  the  Company  estimates  the future
         undiscounted  cash flows derived from an asset to assess whether or not
         a potential impairment exists when events or circumstances indicate the
         carrying value of a long-lived asset may differ.  An impairment loss is
         recognized  when the  undiscounted  future cash flows are less than its
         carrying  amount.  The Company uses its best judgment based on the most
         current facts and circumstances  surrounding its business when applying
         these  impairment rules to determine the timing of the impairment test,
         the  undiscounted  cash flows used to assess  impairments  and the fair
         value of a potentially  impaired  asset.  Changes in  assumptions  used
         could  have  a  significant  impact  on  the  Company's  assessment  of
         recoverability.  At December 31, 2004, the Company  determined  that no
         impairment loss was necessary. There can be no assurance, however, that
         demand for the Company's products will continue,  which could result in
         impairment of long-lived assets in the future.

         Deferred Financing Costs

         Deferred  financing  costs  represent costs incurred in connection with
         the issuance of the convertible  debentures.  Deferred  financing costs
         are being amortized over the life of the convertible  debentures on the
         straight-line basis, which approximates the effective interest method.

         Beneficial Conversion Feature

         The  convertible  feature of certain  convertible  notes provides for a
         rate of  conversion  that is below  market  value (see Notes 9 and 10).
         Such  feature is normally  characterized  as a  "beneficial  conversion
         feature" ("BCF"). Pursuant to Emerging Issues Task Force ("EITF") Issue
         No.  98-5,  "Accounting  For  Convertible  Securities  with  Beneficial
         Conversion  Features or Contingently  Adjustable  Conversion Ratio" and
         EITF Issue No.  00-27,  "Application  of EITF Issue No. 98-5 To Certain
         Convertible  Instruments,"  the relative  fair values of the BCF's have
         been recorded as a discount to the face amount of the  respective  debt
         instrument.  The Company amortizes the discount using the straight-line
         method,  which  approximates  the effective  interest  method,  through
         maturity of such instruments. The Company will record the corresponding
         unamortized  debt  discount  related  to the BCF and  the  warrants  as
         interest  expense when the related  instrument  is  converted  into the
         Company's common stock.

         Fair Value of Financial Instruments

         The  Company's   financial   instruments   consist  of  cash,  accounts
         receivable, due from/to stockholder,  payables, accrued expenses, notes
         payable and  convertible  debentures.  The carrying  value for all such
         instruments,   except  the  convertible   debentures  and  due  from/to
         stockholder, considering the terms, approximates fair value at December
         31, 2004. The fair value of due from/to stockholder is not determinable
         as  the  transaction  is  with a  related  party.  The  fair  value  of
         convertible  debentures is not  determinable as equivalent  instruments
         could not be located.

         Revenue Recognition

         Revenue is  recognized  in accordance  with Staff  Accounting  Bulletin
         ("SAB") No. 101,  "Revenue  Recognition  in Financial  Statements",  as
         revised by SAB 104. The Company  recognizes  revenue when  products are
         shipped to a customer and the risks and rewards of ownership  and title
         have passed based on the terms of sale. The Company records a provision
         for sales returns and claims based upon historical  experience.  Actual
         returns and claims in any future  period may differ from the  Company's
         estimates.

                                      F-9

<PAGE>

                     GOLFGEAR INTERNATIONAL AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

         Amounts billed to customers for shipping and handling fees are included
         in net sales,  and  freight  costs  incurred  related to these fees are
         included in cost of goods sold in accordance with EITF Issue No. 00-01,
         "Accounting for Shipping and Handling Fees and Costs."

         Licensing  revenue is  recognized  when earned per the terms of royalty
         agreements. Occasionally, licensees pay royalties in advance, which are
         recorded as deferred licensing revenue in the accompanying consolidated
         balance sheets until such time they are earned.

         Product Warranties

         The Company generally provides a lifetime warranty against defects. The
         Company maintains a reserve for its product warranty liability based on
         estimates  calculated  using  historical  warranty  experience.   While
         warranty   costs  have   historically   been   within   the   Company's
         expectations,  there can be no assurance that the Company will continue
         to  experience  the same  warranty  return  rates or repair costs as in
         prior years.  A  significant  increase in product  return  rates,  or a
         significant  increase  in the costs to  repair  product,  could  have a
         material adverse impact on the Company's operating results.

         Warranty  liability  activity for the years ended December 31, 2004 and
         2003 was as follows:

                                              2004         2003
                                           ---------    ---------
         Balance as of January 1           $  91,683    $ 116,102
         Provisions for warranty expense       4,632       20,540
         Warranty claims and expenses         (5,602)     (44,959)
                                           ---------    ---------
         Balance as of December 31,        $  90,713    $  91,683
                                           =========    =========

         Advertising

         The Company  expenses  advertising  costs as incurred,  except  certain
         direct-response  advertising costs.  Direct-response  advertising costs
         are  capitalized  as  incurred  and  then  expensed  when  the  related
         advertising  program  is  aired.   Direct-response   advertising  costs
         capitalized  during the year ended  December 31, 2003 was $600.  During
         the year ended December 31, 2003, the direct-advertising program aired,
         and  accordingly,  all costs  related to the program  were  expensed in
         2003.

         Advertising  costs for the years ended  December  31, 2004 and 2003 was
         $28,181 and $794,947  (including  $602,364  related to  direct-response
         advertising  costs),  respectively,  which is  included  in selling and
         marketing  expenses  in the  accompanying  consolidated  statements  of
         operations.

         Income Taxes

         The Company  accounts for income taxes in accordance with SFAS No. 109,
         "Accounting  for Income  Taxes."  Under SFAS No. 109,  income taxes are
         recognized  for the  amount  of taxes  payable  or  refundable  for the
         current  year and deferred  tax  liabilities  and assets for future tax
         consequences of transactions that have been recognized in the Company's
         financial  statements or tax returns. A valuation allowance is provided
         when it is more  likely  than  not  that  some  portion  or the  entire
         deferred tax asset will not be realized.

         Stock-Based Compensation

         The Company  periodically  issues common stock options and common stock
         purchase warrants to employees and non-employees in non-capital raising
         transactions for services rendered and to be rendered, and as financing
         costs.

                                      F-10

<PAGE>

                     GOLFGEAR INTERNATIONAL AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

         Stock-based  awards to  non-employees  are accounted for using the fair
         value  method  in  accordance  with  SFAS  No.  123,   "Accounting  for
         Stock-Based  Compensation,"  and EITF Issue No. 96-18,  "Accounting for
         Equity  Instruments  that  are  Issued  to  Other  Than  Employees  for
         Acquiring,  or in  Conjunction  with Selling  Goods or  Services."  All
         transactions in which goods or services are the consideration  received
         for the issuance of equity  instruments  are accounted for based on the
         fair  value of the  consideration  received  or the  fair  value of the
         equity instrument issued,  whichever is more reliably  measurable.  The
         measurement  date  used to  determine  the  fair  value  of the  equity
         instrument  issued is the earlier of the date on which the  third-party
         performance  is  complete  or the  date on which  it is  probable  that
         performance will occur.

         In December 2002,  the Financial  Accounting  Standards  Board ("FASB")
         issued     SFAS    No.     148,     "Accounting     for     Stock-Based
         Compensation--Transition  and  Disclosure,"  effective for fiscal years
         ending after  December  15,  2002.  SFAS No. 148 amends SFAS No. 123 to
         provide  alternative  methods of transition to the fair value method of
         accounting for  stock-based  employee  compensation.  SFAS No. 148 also
         amends the disclosure  provisions of SFAS No. 123 to require disclosure
         in the summary of significant  accounting policies of the effects of an
         entity's  accounting  policy  with  respect  to  stock-based   employee
         compensation  on reported  net income and  earnings per share in annual
         and interim financial statements.  SFAS No. 148 does not amend SFAS No.
         123 to require  companies  to account  for their  employee  stock-based
         awards  using the fair value  method.  The  disclosure  provisions  are
         required,   however,   for  all  companies  with  stock-based  employee
         compensation,  regardless of whether they utilize the fair value method
         of accounting  described in SFAS No. 123 or the intrinsic  value method
         described in Accounting Principles Board ("APB") Opinion No.
         25, "Accounting for Stock Issued to Employees."

