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

FORM 10-KSB

(Mark One)

x Annual Report Pursuant
  To Section 13 Or 15(D) Of The Securities Exchange Act Of 1934
  For the fiscal year ended DECEMBER 31, 2003

 ̈ Transition Report
  Under Section 13 Or 15(D) Of The Securities Exchange Act Of 1934 
  For the transition period from _____ to _____

COMMISSION FILE NUMBER0-50119

IMAGE INNOVATIONS HOLDINGS INC.(Name of small business issuer in its charter)

|NEVADA                                                         | 91-1898414                          
|-------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)
|                                                               |                                     
|SUITE 615, 100 PARK ROYAL                                      |                                     
|West Vancouver, British Columbia                               | V7T 1A2                             
|(Address of principal executive offices)                       | (Zip Code)                          
|                                                               |                                     
|(604) 925-5283                                                 |                                     
|Issuer's telephone number                                      |                                     

Securities registered under Section 12(b) of the Exchange Act:
  NONE

Securities registered under Section 12(g) of the Exchange Act:
  COMMON STOCK, PAR VALUE $0.001 PER SHARE

Check whether the issuer (1) filed all reports required to
  be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
  (or for such shorter period that the registrant was required to file such reports),
  and (2) has been subject to such filing requirements for the past 90 days. Yes
  xNo
   ̈

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

State issuer's revenues for its most recent fiscal year $101,743

State the aggregate market value of the voting and non-voting
  common equity held by non-affiliates computed by reference to the price at which
  the common equity was sold, or the average bid and asked price of such common
  equity, as of a specified date within the past 60 days. (See definition of affiliate
  in Rule 12b-2 of the Exchange Act.) $76,204,000 as of March 31, 2004

State the number of shares outstanding of each of the issuer's
  classes of common equity, as of the latest practicable date. 24,020,000
  Shares of Common Stock, as of March 31, 2004.

Transitional Small Business Disclosure Format (check one):
  Yes  ̈No
  x

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IMAGE INNOVATIONS HOLDINGS INC. FORM 10-KSB

INDEX

|PART I   |                                                                                                                        |   
|-------- | ---------------------------------------------------------------------------------------------------------------------- | --
|         |                                                                                                                        |   
|Item 1.  | Description Of Business.                                                                                               | 3 
|         |                                                                                                                        |   
|Item 2.  | Description Of Property.                                                                                               | 12
|         |                                                                                                                        |   
|Item 3.  | Legal Proceedings.                                                                                                     | 12
|         |                                                                                                                        |   
|Item 4.  | Submission Of Matters To A Vote Of Security
      Holders.                                                             | 12
|         |                                                                                                                        |   
|PART II  |                                                                                                                        |   
|         |                                                                                                                        |   
|Item 5.  | Market For Common Equity And Related Stockholder
      Matters.                                                        | 13
|         |                                                                                                                        |   
|Item 6.  | Management's Discussion And Analysis Or
      Plan Of Operation.                                                       | 14
|         |                                                                                                                        |   
|Item 7.  | Financial Statements.                                                                                                  | 17
|         |                                                                                                                        |   
|Item 8.  | Changes In And Disagreements With Accountants
      On Accounting And Financial Disclosure.                            | 18
|         |                                                                                                                        |   
|Item 8A. | Controls and Procedures.                                                                                               | 18
|         |                                                                                                                        |   
|PART III |                                                                                                                        |   
|         |                                                                                                                        |   
|Item 9.  | Directors, Executive Officers, Promoters
      And Control Persons; Compliance With Section 16(A) Of The Exchange Act. | 19
|         |                                                                                                                        |   
|Item 10. | Executive Compensation                                                                                                 | 21
|         |                                                                                                                        |   
|Item 11. | Security Ownership Of Certain Beneficial
      Owners And Management                                                   | 23
|         |                                                                                                                        |   
|Item 12. | Certain Relationships And Related Transactions                                                                         | 25
|         |                                                                                                                        |   
|Item 13. | Exhibits And Reports On Form 8-K.                                                                                      | 27
|         |                                                                                                                        |   
|Item 14. | Principal Accountant Fees and Services.                                                                                | 28

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PART I

ITEM 1.	DESCRIPTION OF BUSINESS.

FORWARD-LOOKING STATEMENTS

The information in this Annual Report on Form 10-QSB contains
  forward-looking statements within the meaning of Section 27A of the Securities
  Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
  as amended. These forward-looking statements involve risks and uncertainties,
  including statements regarding Image Innovations Holdings capital needs,
  business plans and expectations. Such forward-looking statements involve risks
  and uncertainties regarding the availability of funds, government regulations,
  common share prices, operating costs, capital costs and other factors. Forward-looking
  statements are made, without limitation, in relation to operating plans, property
  exploration and development, availability of funds and operating costs. Any
  statements contained herein that are not statements of historical facts may
  be deemed to be forward-looking statements. In some cases, you can identify
  forward-looking statements by terminology such as "may", "will", "should", "expect",
  "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential"
  or "continue", the negative of such terms or other comparable terminology. Actual
  events or results may differ materially. In evaluating these statements, you
  should consider various factors, including the risks outlined below, and, from
  time to time, in other reports Image Innovations files with the SEC. These factors
  may cause Image Innovations Holdings actual results to differ materially
  from any forward-looking statement. Image Innovations disclaims any obligation
  to publicly update these statements, or disclose any difference between its
  actual results and those reflected in these statements. The information constitutes
  forward-looking statements within the meaning of the Private Securities Litigation
  Reform Act of 1995. Given these uncertainties, readers are cautioned not to
  place undue reliance on such forward-looking statements.

OVERVIEW

Image Innovations Holdings Inc., formerly Busanda Explorations
  Inc., (We, Image Innovations Holdings or the Company)
  completed the acquisition of all of the issued and outstanding shares of Image
  Innovations Inc. (Image Innovations) effective June 30, 2003. Image
  Innovations was incorporated to engage in the business of promotional licensing
  and branding with the objective of adding value to a wide variety of relatively
  low cost, but desirable or essential products, by endorsing them with the brand
  logos of sports teams and/ or other recognized trademarks. We have been involved
  in developing the business of Image Innovations since June 30, 2003.

CORPORATE ORGANIZATION

We were incorporated as Busanda Explorations Inc. in the State
  of Nevada on March 3, 1998. Our corporate name was changed to Image Innovations
  Holdings Inc. on July 25, 2003.

We were originally organized to engage in the exploration
  and development of mining claims and properties in British Columbia, Canada.
  We operated from March 3, 1998, our date of inception, through approximately
  August 31, 1999, when we ceased all operations due to lack of working capital.
  We were unable to raise the monies necessary to fund a required $100,000 Cdn.
  work program on the mining properties we had acquired and lost all right, title
  and interest in and to the mining claims.

Image Innovations Inc. is a Delaware corporation incorporated
  on January 14, 2003. We acquired Image Innovations effective June 30, 2003.

Image Innovations Sports & Entertainment Inc. (Image
  Sports) is a Delaware corporation incorporated on January 16, 2004.

ACQUISITION OF IMAGE INNOVATIONS

We completed the acquisition of all of the issued and outstanding
  shares of Image Innovations effective June 30, 2003 pursuant to offers made
  by us dated June 23, 2003 to all the shareholders of Image Innovations to purchase
  their shares in exchange for an aggregate of 10,000,000 shares of our common

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stock on the basis of 10,000 shares for each outstanding share
  of Image Innovations. It was a condition precedent of closing that all shareholders
  of Image Innovations accept our offer and that audited financial statements
  of Image Innovations had been delivered to us. We issued 10,000,000 shares of
  our common stock to the existing shareholders of Image Innovations in consideration
  of the transfer by the existing shareholders of all of their shares of Image
  Innovations to us. As a result of this transaction, Image Innovations is now
  a wholly owned subsidiary of Image Innovations Holdings.

THE BUSINESS OF IMAGE INNOVATIONS

Image Innovations was incorporated to engage in the business
  of promotional licensing and branding with the objective of adding value to
  a wide variety of relatively low cost, but desirable or essential products,
  by endorsing them with the brand logos of sports teams and/ or other recognized
  trademarks. Image Innovations has entered into retail license agreements with
  NHL Enterprises, L.P. to market a limited range of products under the National
  Hockey League brand, the National Football League Properties to market a limited
  range of products under the NFL brand, RHC licensing Corporation to market pocket
  size Riddell replica AM/FM radios and American Broadcasting Companies, Inc.
  to market specific fiber optic apparel products under the ABC Sports brand.

The principal components of the business strategy of Image
  Innovations are as follows:

|1. | To identify a range of consumer
        products that can be manufactured and resold for high mark-ups with the
        product endorsement of recognized sports teams and leagues;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | To enter into licensing
        agreements to obtain product endorsement rights for the targeted products
        from recognized sports teams and leagues;                        
|3. | To enter into manufacturing
        arrangements for the manufacture of the targeted products with the licensed
        product endorsements;                                      
|4. | To arrange for sale of the
        targeted products through established distribution channels; and                                                                                
|5. | To market the targeted products
        to consumers.                                                                                                                              

Each of the components of our business strategy for the business of Image
  Innovations is discussed below as follows:

|1. | Targeting of Products
      Image Innovations has targeted relatively low cost,
        but desirable or essential consumer products for branding and sales to
        consumers. The consumer products identified are targeted as being unique
        in the market, are aimed at a large customer base and are intended to
        appear to potential consumers interested in purchasing products endorsed
        with their favorite sports team or celebrity.
      Image Innovations has selected alkaline batteries as
        its initial targeted product. Image Innovations believe that alkaline
        batteries and alkaline battery products satisfy our criteria of being
        relatively low cost products that are capable of high markup and that
        are either desirable or essential products used by consumers. Alkaline
        batteries and battery products offer a range of opportunities for branding
        and product endorsement. Examples of battery products include desk clocks,
        travel clocks, flashlights, radios, calculators, touch-lights, personal
        alcohol breath testers and educational items.
      Image Innovations is also pursuing the development of
        private label products. During 2003, Image Innovations developed a private
        label brand of batteries for a third party who marketed the batteries
        with their battery powered products.
      Our objectives for the product lines of Image Innovations
        include the following, each of which is subject to our ability to achieve
        additional financing:
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