         The Company  accounts for  stock-based  awards to  employees  using the
         intrinsic  value  method in  accordance  with APB  Opinion  No.  25. As
         permitted  by SFAS No. 123, as amended by SFAS No. 148, the Company has
         chosen to continue to account for its employee stock-based compensation
         plan under APB  Opinion No. 25 and  provide  the  expanded  disclosures
         specified  in SFAS No. 123, as amended by SFAS No.  148.  Had  employee
         stock  based  compensation  cost been  determined  using the fair value
         method,  the  Company's  net loss and loss per  share  would  have been
         adjusted to the pro forma amounts indicated below:

                                                For the Years Ended December 31,
                                                     2004           2003
                                                 ------------    -----------
Net loss as reported                             $ (1,796,613)   $(4,157,599)
Deduct:  Total stock-based employee
         compensation under fair value
         based method for all awards, net
         of related tax effects                            --       (148,334)
                                                 ------------    -----------
Pro forma net loss                               $ (1,796,613)   $(4,305,933)
                                                 ============    ===========

Basic and diluted loss per share - as reported   $      (0.04)   $     (0.11)
                                                 ============    ===========

Basic and diluted loss per share - pro forma     $      (0.04)   $     (0.12)
                                                 ============    ===========

         Basic and Diluted Loss Per Share

         Basic  earnings  (loss)  per  common  share are  computed  based on the
         weighted average number of shares  outstanding for the period.  Diluted
         earnings  (loss) per share is computed by dividing net income (loss) by
         the weighted average shares outstanding assuming all dilutive potential
         common shares are issued.  Basic and diluted loss per share is the same
         as the  effect  of stock  options  and  warrants  on loss per share are
         anti-dilutive  and thus not  included  in the  diluted  loss per  share
         calculation.  However,  the impact under the  treasury  stock method of
         dilutive  stock options and warrants would have been zero and 2,800,000
         incremental  shares for the years  ended  December  31,  2004 and 2003,
         respectively.

         Segment and Geographic Information

         The Company  operates in one  business  segment.  The Company  sells to
         customers in the United States,  and the Far East.  Sales for the years
         ended  December  31, 2004 and 2003 to  customers  internationally  were
         $30,732 and $75,985,  respectively.  Sales for the years ended December
         31, 2004 and 2003 to customers in the United  States were  $699,131 and
         $1,897,150, respectively.

                                      F-11

<PAGE>

                     GOLFGEAR INTERNATIONAL AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

         Concentrations of Major Customers

         During the year ended  December 31, 2004,  one customer  accounted  for
         27.3% of net sales.  At December 31, 2004,  one customer  accounted for
         90% of net  accounts  receivable.  During the year ended  December  31,
         2003,  one  customer  accounted  for 39% of net sales.  At December 31,
         2003, one such customer accounted for 86% of net accounts receivable.

         Supplier Concentration

         The Company  relies on several  suppliers  for club heads and  graphite
         shafts.  The Company does not have binding  long-term  supply contracts
         with any of its suppliers. Therefore, the Company's success will depend
         on maintaining  its  relationships  with these suppliers and developing
         relationships  with new suppliers.  Any significant delay or disruption
         in the supply of club heads or graphite shafts caused by manufacturers'
         production limitations,  material shortages,  quality control problems,
         labor   interruptions,   shipping   problems  or  other  reasons  would
         materially  adversely  affect  the  Company's  business.  The delays in
         receiving  such  supplies  from  alternative  sources  would  cause the
         Company  to  sustain  at least  temporary  shortages  of  materials  to
         assemble its clubs,  which could have a material  adverse effect on the
         Company's business, operating results and financial condition.

         New Accounting Pronouncements

         In November 2004, the FASB issued SFAS No. 151,  "Inventory  Costs,  an
         amendment of ARB No. 43,  Chapter 4." The  amendments  made by SFAS No.
         151  clarify  that  abnormal  amounts  of  facility  expense,  freight,
         handling costs, and wasted materials (spoilage) should be recognized as
         current-period  charges and require the allocation of fixed  production
         overheads to inventory  based on the normal  capacity of the production
         facilities.  The guidance is effective  for  inventory  costs  incurred
         during fiscal years  beginning  after June 15, 2005.  The Company is in
         the process of  evaluating  whether  the  adoption of SFAS No. 151 will
         have  a  significant   impact  on  the  Company's  overall  results  of
         operations or financial position.

         In December 2004, the FASB issued SFAS No. 123 (revised  2004),  ("SFAS
         No.  123(R)")  "Share-Based  Payment," to provide  investors  and other
         users of financial  statements with more complete and neutral financial
         information  by  requiring  that  the  compensation  cost  relating  to
         share-based payment transactions be recognized in financial statements.
         That cost will be  measured  based on the fair  value of the  equity or
         liability instruments issued.  Statement No. 123(R) covers a wide range
         of  share-based  compensation  arrangements  including  share  options,
         restricted share plans,  performance-based  awards,  share appreciation
         rights,  and employee share purchase  plans.  SFAS No. 123(R)  replaces
         SFAS No. 123 and  supersedes  APB  Opinion  No. 25.  SFAS No.  123,  as
         originally issued in 1995, established as preferable a fair-value-based
         method  of  accounting  for  share-based   payment   transactions  with
         employees.  However,  that statement  permitted  entities the option of
         continuing  to apply the guidance in APB Opinion No. 25, as long as the
         footnotes to financial  statements disclosed what net income would have
         been had the preferable  fair-value-based method

                                      F-12

<PAGE>

                     GOLFGEAR INTERNATIONAL AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

         been used.  The Company will be required to apply SFAS No. 123(R) as of
         January 1, 2006.  The Company is in the process of  evaluating  whether
         the adoption of SFAS No. 123(R) will have a  significant  impact on the
         Company's overall results of operations or financial position.

         In  December  2004,  the  FASB  issued  SFAS  No.  153,  "Exchanges  of
         Nonmonetary Assets - an amendment of APB Opinion No. 29, Accounting for
         Nonmonetary  Transactions." This statement amends APB Opinion No. 29 to
         eliminate  the   exceptions  for   nonmonetary   exchanges  of  similar
         productive  assets  and  replaces  it  with  a  general  exception  for
         exchanges of nonmonetary assets that do not have commercial  substance.
         A  nonmonetary  exchange  has  commercial  substance if the future cash
         flows of the entity are expected to change significantly as a result of
         the  exchange.  The  provisions  for SFAS  No.  153 are  effective  for
         nonmonetary  asset  exchanges  incurred  during fiscal years  beginning
         after June 15, 2005. The Company is currently evaluating the effect, if
         any, of adopting SFAS No. 153.

4.       INVENTORIES

         During  2004,  the Company  liquidated  its  inventory  completely.  At
         December  31,  2003,  the Company  had raw  materials  of $100,026  and
         finished goods of $69,353.

5.       PROPERTY AND EQUIPMENT

         At December 31, 2004 and 2003  property and  equipment  consists of the
         following:

                                                   2004         2003
                                                ---------    ---------
                Machinery and equipment         $  19,737    $  23,143
                Office equipment                    7,332        9,532
                Computers and software             18,781       18,781
                Furniture and fixtures              6,654        6,654
                Automobile                         18,766       52,091
                Tooling                             6,250           --
                                                ---------    ---------
                                                   77,520      110,201
                Less accumulated depreciation
                    and amortization              (57,968)     (76,152)
                                                ---------    ---------
                                                $  19,552    $  34,049
                                                =========    =========

         Depreciation expense for the years ended December 31, 2004 and 2003 was
         $14,784 and $18,850, respectively.

6.       INTANGIBLE ASSETS

         At  December  31,  2004 and  2003,  intangible  assets  consist  of the
         following:

                            2004                            2003
               -------------------------------------------------------------
               Gross Carrying    Accumulated   Gross Carrying   Accumulated
                   Amount       Amortization       Amount       Amortization
               -------------------------------------------------------------
Patents           $227,210        $165,272        $227,210        $155,619
Trademarks          78,408          78,408          78,408          78,408
                  --------        --------        --------        --------
                  $305,618        $243,680        $305,618        $234,027
                  ========        ========        ========        ========

                                      F-13

<PAGE>

                     GOLFGEAR INTERNATIONAL AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

         Amortization  expense  related to the  acquired  intangible  assets was
         $9,653 and $39,424 for the years ended  December  31,  2004,  and 2003,
         respectively.  Estimated amortization expense for each of the next five
         years ended December 31 is as follows:

                     Years Ending December 31,
                     -------------------------
                               2005                       $ 9,663
                               2006                         9,663
                               2007                         9,663
                               2008                         9,663
                               2009                         9,663

         During the year ended  December 31, 2003, the Company  determined  that
         the  intangible   assets   acquired  in  connection   with  a  previous
         acquisition  were  impaired.  As a result,  the  Company  wrote off the
         unamortized balance of the patents and trademarks of $17,500,  which is
         included  in  amortization  expense  in the  accompanying  consolidated
         statement of operations.

7.       BANK LINES OF CREDIT

         The  Company  had a  $250,000  bank  line  collateralized  by  eligible
         accounts receivable.  The line of credit originally matured on December
         9, 2003 and was extended to June 2004.  Interest was payable monthly at
         an interest rate of 28%  annually.  Outstanding  borrowings  under this
         line at December 31, 2004 and 2003 were zero and $52,905, respectively.
         This credit line was closed and paid in full in June 2004.  The Company
         also  had an  unsecured  $70,000  line of  credit  with  another  bank.
         Interest  was payable  monthly at a variable  rate (10% at December 31,
         2003).  Outstanding  borrowings at December 31, 2004 and 2003 were zero
         and $56,318,  respectively.  This line of credit was closed and paid in
         full in September 2004.  Interest  expense related to the bank lines of
         credit was $14,476 and  $36,445 for the years ended  December  31, 2004
         and 2003, respectively.

8.       NOTES PAYABLE

         At  December  31,  2004 and 2003,  notes  payable  consisted  of a note
         payable  to an  individual,  payable  on demand  plus  interest  at 6%.
         Interest expense related to the notes payable was $1,991 and $4,658 for
         the years  ended  December  31,  2004 and 2003,  respectively.  Accrued
         interest  at  December  31,  2004  and  2003  was  $5,338  and  $6,080,
         respectively.

9.       RELATED PARTY DEBT

         Note Payable to Stockholder

         On November 20, 2002,  the Company  entered into a loan  agreement with
         Peter  Pocklington,  its Chairman,  whereby Mr.  Pocklington loaned the
         Company $200,000.  As consideration for the loan, the Company agreed to
         an amendment to a stock pledge agreement and released  9,029,518 shares
         of common  stock  held by the  Company  as  security  for  payment of a
         promissory  note  due  from  Wyngate  Limited  ("Wyngate"),  a  company
         affiliated with Mr. Pocklington,  for the purchase of 15,000,000 shares
         of common  stock.  The loan has an interest rate of 9.5% and was due on
         June 20, 2003.

                                      F-14
<PAGE>

                     GOLFGEAR INTERNATIONAL AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

         On July 17,  2003,  Mr.  Pocklington,  Wyngate  and Quincy  Investments
         Corp.,   a  company   affiliated   with  Mr.   Pocklington   ("Quincy")
         (collectively,  the "Parties") jointly and collectively entered into an
         agreement  with the Company  whereby,  among other things,  the Parties
         satisfied  a  portion  of the then  outstanding  balance  of the  Stock
         Purchase Note by offsetting  the $200,000 note payable to  stockholder,
         including  accrued interest of $14,710, against the Stock Purchase Note
         (See Note 14).

         In 2004, a director and stockholder advanced the Company $166,423 to be
         used for working  capital.  The advances  bear interest at 6% per annum
         and are due on demand.

         Interest expense related to the notes payable to stockholder was $2,252
         and  $14,446  for  the  years  ended   December   31,  2004  and  2003,
         respectively. Accrued interest at December 31, 2004 was $2,252 (none at
         December 31, 2003).

         Convertible Debentures Due to Related Parties

         On October 7, 2003,  the Company  completed  the sale of $250,000 of 5%
         convertible  debentures to MC Corporation,  a company affiliated with a
         Company  director and stockholder  ("MC Corp").  These  debentures were
         convertible  into common stock at $0.09 per share for a period of three
         months from the date of issuance. For each share of common stock issued
         upon  conversion of the debentures,  one common stock purchase  warrant
         will be issued and will be exercisable for a period of twelve months at
         $0.045 per share.  Issuance costs were not  significant.  The estimated
         value of the beneficial  conversion  feature was not significant at the
         date of issuance. In December 2003, these debentures, including accrued
         interest of $2,083,  were  converted  into  2,800,922  shares of common
         stock. The warrants expired unexercised.

         On December 30, 2003,  the Company  completed the sale of $1,000,000 of
         5% convertible  debentures to Quincy and MC Corp.  The debentures  were
         automatically  convertible  into  525,000  shares of Series A preferred
         stock  of the  Company  within  ninety  days of the  date of  issuance.
         Pursuant to the terms of the  debenture  agreement,  if the Company was
         unable to convert  the  debentures  into  shares of Series A  preferred
         stock  within  ninety days of  issuance,  the  debentures  would become
         immediately due and payable in full, with interest continuing to accrue
         at the face rate of interest of 5% per annum.  As of December 31, 2003,
         the Company had not  received  $100,000 in proceeds  from  Quincy,  and
         accordingly,  the Company recorded $100,000 due from stockholder in the
         accompanying  consolidated  balance sheet.  The amount was subsequently
         received in January 2004. As of August 1, 2005,  the  debentures are in
         default and are due on demand.

         Holders of the Series A  preferred  stock have the right to convert the
         Series A preferred  stock into shares of common stock of the Company at
         conversion rates of 158:1 for Quincy and 161:1 for MC Corp. upon any of
         the  following:  (i) eighteen  months after the date of issuance of the
         Series A  preferred  stock,  (ii) a change of control,  as defined,  or
         (iii) upon the date the Company is no longer  required to file  reports
         or financial  statements  with the United  States  Securities  Exchange
         Commission.

         The conversion  feature of the  convertible  debentures  provides for a
         rate  of  conversion  that  is  below  market  value,  resulting  in  a
         beneficial  conversion feature. The Company estimated the fair value of
         the beneficial conversion feature to be $1,000,000 at date of issuance,
         and recorded  such  conversion  feature as a debt  discount,  which was
         amortized to interest expense over the term of the debentures. Interest
         expense  related to the  convertible  debentures due to related parties
         was  $1,030,099  and $22,222 for the years ended  December 31, 2004 and
         2003,  respectively,  of  which  $977,778  and  $22,222,  respectively,
         related to the  amortization of the debt discount.  Accrued interest at
         December 31, 2004 was $52,321 (none at December 31, 2003).

10.      CONVERTIBLE DEBENTURES

         On June 6, 2002,  the Company  completed  the sale of  $2,100,000 of 7%
         convertible  debentures.  The  debentures are  convertible  into common
         stock at $0.25  per share for the  period of 12 months  commencing  six
         months  after  the  initial  sale of the  debentures,  and  were due in
         December 2003. The Company's patents,  trademarks, and other intangible
         assets  secure the  debentures.  For each share of common  stock issued
         upon  conversion of the debentures,  one common stock purchase  warrant
         will be  issued,  which  will be  exercisable  at $0.10 per share for a
         period of 18 months from the date of conversion.

         The conversion  feature of the  convertible  debentures  provides for a
         rate  of  conversion  that  is  below  market  value,  resulting  in  a
         beneficial  conversion feature. The Company estimated the fair value of
         the beneficial conversion feature to be $2,100,000 at date of issuance,
         and recorded  such  conversion  feature as a debt  discount,  which was
         amortized  to  interest  expense  over the term of the  debentures.  On
         December 16, 2002, the Company's Board of Directors approved a

                                      F-15

<PAGE>

                     GOLFGEAR INTERNATIONAL AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

         modification  to the  original  debenture  agreement to provide for the
         exercise of warrants  prior to the  conversion of the  debentures.  The
         Company  estimated  the fair value of the  warrants  at the date of the
         modification and reallocated  $600,000 of the original debt discount of
         $2,100,000  to the warrants  based on the  relative  fair values of the
         warrants and beneficial conversion feature as of December 16, 2002. The
         estimated  fair value of the warrants was amortized  over the remaining
         term of the debentures.