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|   | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | We plan to enter into new product categories; and                                                    
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------
|   | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | We plan to expand our current product line into new markets
      with the addition of new licensors.
|   | Image Innovations has a
        team of in-house graphic designers and marketing personnel that work to
        developing branding materials for implementation. This work includes developing
        consumer-appealing package designs and concepts. This work is targeted
        at developing products that are perceived to be of high quality, attractive
        and to offer excellent value. Packaging designs are created with the objective
        of conveying the value and quality of the product inside.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|2. | Licensing Agreements
      Image Innovations has entered into a license agreement
        with NHL Enterprises, LP for the license of the National Hockey League
        name and other NHL logos and indicia for use in connection with batteries
        and other battery powered electronic products. The license is a non-exclusive
        license for the United States. The license is for a term expiring December
        31, 2004. Image Innovations has agreed to pay to NHL Enterprises, LP a
        royalty of 10% of net sales. In addition, Image Innovations will pay guaranteed
        annual minimum payments of $60,000 US, including an upfront fee of $15,000
        US that has been paid by Image Innovations.
      Image Innovations has entered into a license agreement
        dated effective April 1, 2004 with NHL Enterprises Canada, LP for the
        license of the National Hockey League name and other NHL logos and indicia
        for use in connection with radios, flashlights, fiber-optic animated sports
        frames, light chasers and flashing cell phone holders. The license is
        a non-exclusive license for Canada. The license is for a term expiring
        December 31, 2005. Image Innovations has agreed to pay to NHL Enterprises
        Canada, LP a royalty of 10% of net sales. In addition, Image Innovations
        will pay guaranteed annual minimum payments of $75,000 CDN (equal to approximately
        $56,400) including an upfront fee of $25,000 CDN (equal to approximately
        $18,800) that has been paid by Image Innovations
      Image Innovations has also entered into a letter of
        intent with NFL Properties LLC for the grant of a license to use the National
        Football League mark and other related marks in connection with batteries,
        flashlights with batteries, e-badge with batteries, radios with batteries,
        universal remote controls with batteries, light chaser and LED pins. The
        arrangement required an advance royalty payment of $100,000 US, which
        has been paid by Image Innovations. Image Innovations is required to pay
        a royalty of 11% of net sales. The license will be limited to the United
        States. The original term of the license was to expire on March 31, 2004
        but has been extended for an additional term expiring March 31, 2005 royalty
        payments have been increased to 12%. Image Innovations is required to
        make an advance royalty payment of $50,000 and overall minimum royalty
        payments of $100,000 for the annual term ended March 31, 2005. The license
        agreement remains subject to the execution of a definitive license agreement
        with NFL Properties LLC. The renewal agreement was entered into effective
        March 12, 2004
      We entered into a license agreement with RHC Licensing
        Corporation in July 2003 whereby we acquired a license to manufacture
        a pocket-size AM/FM Helmet Radio that replicates a Riddell style football
        helmet. The license agreement is for a one-year term for the United States
        and Canada and requires us to pay a royalty based on net sales. We have
        the right to renew the agreement for additional one-year terms upon our
        achieving the performance milestones stipulated in the agreement. We paid
        a non-refundable royalty payment of $20,000 upon execution of the license
        agreement.
      Image Innovations entered into a license agreement with
        ABC Sports. The license is for the development and marketing of officially
        licensed fiber optic apparel products in the United States and Canada
        for Monday Night Football, ABC Sports, ABC Wide World of Sports and ABCs
        Bowl Championship Series. The license agreement is for a two-year term
        for the United States and Canada and requires us to pay a royalty based
        on net sales. We have the right to renew the agreement for additional
        two one-year terms upon our achieving the performance milestones

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|   | stipulated in the agreement. We paid a non-refundable
        royalty payment of $15,000 upon execution of the license agreement.
      We plan to pursue negotiations with further sports leagues
        and sports teams to obtain additional license rights.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3. | Manufacturing Arrangements
      Image Innovations will not manufacture any of its targeted
        products. Image Innovations has out-sourced manufacturing to third party
        manufacturers located primarily in the Far East. This determination to
        out-source manufacturing is based on our belief that manufacturing in
        the Far East will offer the best price competitiveness and also the most
        advanced technology for batteries and battery related products. Image
        Innovations has established relationships with major suppliers in Asia
        who are believed by Image Innovations to be capable of delivering innovative
        products with the brand recognition colors and symbols of the licensed
        properties. During 2003, Image Innovations worked with its manufacturers
        to develop products with the licensed brand names. This process involved
        generating sample products and obtaining approval of the sample products
        from the licensors of the brand names. Image Innovations has completed
        this initial phase of the manufacturing process and is currently obtaining
        inventory for distribution to its distribution network.
      Image Innovations plans to continue to establish these
        relationships through attendance at major international trade shows and
        through a program of personal visits to the Far East. Image Innovations
        plans to work with its major suppliers in order to keep abreast of new
        product lines as they become available in order that its targeted products
        remain in demand.
      Once manufacturing relationships are established, Image
        Innovations goes through a six step process designed to establish quality
        control and compliance with our license agreements. This process includes
        the following steps:

| | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | Manufacturer Inspection and References
         We personally inspect all factories and review their manufacturing
        and quality control standards;                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Prototype and User Testing  We
        require the manufacturer to first submit a prototype to us for examination
        and user testing;                                                                                                                                                                                                         
| | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Initial Production Run  We request
        the manufacturer produce an initial production run of the product under
        typical manufacturing conditions. We sample approximately 30% of the products
        produced and inspect them for color, finish, material used, function,
        packaging, qualityof finish and overall presentation.
| | (iv)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Full Production  We continue inspections
        during the manufacturing process to ensure a minimal defective rate;                                                                                                                                                                                                                               
| | (v)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | Product Delivery  We test shipments
        of our products to determine whether any products become damaged or defective
        during transit and shipment to customers.                                                                                                                                                                         
| | (vi)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | In-Market Testing  We systematically
        and continuously test the products for failure in-market under actual
        customer use scenarios.                                                                                                                                                                                                  
| | Our plan of operations
        for the business of Image Innovations will require that we obtain additional
        financing in order that it can complete purchases of targeted products
        from manufacturers. Manufacturers of the targeted products will require
        that Image Innovations have in place letters of credit in favor of manufacturers
        prior to the start of manufacturing. The posting of letters of credit
        is a standard arrangement for international manufacturing orders and is
        a mechanism that provides manufacturers with assurance that they will
        be paid for the products they manufacture. Letters of credit will only
        be issued by financial institutions against a deposit of either cash or
        against collateral of an amount sufficient to enable the financial institution
        to post a letter of credit. Although Image Innovations plans to only order
        product from manufacturers when it is in

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|   | possession of firm purchase orders, manufacturers will
        require that letters of credit are in place at the time of ordering. Due
        to our current working capital deficit, we will require additional financing
        before we are able to post letters of credit and start the manufacturing
        process.
      We anticipate that there will be a period of four months
        between the time that product is ordered from a manufacturer until the
        time payment is received from customers. This four month period includes
        two months for production, one month for shipping and delivery and a final
        ten to thirty days to receive payment from customers. Due to this time
        lag between posting of a letter of credit and ultimate realization of
        revenues, the amount of revenues that we will be able to achieve will
        be dependent on the amount of upfront financing that we are able to obtain.
        If we are not able to obtain financing, then we will not be able to order
        products from manufacturers with the result that we may not be able to
        achieve revenues.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4. | Distribution
      Image Innovations is in the process of establishing
        a distribution network of independent brokers to market its product to
        targeted retailers. Image Innovations has pursued relationships with independent
        brokers with established relationships with retailers in order to access
        retailers, rather than attempting to sell to retailers directly. Image
        Innovations has adopted this strategy with the objective of gaining entry
        into major retailers in the United States. Image Innovations also plans
        to establish a network of seasoned salesmen in the United States who will
        spearhead its marketing campaigns in North America. The targeted retail
        market will focus on chain stores, convenience stores, drug stores, electronic
        retailers and specialty distributors.                                                                                                                                                                                                                                                                                   
|5. | Marketing
      Image Innovations marketing strategy will be to
        focus its licensing program on premier sports franchises and household
        name trademarks. Image Innovations plans to create demand for its products
        by combining high profile brand names and trademarks with desirable or
        essential consumer products. Image Innovations overall objective
        is to establish itself as a specialized brand licensing and promotional
        merchandising company. One objective of Image Innovations will be to create
        brand name awareness amongst decision makers who place its targeted products
        into its targeted market.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

IMAGE SPORTS

Image Sports, our wholly owned subsidiary acquired all of
  the inventory, personal property and material contracts of the celebrity image
  memorabilia business carried by MDK Sports & Entertainment Inc. (MDK
  Sports). The acquisition of assets was completed pursuant to an asset
  purchase agreement dated March 4, 2004 between Image Innovations Holdings, Image
  Sports and MDK Sports (the Asset Purchase Agreement). As consideration
  of the sale, transfer and assignment of the assets by MDK Sports to Image Sports,
  Image Innovations Holdings issued to MDK Sports an aggregate of 4,000,000 restricted
  shares of Image Innovation Holdings common stock on closing.

Image Sports has also agreed to deliver to MDK Sports the
  following additional shares of our common stock upon achievement of the milestones
  set forth below, provided that no shares will be issuable in the event that
  the milestone is not achieved for whatever reason:

| | (a) | an aggregate of 2,500,000
        shares of Image Innovations Holdings common stock will be issued to MDK
        Sports in the event that each of the conditions listed below are met:
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     | (i)                                                                                                                                                                                    
| |     | (ii)                                                                                                                                                                                   

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| | (b) | an aggregate of 1,500,000 shares of Image Innovations
        Holdings common stock will be issued to MDK Sports in the event that a
        Trademark License Agreement is made by and among Tony Stewarts Race
        team and Tony Stewarts Sponsor and Image Sports.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Image Sports has acquired the complete inventory of MDK Sports
  consisting of over 22,000 pieces of collectible sports memorabilia and fine
  art. Image Sports also acquired all contracts and business arrangements that
  MDK Sports had with artists and sport celebrities. The management of MDK Sports
  have become employees of Image Sports with the objective of ensuring that the
  distribution channels developed by MDK Sports survives the acquisition and is
  expanded to enhance the distribution of the other subsidiaries in the Image
  group of companies.