         In connection with the issuance of the  debentures,  the Company issued
         420,000  shares of the  Company's  common  stock  valued at $105,000 to
         Wyngate as a finder's fee. In addition,  the Company  granted Wyngate a
         warrant to purchase  420,000 shares of the Company's common stock at an
         exercise price of $0.10 per share,  which were exercisable for a period
         of eighteen  months.  The  warrants  were valued at $172,200  using the
         Black-Scholes  option-pricing  model.  In addition,  the Company issued
         540,000  shares of the  Company's  common stock valued at $135,000 as a
         finder's fee to an unrelated  third party.  The Company also paid legal
         fees of $29,934 related to the financing.

         The costs incurred in connection with the financing were capitalized as
         deferred  financing  costs  and  were  amortized  over  the term of the
         convertible  debentures.  Amortization of deferred  financing costs was
         $270,193  during the year ended  December  31,  2003 and is included in
         interest  expense  in  the  accompanying   consolidated   statement  of
         operations.

         During the year ended December 31, 2003, the Company repaid $700,000 in
         debentures,  including  accrued  interest.  As of  December  31,  2003,
         $1,400,000 in debentures were in default. In January and February 2004,
         the Company  repaid an  additional  $200,000 in  debentures,  including
         accrued interest,  which was satisfied with  approximately  $122,000 in
         cash and  inventories  valued at  $100,000.  The Company  continues  to
         accrue  interest  on all  outstanding  debentures  at the face  rate of
         interest.

         Interest expense related to the convertible  debentures was $98,546 and
         $1,317,754   for  the  years   ended   December   31,  2004  and  2003,
         respectively,  of which  $1,159,739 in 2003 related to the amortization
         of the debt  discount.  Accrued  interest at December 31, 2004 and 2003
         was $242,638 and $166,259, respectively.

11.      COMMITMENTS AND CONTINGENCIES

         Operating Leases

         The  Company  leases  its  facilities  and  various   equipment   under
         non-cancelable  operating  leases which expire at various dates through
         February 2006.

         In December  2003,  the Company  entered  into a five-year  lease for a
         facility in Rancho Mirage,  California. In May 2004, the Company closed
         this facility.  The landlord has filed a complaint  against the Company
         and is seeking $40,040 in damages.  Prior to June 2004, the Company was
         leasing its corporate facility in Huntington Beach,  California under a
         non-cancelable  operating lease,  which was scheduled to expire in July
         2005. In June 2004,  the Company  relocated  its corporate  facility to
         Garden Grove, California. In March 2005, the landlord of the Huntington
         Beach  facility  was awarded a judgment in the amount of  approximately
         $25,800,  and the Company was released from its  obligation  under this
         office lease.

         The Company is currently leasing a 2,000 square foot corporate facility
         in Garden Grove,  California  under a  non-cancelable  operating  lease
         which expires on August 31, 2005. The lease requires  monthly base rent
         of $1,740, plus monthly common area maintenance charges.

         Future   annual   minimum   lease   payments   required   under   these
         non-cancelable operating leases is as follows at December 31, 2004:

                      Year Ending December 31,
                      ------------------------
                                2005                      $ 14,712
                                2006                           132
                                                          --------
                                                          $ 14,844

         Rent expense was $67,510 and $112,730 for the years ended  December 31,
         2004 and 2003, respectively.

                                      F-16

<PAGE>

                     GOLFGEAR INTERNATIONAL AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

         Litigation

         On December 18, 2003,  the Company  received a resignation  letter from
         Donald  A.  Anderson  as a  member  of the  Board of  Directors  of the
         Company.  On December 19, 2003,  Mr.  Anderson  also  resigned as Chief
         Executive Officer of the Company. Prior to his resignation, on or about
         November 8, 2003, Mr. Anderson was suspended  pending an  investigation
         into possible  violations of his  employment  contract with the Company
         and breach of fiduciary duty.

         On November  18,  2003,  Mr.  Anderson  filed a  complaint  against the
         Company  and its  officers  for  breach of written  contract,  wrongful
         termination of employment and slander.  Subsequently, the Company filed
         a cross complaint against Mr. Anderson for, among other things,  breach
         of fiduciary duty and breach of written contract.

         On June 23, 2004, the Company,  its officers and Mr.  Anderson  entered
         into a Settlement  Agreement  (the  "Settlement  Agreement"),  wherein,
         among  other  things,  the Company  withdrew  its  allegation  that Mr.
         Anderson  breached his fiduciary  duties.  Pursuant to the terms of the
         Settlement  Agreement,  the  Company  agreed  to (i) pay  Mr.  Anderson
         $165,000  in  varying  installments  through  January  30,  2006,  (ii)
         transfer  the  title of a 1996  Ford  custom  tour van (with a net book
         value of  approximately  $7,000) owned by the Company to Mr.  Anderson,
         and remove Mr.  Anderson  as a  guarantor  from  certain  Company  debt
         obligations.  In return,  Mr. Anderson  returned to the Company 994,110
         shares  of  the   Company's   common  stock  owned  by  him  valued  at
         approximately  $30,000 (fair market value of the Company's stock on the
         settlement  date). As of December 31, 2003, the Company  recorded a net
         liability of  approximately  $142,000 related to the settlement of this
         lawsuit.  Mr.  Anderson also agreed to convert  $60,000 in  debentures,
         including  accrued  interest,  held by him into shares of the Company's
         common stock at a conversion rate of $0.095 per share. These debentures
         were  converted  into 753,000  shares of the Company's  common stock on
         February 23, 2005.

         The Company is  currently  in default for payment of amounts due to Mr.
         Anderson  under the  Settlement  Agreement.  On February 15, 2005,  Mr.
         Anderson  received a judgment for $76,310 due to him under the terms of
         the Settlement  Agreement.  Pursuant to the Settlement  Agreement,  the
         Company agreed to issue a new stock  certificate to Mr.  Anderson for a
         stolen stock  certificate for 2,642,625  shares of the Company's common
         stock.  As of August 1, 2005,  the  Company  has not issued  this stock
         certificate.  Mr.  Anderson will dismiss the lawsuit upon the Company's
         full performance of the Settlement Agreement.

         In March  2004,  holders in the  amount of  $200,000  of the  Company's
         convertible  debentures filed suit against the Company claiming,  among
         other things,  breach of written  contract and default  under  security
         agreement and  possession of  collateral.  The  plaintiffs  are seeking
         repayment of the principal amount of the debentures,  including accrued
         interest,  which  matured on January 6,  2004,  and  possession  of the
         intellectual   property,   including  patents  and  trademarks,   which
         collateralized the debentures.  The parties are currently attempting to
         reach agreement on resolving this action in its entirety.

         From  time  to time  the  Company  is  involved  in  various  types  of
         litigation  in  the  normal  course  of  business,  none  of  which  is
         considered material at this time.

         Indemnities and Guarantees

         The  Company  has  executed   certain   contractual   indemnities   and
         guarantees,  under  which  it may be  required  to make  payments  to a
         guaranteed  or  indemnified  party.  The  Company  also has  agreed  to
         indemnify its directors,  officers, employees and agents to the maximum
         extent  permitted under the laws of the State of Nevada.  In connection
         with a certain  facility lease,  the Company has indemnified its lessor
         for certain claims arising from the use of the facilities. The duration
         of the  guarantees  and  indemnities  varies,  and  in  many  cases  is
         indefinite.  These  guarantees  and  indemnities do not provide for any
         limitation of the maximum  potential  future payments the Company could
         be obligated to make. Historically,  the Company has not been obligated
         to make any payments for these obligations and no liabilities have been
         recorded  for these  indemnities  and  guarantees  in the  accompanying
         consolidated balance sheets.

12.      RELATED PARTY TRANSACTIONS

         See Notes 9, 10, 14 and 15 for related party transactions.

                                      F-17

<PAGE>

                     GOLFGEAR INTERNATIONAL AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

13.      INCOME TAXES

         For the years ended  December  31,  2004 and 2003,  the  provision  for
         income taxes consists of the following:

                                        2004      2003
                                       ------   ------
                           Current:
                           Federal     $   --   $   --
                           State        2,400    2,400
                                       ------   ------
                                        2,400    2,400
                                       ------   ------
                           Deferred:
                           Federal         --       --
                           State           --       --
                                       ------   ------
                                       $2,400   $2,400
                                       ======   ======

         The  reconciliation  of the effective tax rate to the federal statutory
         rate is as follows for the years ended December 31:

                                                   2004       2003
                                                -------    -------
              Federal income tax rate           -34.00%    -34.00%
              Interest expense on
                convertible debt                  18.53%      9.43%
              Increase in valuation allowance     14.93%     24.22%
              Other                                0.67%      0.41%
                                                -------    -------
                                                   0.13%      0.06%
                                                =======    =======

         The tax effects of the major items  recorded as deferred tax assets and
         liabilities at December 31, 2004 and 2003 are as follows:

                                                       2004           2003
                                                   -----------    -----------
             Net operating loss carryforwards      $ 4,688,883    $ 4,385,281
             Receivable and inventory allowances        16,187         21,297
             Accruals                                  184,484        153,762
             Other                                         607          4,034
                                                   -----------    -----------
                                                     4,890,161      4,564,374
             Valuation allowance                    (4,890,161)    (4,564,374)
                                                   -----------    -----------
                                                   $        --    $        --
                                                   ===========    ===========

         Deferred income taxes are provided for the tax effects of net operating
         loss  carry-forwards  and  temporary  differences  in the  reporting of
         income for financial statement and income tax reporting  purposes,  and
         arise  principally  from  the use of  different  methods  in  reporting
         deductions for bad debts, inventory reserves and accruals.

         As of December 31,  2004,  the Company has federal net  operating  loss
         carry-forwards of approximately $11,832,000.  The carry-forwards expire
         through 2018 for federal purposes. As of December 31, 2004, the Company
         has  state  net  operating   loss   carry-forwards   of   approximately
         $7,499,000.  The carry-forwards expire through 2014 for state purposes.
         The deferred tax benefit has been offset by a valuation  allowance  due
         to the realization of these carry-forwards being doubtful.  No deferred
         tax asset has been  recognized in the financial  statements due to this
         uncertainty.

                                      F-18

<PAGE>

                     GOLFGEAR INTERNATIONAL AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

14.      STOCKHOLDERS' EQUITY

         Stock Purchase Agreement

         On April 8, 2002, the Company  entered into a stock purchase  agreement
         (the  "Agreement")  with  Wyngate  whereby  Wyngate  agreed to purchase
         15,000,000 shares of the Company's common stock at $0.075 per share for
         an aggregate  purchase  price of  $1,125,000.  Of the  purchase  price,
         $200,025 was paid upon execution of the Agreement and Wyngate  executed
         a Stock  Purchase Note with interest at 2.88% per annum in favor of the
         Company for the  balance of  $924,975.  Pursuant to the Stock  Purchase
         Note,  the  balance  was due and  payable  October 8,  2003.  The Stock
         Purchase  Note was secured  pursuant to a stock pledge  agreement  that
         initially pledged 12,333,000 shares of the common stock, which was held
         by the Company as security for payment of the Stock  Purchase  Note. As
         additional  consideration for lending the Company $200,000 as described
         in Note 9, the  Company  amended a  previously  executed  stock  pledge
         agreement and agreed to the release of 9,029,518 shares of common stock
         held as collateral under the terms of the Stock Purchase Note.

         In conjunction with the Agreement executed by Wyngate,  Wyngate and its
         President,  Peter H. Pocklington,  had the exclusive right for a period
         of 90 days to  implement a second stage of financing in the form of the
         sale  by the  Company  to  accredited  investors  only  of  convertible
         debentures (see Note 10) in an aggregate  amount ranging from a minimum
         of  $2,000,000  to a  maximum  of  $4,000,000,  which  would  have been
         convertible  into  common  stock at $0.25  per share for a period of 12
         months  commencing six months after the initial sale of the debentures.
         Such  financing was completed and closed on June 6, 2002 (see Note 10).
         The Company's patents,  trademarks, and other intangible assets secured
         the debentures.

         The Agreement also provided that Peter H. Pocklington had the right for
         an 18 month period to merge  Meditron  Medical,  Inc.  ("Meditron"),  a
         Canadian corporation controlled by Mr. Pocklington, into the Company in
         a reverse  merger  transaction  through the  issuance of the  Company's
         common  stock,  at an  agreed  value of $0.25 per  share.  The value of
         Meditron was to be  determined  by obtaining a fairness  opinion from a
         reliable  investment  banking firm.  Meditron is engaged in the medical
         manufacturing sales business.

         On July 17, 2003, Mr.  Pocklington,  Wyngate and Quincy  (collectively,
         the "Parties") jointly and collectively  entered into an agreement with
         the Company whereby the Parties satisfied the then outstanding  balance
         of the Stock Purchase Note of $924,975,  including  accrued interest of
         $35,423,  in  exchange  for (i) a cash  payment of  $225,000,  (ii) the
         conversion  of the  $200,000  note  payable to  stockholder,  including
         accrued  interest  of  $14,710  to  equity  (see  Note  10),  (iii) the
         cancellation of Meditron's  right (valued at $150,000 and recorded as a
         loss on settlement of stock purchase note receivable) to merge with the
         Company,  and (iv) the assumption of $370,688 of the Company's existing
         notes payable and certain accounts payable obligations.

         Warrants

         From time to time, the Company issues  warrants in connection  with its
         financing  and  consulting   agreements.   Information   regarding  the
         Company's  warrant  activity for years ended December 31, 2004 and 2003
         is as follows:

<TABLE>
<CAPTION>
                                 Shares         Weighted Average     Weighted Average
                           Underlying Warrants   Exercise Price        Fair Value        Exercisable
                           --------------------------------------------------------------------------
<S>                           <C>                 <C>                   <C>              <C>
Balance, January 1, 2003        9,657,500            $ 0.14                               9,657,500
Granted                         2,800,922            $ 0.05              $ 0.05
Exercised                      (2,800,000)           $ 0.10
Canceled/Expired               (2,847,500)           $ 0.11
                              -----------                                                 ---------
Balance, December 31, 2003      6,810,922            $ 0.13                               6,810,922
Granted                                 -            $   --
Exercised                               -            $   --
Canceled/Expired               (6,170,922)           $ 0.10
                              -----------                                                 ---------
Balance, December 31, 2004        640,000            $ 0.41                                 640,000
                              ===========
</TABLE>

                                      F-19

<PAGE>

                     GOLFGEAR INTERNATIONAL AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

         During the year ended December 31, 2003,  the Company issued  2,800,922
         warrants in connection  with the  conversion  of  debentures  due to MC
         Corp, which expired unexercised  (See Note 9). During 2003, the Company
         received  $280,000 in proceeds from the exercise of 2,800,000  warrants
         held by certain convertible debenture holders.

         The  following  table   summarizes  the   information   about  warrants
         outstanding at December 31, 2004:


                         Share                Weighted
                       Underlying         Average Remaining
  Exercise Price     Shares Underlying     Contractual Life        Exercisable
-------------------------------------------------------------------------------
      $ 0.35             390,000                  1                     390,000
      $ 0.50             250,000                  1                     250,000
                     -----------                                  -------------
                         640,000                                        640,000
                     ===========                                  =============

         Stock Options

         In October  1997,  the Board of Directors  of the Company  approved the
         GolfGear International,  Inc. 1997 Stock Option Plan (the "1997 Plan").
         The 1997 Plan is intended to allow  designated  officers and  employees
         and certain  non-employees  of the Company to receive  stock options to
         purchase the  Company's  common  stock and to receive  grants of common
         stock subject to certain  restrictions,  as more fully described in the
         1997 Plan. The 1997 Plan has reserved 2,642,625 shares of the Company's
         common stock, subject to adjustments, to be issued under the 1997 Plan.

         The  1997  Plan  provides  for the  granting  to  employees  (including
         employees who are also  directors and officers) of options  intended to
         qualify as incentive stock options within the meaning of Section 422 of
         the Internal Revenue Code of 1986, as amended,  and for the granting of
         non-statutory  stock options to directors,  employees and  consultants.
         The Board of Directors of the Company  currently  administers  the 1997
         Plan.