Michael Radcliffe, one of the principals of MDK Sports, has
  been appointed as one of our directors in connection with the completion of
  the acquisition. In addition, Mr. Radcliffe has been appointed as the chief
  operating officer of Image Sports. Mr. Radcliffe has over 15 years experience
  in the sports and entertainment industry. Along with creating many significant
  relationships with athletes and celebrities, Mr. Radcliffe has successfully
  developed and launched many innovative products. Mr. Radcliffe has been the
  chief executive officer of several private companies that he has helped become
  public companies. Currently, Mr. Radcliffe is working with many fine artists
  to increase their revenue base by finding new distribution channels and creating
  new products based on their work.

Image Sports is our celebrity artwork and collectibles marketing
  and sales operation through which we offer unique collectible sports memorabilia
  through an established distribution network originally created through MDK Sports.
  Products include limited art creations by well known artists featuring sports
  legends with the personal signatures of both the artist and sports celebrity.
  Artists include Carlo Beninati and Danny Tarantola. Image Sports combines the
  skills of these talented artists with the appeal of sports legends like Tiger
  Woods, Michael Jordan, Alex Rodriquez and Mark Martin to create masterpieces
  of memorabilia which it then makes available to discerning buyers.

On closing, Image Sports entered into consultant agreements
  with Kenneth Radcliffe, Michael Radcliffe and Dennis Radcliffe whereby these
  individuals have agreed to provide services to Image Sports in connection with
  the development of its sports memorabilia business. These consultant agreements
  are described in greater detail under Item 12  Certain Relationships and
  Related Transactions.

In a previous news release dated February 20, 2004, we announced
  our intention to merge Image Sports with MDK Sports and Entertainment. We and
  MDK Sports determined that the objectives of the acquisition transaction would
  best be served through an acquisition of the inventory, material contract and
  personal property assets of MDK Sports versus the original structure of a merger.
  Accordingly, the Asset Purchase Agreement was executed and the original merger
  agreement terminated.

BUSINESS PLAN OF IMAGE SPORTS

Our business strategy for Image Sports involves the following key components:

|1. | We will pursue the gradual and strategic sale of
        the inventory of limited art creations that we acquired from MDK Sports.
        Our strategy will be to sell products through market channels where we
        believe that we can achieve the highest sale price and return. We also
        plan to auction select items in promotional events, such as charity events
        attended by sports celebrities, with the objective of creating publicity
        for our celebrity image products.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | We plan to develop new celebrity image art creations
        for resale to consumers. The targeted types of art creations are discussed
        below. These art creations will be art creations that will be created
        for Image Sports under a contractual arrangement with the artist. The
        art creation will involve images of well known sports celebrities who
        will endorse the art creation. The artist will be paid a fee for creation
        of the work of art and the celebrity will be paid an endorsement fee.
        Once endorsed by a celebrity, the art creations would be the subject of
        a verification process that would be contracted for by an independent
        third party. The objective of the verification process is to provide a
        means of demonstrating to consumers that the art creations have been endorsed
        by the celebrity and are not the subject of fraud. An example of a celebrity
        endorsed art creation would

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be limited edition prints of images
  of a famous sport celebrity printed on canvass and signed by the celebrity.
  The limited edition prints would be sold through distributors to consumers in
  markets which offer the greatest ability to access the consumer who would pay
  the highest price for the art creation. An example of a market to be targeted
  is the cruise ship market.

We have identified three targeted product segments for our Image Sports business:

|1. | Fine Art & Assemblages
        Products  Products in this category include the following:
|-- | ------------------------------------------------------------------------------------------
|   | (i)                                                                                       
|   | (ii)                                                                                      
|   | (iii)                                                                                     
|   | (iv)                                                                                      

|2. | Sports and Celebrity
        Memorabilia Products Consists of affordable memorabilia items
        that allow customers to own a token from their favorite sports or celebrity
        hero including baseballs, bats, boxing gloves, sports jerseys, footballs,
        etc.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3. | Mass Market Products Consists of collectible reproductions which are quality affordable
        reproductions of the art created by retained artists for general enthusiasts,
        including posters and cards.                                                           