         The exercise price per share of incentive  stock options  granted under
         the 1997 Plan must be at least  equal to the fair  market  value of the
         common stock on the date of the grant.  With respect to any participant
         who owns shares  representing  more than 10% of the voting power of all
         classes of the Company's  outstanding capital stock, the exercise price
         of any  incentive or  non-statutory  stock  options must be equal to at
         least 110% of the fair market value of the grant date,  and the maximum
         term of the option  must not exceed  five  years.  Upon a merger of the
         Company,  the options  outstanding  under the 1997 Plan will  terminate
         unless  assumed or  substituted  by the  successor  corporation.  As of
         December 31, 2004,  1,138,330  options have been granted and  1,504,295
         options are available for grant under the 1997 Plan.

         Activity  regarding  the  Company's  stock  options for the years ended
         December 31, 2004 and 2003 is as follows:

<TABLE>
<CAPTION>
                                                   Weighted
                                   Shares           Average
                                 Underlying        Exercise     Weighted Average
                                   Options           Price         Fair Value      Exercisable
                              --------------------------------------------------------------------
<S>                           <C>                  <C>            <C>             <C>
Balance, January 1, 2003            12,044,997       $ 0.31                             5,532,497

Granted                                 33,332       $ 0.25         $ 0.13
Canceled/Expired                    (6,671,667)      $ 0.25
Exercised                              (50,000)      $ 0.01
                              ----------------                                     --------------
Balance, December 31, 2003           5,356,662       $ 0.39                             5,281,662

Granted                                     --
Canceled/Expired                      (210,000)      $ 0.47
Exercised                                   --
                                                                                   --------------
                              ----------------
Balance, December 31, 2004           5,146,662       $ 0.39                             5,096,662
                              ================
</TABLE>

                                      F-20

<PAGE>

                     GOLFGEAR INTERNATIONAL AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003

         The following  table  summarizes  the  information  about stock options
         outstanding at December 31, 2004:

                     Shares Underlying  Weighted Average Remaining
    Exercise Price       Options            Contractual Life        Exercisable
    ---------------------------------------------------------------------------
       $   0.10          1,000,000                8.0                1,000,000
       $   0.20          2,333,333                8.0                2,333,333
       $   0.25             83,329                1.5                   83,329
       $   0.31            100,000                8.0                   50,000
       $   0.50          1,125,000                1.5                1,125,000
       $   0.55            325,000                1.0                  325,000
       $   1.50             50,000                1.0                   50,000
       $   2.50             15,000                1.0                   15,000
       $   3.50             50,000                1.0                   50,000
       $   4.50             25,000                1.0                   25,000
       $   5.50             15,000                1.0                   15,000
       $   6.50             25,000                1.0                   25,000
                     -------------                                   ---------
                         5,146,662                                   5,096,662
                     =============                                   =========

         The fair value of the warrants and options  granted is estimated on the
         date of  grant  using  the  Black-Scholes  option  pricing  model  with
         following   weighted-average  assumptions  for 2003  (none  granted  in
         2004): dividend yield of 0%; volatility of 72%; risk-free interest rate
         of 3.66% and an expected life of five years.

15.      SUBSEQUENT EVENTS

         From January 2005  through  August 1, 2005, a director and  stockholder
         has  advanced  approximately  $74,000  to the  Company  to be used  for
         working capital. The Company has received these funds and recorded them
         as notes payable to stockholder during 2005.

         On January 14, 2005, the Company secured a commitment for a $10,000,000
         private  placement   offering  whereby  a  third  party  investor  (the
         "Investor")  will purchase up to  $10,000,000  of the Company's  common
         stock over a  twenty-four  month  period to provide  the  Company  with
         operating  capital.  Funding is subject  to,  among other  things,  the
         Company  filing a registration  statement with the U.S.  Securities and
         Exchange  Commission with respect to the resale of common stock sold in
         the  private  placement  offering.  The  Company is  currently  working
         towards satisfying all conditions precedent to closing the funding, but
         there  can be no  assurance  that the  Company  will be  successful  in
         satisfying these terms. In connection with the funding commitment,  the
         Company paid a structuring fee of $10,000 and issued  2,000,000  shares
         of the Company's common stock to the Investor as a commitment fee.

         On February  23,  2005,  a debenture  for  $60,000,  including  accrued
         interest,  was  converted  to 753,000  shares of the  Company's  common
         stock. (See Note 10).

                                      F-21

<PAGE>

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

         There  have  been  no  disagreements  with  the  Company's  independent
registered public accounting firm on accounting or financial disclosure.

ITEM 8A: CONTROLS AND PROCEDURES

         We carried out an  evaluation  of the  effectiveness  of the design and
operation of our disclosure  controls and procedures (as defined in Exchange Act
Rules  13a-15(e) and  15d-15(e)) as of December 31, 2004.  This  evaluation  was
carried  out  under  the  supervision  and with the  participation  of our Chief
Executive Officer and Chief Financial Officer.  Based upon that evaluation,  our
Chief  Executive  Officer and Chief  Financial  Officer  concluded  that,  as of
December 31, 2004, our disclosure  controls and procedures are effective.  There
have  been no  significant  changes  in our  internal  controls  over  financial
reporting  during the  quarter  ended  December  31,  2004 that have  materially
affected or are reasonably likely to materially affect such controls.

         Disclosure  controls and procedures  are controls and other  procedures
that are  designed to ensure that  information  required to be  disclosed in our
reports  filed or  submitted  under the Exchange  Act are  recorded,  processed,
summarized  and reported,  within the time periods  specified in the SEC's rules
and forms.  Disclosure  controls and  procedures  include,  without  limitation,
controls  and  procedures  designed  to ensure that  information  required to be
disclosed  in our  reports  filed  under the  Exchange  Act is  accumulated  and
communicated  to  management,  including our Chief  Executive  Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of Internal Controls

         Our  management  does not  expect  that  our  disclosure  controls  and
procedures or our internal  control over financial  reporting  will  necessarily
prevent all fraud and material error. An internal 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,  within the  Company  have been  detected.  These  inherent  limitations
include the realities that judgments in decision-making  can be faulty, and that
breakdowns can occur because of simple error or mistake. Additionally,  controls
can be circumvented by the individual acts of some persons,  by collusion of two
or more people, or by management override of the internal control. The design of
any system of controls also is based in part upon certain  assumptions about the
likelihood of future  events,  and there can e no assurance that any design will
succeed in achieving  its stated goals under all  potential  future  conditions.
Over time,  control may become inadequate  because of changes in conditions,  or
the degree of compliance with the policies or procedures may deteriorate.

ITEM 8B: OTHER INFORMATION

         None

                                       21

<PAGE>

PART III

ITEM 9:    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The  following  table  and text  sets  forth  the names and ages of all
directors and executive officers of the Company as of July 22, 2005:

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

   Peter H. Pocklington          60     Chairman of the Board

   Daniel Wright                 48     President, Chief Operating Officer and
                                        Chief Financial Officer

   Naoya Kinoshita               40     Director

   Donald Berry                  47     Director

   Michael J Gobuty              60     Director


Peter H. Pocklington, Chairman of the Board

         Mr. Pocklington,  a Canadian citizen,  began his business career as the
owner  of  a  successful  Ford  dealership  in  Ontario,  Canada.  By  1975  Mr.
Pocklington  became the largest  Ford dealer in Canada with  business  interests
generating  over $100 million in annual sales.  Throughout the 1970's and 1980's
Mr.  Pocklington   invested  in  real  estate  and,  by  1985,  had  accumulated
substantial  real estate  assets.  In addition  from 1977 to 1998,  he owned and
operated one of the most successful sports  franchises in history,  the Edmonton
Oilers Hockey Team that won five (5) Stanley Cups. In 1983 Mr.  Pocklington  ran
unsuccessfully for national political office in Canada.  Over the past few years
he has made investments and actively  participates in the management of GolfGear
International,  Inc. and Meditron Medical,  Inc. (a Canadian  Corporation).  Mr.
Pocklington is very active in charity work.