PLAN OF OPERATIONS

We anticipate that we will require approximately $4,500,000
  over the next twelve months in order to carry out the plan of operations for
  Image Innovations and Image Sports. This amount is comprised of the following
  amounts:

|1. | We anticipate that we will
        spend approximately $1,000,000 to fund the acquisition of inventory for
        Image Innovations. We will also apply a portion of the proceeds of the
        sale of inventory sold to the acquisition of additional inventory for
        the Image Innovations business. We anticipate that sales of inventory
        will be used to satisfy the revenue commitments pursuant to our license
        arrangements for Image Innovations, subject to our achieving the necessary
        sales levels. The amount that we spend to maintain our inventory will
        be dependent both on the amount of financing that we are able to achieve
        and upon our success in establishing sales of products bearing the brand
        names we have licensed.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | We anticipate spending approximately
        $100,000 to research and develop new products under license arrangements
        for marketing to customers. An example of a new product that we are currently
        developing is a Riddell styled football helmet incorporating
        an AM/FM radio pursuant to our license agreement with RHC Licensing Corporation.
        We also anticipate spending approximately $50,000 to attend trade shows
        to display and market our products to potential customers, including retailers.                                                                                                                                                                                                                                                     
|3. | We anticipate that we will
        spend approximately $2,000,000 to establish and maintain the inventory
        of celebrity art creations for the business of Image Sports. We anticipate
        that we will maintain our inventory of sports memorabilia at the present
        level of approximately $3,000,000 as opportunities to acquire unique memorabilia
        present themselves. The celebrity art creations                                                                                                                                                                                                                                                                                                                                                                          

Page 9 of 29

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inventory include the cost of creating
  the celebrity art creations and the cost of paying celebrities to endorse the
  art creations that are created for Image Sports. Our ability to acquire additional
  inventory for our Image Sports business will be contingent upon the amount of
  financing that we are able to obtain.

|4. | We anticipate that we will
        require approximately $400,000 to fund the acquisition and refurbishing
        of a warehouse located in Tannersville, New York. The purchase price of
        the warehouse is approximately $300,000 and we anticipate spending approximately
        $100,000 to refurbish the warehouse. We anticipate that this facility
        will handle all of our inventory warehousing once acquired and refurbished.
        We are presently renting distribution space from a facility in Bellingham,
        Washington on a fee-for-usage basis that we plan to phase out as our New
        York facility becomes available.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5. | We anticipate our overhead
        expenses which are currently approximately $100,000 per month to increase
        will increase as we introduce new products and increase our revenues.
        We anticipate that our overheads will stabilize at approximately 20% of
        revenues. If we achieve less than the necessary financing or if our sales
        are less than projected, then we will scale back our overhead expenses
        accordingly.                                                                                                                                                                                                  

Of the total amount of projected expenditures, we anticipate
  that approximately one-half of these expenses will be incurred over the next
  six month period, provided these expenses may be accelerated if we achieve the
  necessary financing. We are planning an equity for debt financing in order to
  raise the necessary funds ($4,500,000) to proceed with the plan of operations
  for Image Innovations and Image Sports. We do not have any arrangements for
  any equity or debt financing currently in place and there is no assurance that
  the necessary equity or debt financing will be achieved. Accordingly, there
  is a risk that we will not achieve additional financing and that we will have
  to scale back the plan of operations of Image Innovations and Image Sports to
  reflect the actual proceeds available to us. While H.E. Capital S.A. has provided
  loans to fund our initial business operations, there is no assurance that H.E.
  Capital S.A. will advance further funds to us in order to continue to fund our
  plan of operations. If we are not able to achieve the necessary financing, then
  our ability to complete our plan of operations and our business and financial
  condition will be adversely affected. Should we be unable to raise the $4,500,000
  we would adjust the operations by reducing the inventory levels and delaying
  the refurbishing of the warehouse in accordance with available funding.

WEB SITE

We maintain a web site at www.imageii.com
  which was developed to support the Image Innovations and the licensed products
  segment of our business. The web site to support Image Sports business is under
  development. The web site will be expanded to include a shareholder relations
  resource area which is currently under construction.

ADVISORY BOARD

We have established an advisory board consisting of: Gerry
  Cooney, Ken Danekyo, Rollie Fingers, George Gervin, Larry Holmes, Dave Kingman,
  and Debbie Meyers.

COMPETITION

There are numerous companies that compete in the same business
  as our Image Innovations and Image Sports businesses. Many of these competitors
  have established recognized brand names and presence in the market place and
  have substantially greater financial and business resources than we do. We plan
  to compete against this competition using the following strategies:

|1. | We plan to continuously develop and bring to market
        innovative proprietary products that our competitors do not have access
        to due to our license arrangements and are difficult to copy because of
        the long lead times for development, packaging, manufacturing, contract
        negotiation and sales distribution.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Page 10 of 29

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|2. | We plan to secure licensed
        properties and rights from licensors for products in particular categories
        in order to differentiate our products from those of our competitors.
        These license agreements typically require up-front royalty payments which
        act as a barrier to entry to other competitors who lack the financing
        to make these payments.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3. | We plan to develop extensive
        relationships with licensors and artists with the objective of being able
        to introduce unique products to the marketplace. We plan to develop these
        extensive relationships using our existing relationships that we have
        acquired in connection with our acquisition of certain of the assets of
        MDK Sports.          

COMPLIANCE WITH GOVERNMENT REGULATION

We are not aware of any existing or pending governmental regulation
  that will have a material impact on the operation of our business.

EMPLOYEES

We presently have 16 full-time equivalent consultants. We
  anticipate converting our full-time equivalent consultants to employees during
  our current fiscal year.

RESEARCH AND DEVELOPMENT EXPENDITURES

We did not incur any research and development expenditures
  during our period ended December 31, 2003.

SUBSIDIARIES

We have two subsidiaries, namely Image Innovations Inc., a
  Delaware corporation, and Image Innovations Sports & Entertainment Inc.,
  a Delaware corporation.

PATENTS AND TRADEMARKS

We do not own, either legally or beneficially, any patent
  or trademark.

Page 11 of 29

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ITEM 2.	DESCRIPTION OF PROPERTY.

Our principal business head office and the operations of Image
  Innovations is located in leased premises at 615-100 Park Royal, West Vancouver,
  B.C., V7T 1A2, Canada. These premises are comprised of 2,852 square feet and
  are leased for a term expiring March 31, 2009. We have recently moved to new
  office premises within the same office building due to the expansion of our
  business operations.

We also maintain an office for the operations of Image Sports
  & Ent. at 6061 Mains Street, Suite 1A, Tannersville, NY 12485. These premises
  are comprised of 2,000 square feet and are leased for a term expiring January
  11, 2011. Our business operations for our Image Sports business are carried
  out from these premises.

We are in the process of acquiring a warehouse at 6093 Main
  Street Tannersville, NY 12485. This warehouse is comprised of 9,000 square feet
  that is used for warehousing and inventory storage.

ITEM 3. LEGAL PROCEEDINGS.

We are not a party to any material legal proceedings and to
  our knowledge, no such proceedings are threatened or contemplated.

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

No matters were submitted to our security holders for a vote
  during the fourth quarter of our fiscal year ending December 31, 2003.

Page 12 of 29

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PART II

ITEM 5.	MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Market Information

Our shares of common stock are currently trading on the OTC
  Bulletin Board under the stock symbol IMGV. The Companys shares were traded
  under the stock symbol IMGV commencing August 2003 upon completion of our name
  change from Busanda Explorations Inc. to Image Innovations Holdings Inc. The
  high and the low bid information for our shares of common stock for each quarter
  of actual trading were:

|QUARTER             | HIGH ($) | LOW ($)
|------------------- | -------- | -------
|First Quarter 2003  | $0.00    | $0.00  
|Second Quarter 2003 | $0.00    | $0.00  
|Third Quarter 2003  | $1.10    | $0.00  
|Fourth Quarter 2003 | $1.15    | $1.10  

The source of the high and low bid information is the NASD
  OTC Bulletin Board. The market quotations provided reflect inter-dealer prices,
  without retail mark-up, markdown or commission and may not represent actual
  transactions.

Holders of Common Stock

As of the date of March 30, 2004, there were 91 registered
  shareholders of our common stock.

Dividends

There are no restrictions in our Articles of Incorporation
  or bylaws that restrict us from declaring dividends. The Nevada Revised Statutes,
  however, prohibit us from declaring dividends where, after giving effect to
  the distribution of the dividend:

| | (A) | We would not be able to pay our debts
        as they become due in the usual course of business; or                                                                                                                                               
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (B) | Our total assets would be less than
        the sum of our total liabilities, plus the amount that would be needed
        to satisfy the rights of shareholders who have preferential rights superior
        to those receiving the distribution.

We have neither declared nor paid any cash dividends on our
  capital stock and do not anticipate paying cash dividends in the foreseeable
  future. Our current policy is to retain any earnings in order to finance the
  expansion of our operations. Our board of directors will determine future declaration
  and payment of dividends, if any, in light of the then-current conditions they
  deem relevant and in accordance with the Nevada Revised Statutes.

Recent Sales of Unregistered Securities

We completed the following sales of our common stock during
  our fiscal year ended December 31, 2003, other than sales of our common stock
  that have been previously reported on our Quarterly Reports on Form 10-QSB that
  we have filed with the Securities and Exchange Commission.

|1. | On December 29, 2003, we completed a private
        placement with H.E. Capital S.A. whereby we sold 1,200,000 units at a
        price of $0.75 per unit for a purchase price of $900,000. The purchase
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Page 13 of 29

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price for the units was paid for by
  cancellation of indebtedness in the amount of $900,000 owed by us to H.E. Capital.
  Each unit consisted of one common share and one common share purchase warrant.
  Each common share purchase warrant entitles the warrant holder to purchase one
  common share at a price of $1.50 per share until December 29, 2005. No commission
  or fee was paid in connection with the offering. The sale was completed pursuant
  to Regulation S of the Act on the basis that H.E. Capital is a non-U.S. person,
  as defined under Regulation S of the Act. All securities issued were endorsed
  with a restrictive legend confirming that the securities could not be resold
  without registration under the Act or an applicable exemption from the registration
  requirements of the Act.

ITEM 6.	MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

PLAN OF OPERATIONS

Our plan of operations for the next twelve months is described under Item 1  Description of Business.