Daniel Wright, President, Chief Operating Officer, and Chief Financial Officer

         Mr.  Wright  has been with the  Company  since May 2001  serving as its
Chief Financial Officer and a director. Mr. Wright has over eleven (11) years in
senior management positions within the golf industry. He began his career in the
golf industry with Tru-Form Golf as their controller. Tru-Form Golf manufactured
clubs and accessories originally severing as the house brand name for the Nevada
Bob retail chain.  After more then four (4) years with Tru-Form Golf, Mr. Wright
joined  Grip  Technology,  Inc.,  a  publicly  traded  company,  ("GTI")  as its
controller  and CFO.  GTI  manufactured  golf  grips  for both  OEMs and  retail
outlets.  GTI filed for  bankruptcy  in 1999.  In addition to Mr.  Wright's golf
industry  experience he has worked in the medical and direct  market  industries
and has several years experience with local accounting firms. Mr. Wright has his
bachelors in accounting and finance.

Naoya Kinoshita

         Mr. Kinoshita is President of MC Corporation,  which he founded in 1990
and is  involved  in real  estate  development  and  management.  In  1995,  Mr.
Kinoshita began  development,  construction  and sales of generational  housing;
i.e.,  housing for two  generations of family  (parents and offspring  under one
roof),  as well as imported  housing sales from outside  Japan.  During the same
year he started an Internet  service provider  business.  In 1996, Mr. Kinoshita
combined his experience in real estate development and the Internet to construct
and sell the first  Internet  line  pre-installed  condominium  in  Japan.  More
recently, he commenced the design, construction,  and sales of 2x4 housing which
utilized fewer chemicals,  and more natural  materials to promote healthy living
for  the  resident.  Mr.  Kinoshita  has  extensive  expertise  in  real  estate
development,  information processing,  sales, management, and distribution.  Mr.
Kinoshita has served as a Director since December 2003.

Donald Berry, Director

         Mr. Berry is regarded as one of Canada's  premier health care sales and
marketing executives. In 1997 as the Vice President of Western Canada for Ingram
and Bell  Medical,  where he drove the company from number three in market share
to number one in market position.  While at Ingram and Bell the Western Division
contributed  more then 50% of the company's annual gross profit despite the fact
that  Western  Canada is less then 30% of the Canadian  population.  In 2002 Mr.
Berry formed a partnership  with Medical Mart Supplies  West. As Executive  Vice
President  and General  Manager the Company has grown from  negligible  sales to
over $7 million in a three year period.

                                       22

<PAGE>

Michael J. Gobuty, Director

         Mr. Gobuty started with Victoria Leather Garment MFG. Co. Ltd. in 1958.
From  an  entry  level   position  in  the  receiving   department,   he  worked
progressively through every job description in the organization to a position of
complete  control of the  company.  One of the largest  companies of its kind in
Canada,  Victoria Leather  manufactured and sold full lines of leather outerwear
and  sportswear.  Currently  Mr.  Gobuty is in dual control of Gobuty's & Son's,
where he is responsible for the production and sourcing of manufacturing in main
land China.

ITEM 10: EXECUTIVE COMPENSATION

         The  following  table  sets  forth  the cash  compensation  paid by the
Company to its Chief  Executive  Officer,  who is the only  officer who was paid
aggregate compensation exceeding $100,000 for the past three years.

<TABLE>
<CAPTION>
                                                 SUMMARY COMPENSATION TABLE
-----------------------------------------------------------------------------------------------------------------------
                                       Annual compensation                           Long-term compensation
                               --------------------------------------   -----------------------------------------------
                                                                               Awards           Payouts
                                                                        ----------------------  -------
                                                                                   Securities
                                                                        Restricted Underlying
                                                         Other annual      Stock    options/      LTIP      All other
   Name and                    Salary         Bonus      compensation     Award(s)   SARs        Payouts   compensation
Principal Position   Year       ($)            ($)           ($)            ($)       (#)          ($)         ($)
-----------------------------------------------------------------------------------------------------------------------
<S>                  <C>      <C>              <C>        <C>                <C>  <C>               <C>         <C>
Daniel Wright        2004     120,000           0          8,400(4)           0           0           0           0
CEO and CFO          2003      93,462           0              0              0      33,332           0           0
                     2002      64,263           0              0              0      33,332           0           0
Donald A. Anderson   2004          --           0              0              0           0           0           0
Former CEO (6)       2003      88,468           0          5,933(2)           0           0           0           0
                     2002     107,619           0         17,155(1)           0   5,000,000           0           0
John Pierandozzi     2004      60,000           0          4,200(5)           0           0           0           0
President (3)        2003      51,231           0              0              0           0           0           0
                     2002          --           0              0              0           0           0           0
</TABLE>

(1)  Includes  $5,972  for  medical  insurance  premiums  and  $2,183  for  life
     insurance  premiums  paid on behalf of Mr.  Anderson.  Also  includes  auto
     allowance of $9,000.

(2)  Includes $2,183 for life insurance premiums paid on behalf of Mr. Anderson.
     Also includes auto allowance of $3,750.

(3)  Mr.  Pierandozzi,  President,  assumed Mr. Anderson's  responsibilities  on
     December  19,  2003,  the  date  of Mr.  Anderson's  resignation  as  Chief
     Executive Officer. Mr. Pierandozzi resigned on October 14, 2004.

(4)  Includes auto allowance of $8,400.

(5)  Includes auto allowance of $4,200.

(6)  Mr. Anderson resigned on December 19, 2003.

                                       23

<PAGE>

The following table sets forth certain  information with respect to options held
by the named officers at December 31, 2004.

<TABLE>
<CAPTION>
                        Aggregated Options/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
---------------------------------------------------------------------------------------------------------------------------
                                                              Number of securities                Value of unexercised
                                                             underlying unexercised             in-the-money options/SARs
                                                            options/SARs at FY-end (#)                 at FY-end ($)
                                                        -----------------------------------    -----------------------------
                         Shares
                       acquired on   Value Realized
Name                   on exercise         ($)           Exercisable          Unexercisable    Exercisable    Unexercisable
---------------------------------------------------------------------------------------------------------------------------
<S>                       <C>            <C>            <C>                     <C>             <C>             <C>
Daniel Wright               --              --               83,333                --               --             --
Donald A. Anderson          --              --            1,733,333(1)             --               --             --
John Pierandozzi            --              --                   --                --               --             --
</TABLE>

(1)  Effective with Mr. Anderson's  resignation on December 19, 2003,  3,666,667
     options were canceled.

ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  following  table shows the  beneficial  ownership of our shares of
common stock as of July 22, 2005 by (i) each person who is known by us to be the
beneficial  owner of more than five percent (5%) of our common stock,  (ii) each
of our directors  and  executive  officers and (iii) all directors and executive
officers as a group. Except as otherwise indicated, the beneficial owners listed
in the table have sole voting and investment powers of their shares.

                                              Number of      Percentage
           Name and Address (1)                Shares           Owned
           ------------------------------   -------------     ----------
           Mr. Peter H. Pocklington         15,000,000(1)       45%(2)
           Quincy Investment Corp
           47-111 Vintage Dr. East #309
           Indian Wells, CA 92210

           Mr. Naoya Kinoshita               5,800,922(1)       44%(2)
           MC Corporation
           Terasiosu Bldg,
           6-7-2 Minami Aoama Minato-Ku
           Tokyo, Japan 107-0062

(1)  The indicated shares  represent the number of outstanding  securities owned
     by the  beneficial  owner,  and does not include  the number of  securities
     which would be held upon conversion of debt or equity instruments.

(2)  The indicated  percentage  includes  outstanding  securities  owned and any
     securities  that  each  beneficial  owner  has the  right to  acquire  upon
     conversion of debt or equity securities.

ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On December 30, 2003,  GolfGear  International,  Inc.  (the  "Company")
completed the sale of $1,000,000 of Convertible  Debentures.  The Debentures are
automatically  converted into  Preferred  Stock at $1.00 per share within ninety
days of the date of  issuance.  Holders of the  Preferred  stock  shall have the
right to convert the Preferred  stock into shares of Common Stock of the Company
at  conversion  rates  of 158  to 1,  and  161 to 1.  The  Preferred  stock  are
convertible upon any of the following: eighteen months after the issuance of the
Preferred  Stock,  a Change in Control or upon the date the Company is no longer
required  to file  reports  or  financial  statements  with  the  United  States
Securities  Exchange  Commission.  If the  Company is not able to  convert  this
Debenture into shares of Preferred  within ninety days from the date of issuance
the Debentures  shall become  immediately due and payable in full, with interest
accruing on the face amount at a rate of 5% per annum.  Currently the Debentures
are in default, but the holders have made no demands at this time.

                                       24
<PAGE>

         On October 7, 2003 (the  "Company")  completed  the sale of $250,000 of
convertible  debentures to related parties.  The debentures are convertible into
common  stock at $0.09  per share  for a period  of 3 months  for each  share of
common stock issued upon conversion of the  debentures,  1 common stock purchase
warrant will be issued,  which will be exercisable  for a period of 12 months at
$0.045 per share.  This debenture has been  converted  into 2,800,922  shares of
common stock in December 2003.

         From January 2004  through  July 2005, a director and  stockholder  has
advanced  approximately  $240,000 to the Company to be used for working capital.
The  Company has  received  these funds and  recorded  them as notes  payable to
stockholder  of  approximately  $166,000 in 2004 and $74,000  during  2005.  The
advances bear interest at 6% per annum and are due on demand.

         See Notes 9, 10,  14 and 15 to the  consolidated  financial  statements
included elsewhere herein for additional related party transactions.

ITEM 13: EXHIBITS

(a) Exhibits

       3.1    Articles of Incorporation (1)

       3.2    Certificate of Amendment of Articles of Incorporation (1)

       3.3    Certificate of Amendment of Articles of Incorporation (1)

       3.4    Articles of Merger (1)

       3.5    Bylaws (1)

       4.3    Binding  Subscription  Agreement for Purchase of Equity Securities
              (MC Corporation) (1)

       4.4    Certificate of Determination (1)

       10.1   Distribution Agreement (MC Corporation) (1)

       10.10  GolfGear International, Inc. 1997 Stock Incentive Plan (1) (C)

       10.13  Property Lease Agreement (2)

       10.14  Amended and  Restated  Agreement  for Sale and  Purchase of Assets
              between Bel-Air Golf Company and GolfGear International, Inc. (2)

       10.15  Agreement for Sale and Purchase of Assets - Leading Edge (3)

       10.16  Personal Services Agreement - Peter Alliss (3)

       10.17  Exclusive Distribution Agreement (4)

       10.18  Subscription Agreement dated March 7, 2002(6)

       10.19  Stock Purchase Agreement dated April 8, 2002(6)

       10.20  Promissory Note dated April 8, 2002(6)

       10.21  Stock Pledge Agreement dated April 8, 2002(6)

       10.22  Employment Agreement (Michael A. Piraino) (4)

       10.23  Employment Agreement (Donald A. Anderson) (4)

       10.24  Loan Agreement (Peter H. Pocklington) (4)

       10.25  Employment Agreement (Chris Holiday) (4)

       10.26  Attorney Fee Agreement (Fulbright & Jaworski LLP) (4)

       10.27  Non-Exclusive License Agreement (Nike, Inc.) (5)

       21     Subsidiaries of the Registrant (1)

       31     Certification  Pursuant  to 18 U.S.C.  Section  1350,  As  Adopted
              Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002 (7)

       32     Certification  Pursuant  to 18 U.S.C.  Section  1350,  As  Adopted
              Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 (7)

       99.1   Patents (1)

       99.2   Trademarks (1)

       99.3   Certifications Pursuant to Sarbanes-Oxley Act of 2002 (4)


                                       25
<PAGE>

       Footnotes:

       (1)    Previously  filed  as an  Exhibit  to the  Company's  Registration
              Statement on Form 10-SB dated November 11, 1999, and  incorporated
              herein by reference.

       (2)    Previously  filed as an Exhibit to the Company's  Annual Report on
              Form  10-KSB for the fiscal  year ended  December  31,  1999,  and
              incorporated herein by reference.

       (3)    Previously  filed as an Exhibit to the Company's  Annual Report on
              Form  10-KSB for the fiscal  year ended  December  31,  2000,  and
              incorporated herein by reference.

       (4)    Previously  filed as an Exhibit to the Company's  Annual Report on
              Form  10-KSB for the fiscal  year ended  December  31,  2002,  and
              incorporated herein by reference

       (5)    Previously  filed as an Exhibit to the Company's  Annual Report on
              Form 10-QSB for the quarter ended March 31, 2003, and incorporated
              herein by reference.

       (6)    Previously filed as Exhibits to the Company's Report on Form 8-K.

       (7)    Filed herewith


ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES

         On October  21,  2003 the  Company  received  notice  from its  current
auditors,  Good, Swartz, Brown and Berns, LLP ("GSBB"), that they will no longer
provide audit services to SEC reporting  companies,  and are therefore resigning
as the Company's independent auditors.

         Effective  November  8,  2003  the  Board  of  Directors  approved  the
engagement of Corbin & Company, LLP ("C&C") as its independent registered public
accounting  firm for the fiscal year ending  December 31, 2003.  The Company did
not consult with C&C prior to their retention.

         During the past two years,  GSBB's  audit  opinion on the  Registrant's
financial  statements  did not  contain an adverse  opinion or a  disclaimer  of
opinion, nor was it modified as to audit scope or accounting principles.  GSBB's
report was modified to include an  explanatory  paragraph  where they  expressed
substantial doubt about the Registrant's ability to continue as a going concern.

         There were no  disagreements  with GSBB during the past two most recent
fiscal years and through the date of their dismissal on any matter of accounting
principles or practices,  financial  statement  disclosure or auditing  scope or
procedure.

Audit and Non-Audit Fees

         Aggregate  fees for  professional  services  rendered to the Company by
Corbin & Company LLP and its predecessor  firm GSBB for the years ended December
31, 2004 and 2003 were as follows:

               Services Provided      2004      2003
                                    -------   -------
               Audit Fees           $37,500   $43,000
               Audit Related Fees   $    --   $    --
               Tax Fees             $    --   $    --
               All Other Fees       $    --   $50,605
                                    -------   -------
               Total                $37,500   $93,605
                                    =======   =======

Audit Fees

         The  aggregate  fees billed for the years ended  December  31, 2004 and
2003 were for the audits of our financial  statements and reviews of our interim
financial statements included in our annual and quarterly reports.

Audit Related Fees

         There were no fees  billed for the years  ended  December  31, 2004 and
2003 for the audit or review of our financial  statements  that are not reported
under Audit Fees.

Tax Fees

         There were no fees  billed for the years  ended  December  31, 2004 and
2003 for  professional  services  related to tax compliance,  tax advice and tax
planning.

All Other Fees

         The  aggregate  fees billed for the years ended  December  31, 2004 and
2003 were for services other than the services  described above.  These services
include attendance and preparation for shareholder and audit committee meetings,
consultation  on  accounting,  on  internal  control  matters  and review of and
consultation  on our  registration  statements and issuance of related  consents
(Forms S-3 and S-8).

                                       26
<PAGE>
                                   SIGNATURES

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

                          GOLFGEAR INTERNATIONAL, INC.
                          ----------------------------
                                  (Registrant)

Date:  September 16, 2005    /s/ Daniel C. Wright
                             -------------------------
                             Daniel C. Wright
                             President, Chief Operating Officer
                             and Chief Financial Officer

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

Date:  September 16, 2005    /s/ Peter H. Pocklington
                             -------------------------
                             Peter H. Pocklington
                             Chairman of the Board

Date:  September 16, 2005    /s/ Naoya Kinoshita
                             -------------------------
                             Naoya Kinoshita
                             Director

Date:  September 16, 2005    /s/ Donald Berry
                             -------------------------
                             Donald Berry
                             Director

Date:  September 16, 2005    /s/ Michael J Gobuty
                             -------------------------
                             Michael J Gobuty
                             Director

<PAGE>

                                  EXHIBIT INDEX

Exhibit 31        Certification  of Chief Executive  Officer and Chief Financial
                  Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a).

Exhibit 32        Certification  of Chief Executive  Officer and Chief Financial
                  Officer  pursuant  to  18  U.S.C.  Section  1350,  as  adopted
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.