PRESENTATION OF FINANCIAL INFORMATION

We completed the acquisition of Image Innovations effective
  June 30, 2003. Under United States generally accepted accounting principles,
  our financial statements have been prepared using reverse-acquisition accounting
  principles, which resulted in Image Innovations acquiring Image Innovations
  Holdings for accounting purposes. Accordingly, Image Innovations is treated
  as the acquirer for accounting purposes, even though Image Innovations Holdings
  is the legal acquirer. Under United States generally accepted accounting principles,
  comparative figures for prior periods are based on the operating results of
  Image Innovations, but the type of share capital and number of issued and outstanding
  shares continue to reflect those of Image Innovations Holdings. Image Innovations
  was incorporated on January 14, 2003.

OPERATING RESULTS

Our operating results reflect our operating results from the
  period from January 14, 2003, being the date of incorporation of Image Innovations,
  to December 31, 2003. While we have commenced earning revenues, we continue
  to be in the start-up phase of our operations.

Revenues

We earned revenues of $101,743 for the period ended December
  31, 2003. All revenues were received from sales of battery products that had
  been brand labeled for a third party in connection with the promotion of their
  products and brand. We did not earn any revenues under our NFL and NHL license
  agreements during this period. We were engaged in 2003 in finalizing products
  for manufacture and distribution under these license agreements. Product finalization
  for initial products has been completed and inventory has been ordered from
  manufacturers and delivered to our warehouse for sale through our distributors.

Our cost of sales was $54,678 for the period ended December
  31, 2003 and was comprised of battery purchases and related expenses for the
  branded battery products that we sold. Our gross margin was $46,975, representing
  46.2% of revenues.

Expenses

We incurred expenses totaling $665,670 during the period ended
  December 31, 2003. These expenses were associated with the start-up of the Image
  Innovations business.

The largest component of our expenses was consulting expenses
  in the amount of $296,408. These expenses were primarily paid to our full-time
  equivalent consultants based in our Vancouver, British Columbia office.

Page 14 of 29

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We paid $125,000 of royalties under our NFL and NHL license
  agreements during the period ended December 31, 2003. All royalties paid constituted
  up-front royalty payments and minimum royalty payments in view of the fact that
  we did not sell any products under these license agreements during the period
  ended December 31, 2003.

We incurred product development expenses of $52,303 in connection
  with the development of products under our license agreements. Product development
  expenses included expenses associated with the development of our Riddell football
  helmet radio.

We incurred travel expenses of $74,419 during the period ended
  December 31, 2003. These travel expenses were incurred in connection with our
  negotiation our license agreements and our establishing contacts for our distribution
  network.

We anticipate that our operating expenses will continue to
  increase as we carry out our plan of operations for Image Innovations and Image
  Sports. These increased operating expenses will be incurred prior to our realizing
  revenues from sales of products by Image Innovations and Image Sports. In view
  of these factors, we continue to require financing in order to carry out our
  plan of operations.

Loss

We incurred a loss of $618,695 for the period ended December
  31, 2003.

LIQUIDITY AND FINANCIAL CONDITION

We had working capital of $222,611 including cash of $273,111
  as of December 31, 2003.

We anticipate that we will require approximately $4,500,000
  over the next twelve months in order to carry out the plan of operations for
  Image Innovations and Image Sports, as described under Item 1 Description
  of Business. Our ability to generate revenues will depend on our ability to
  obtain financing to fund our plan of operations and our success in implementing
  our plan of operations. We have no arrangement for the financing of the business
  of Image Innovations and there is no assurance that the required financing will
  be obtained. There is no assurance that we will be able to obtain the financing
  required to enable us to carry out our plan of operations.

We have been dependent upon H.E. Capital S.A., a related party,
  in order to fund the business of Image Innovations to date. H.E. Capital originally
  agreed to advance up to $500,000 to Image Innovations in order to finance the
  start-up of our business operations pursuant to a loan agreement between H.E.
  Capital and Image Innovations dated January 14, 2003. We entered into an amendment
  to the loan agreement with H.E. Capital on November 5, 2003 whereby H.E. Capital
  agreed to advance up to $1,000,000 under the terms of the loan agreement. H.E.
  Capital has advanced to Image Innovations a total of $1,075,704 as of December
  31, 2003 and an amount of $175,704 was payable to H.E. Capital S.A. as of December
  31, 2003. Of the amount advanced during 2003, an aggregate of $900,000 was converted
  into shares and share purchase warrants effective December 29, 2003. See Item
  12. Certain Relationships and Related Transactions. The loans bear interest
  at the rate of 9% per annum and are repayable upon demand. The loans are secured
  by a general security agreement granted by Image Innovations against all of
  its assets. There is no assurance that H.E. Capital S.A. will advance additional
  amounts in order to continue to fund our business. Subsequent to December 31,
  2003, the amount outstanding to H.E. Capital and additional amounts advanced
  by H.E. Capital have been repaid by the issuance of shares and share purchase
  warrants. See Item 12. Certain Relationships and Related Transactions.

We plan to pursue equity or debt financings through private
  placements of our common stock or common stock and share purchase warrants in
  order to raise the funds necessary to enable us to pursue our plan of operations
  for the next twelve months. We do not have any arrangements in place for equity
  or debt financings and there is no assurance that any equity or debt financing
  will be achieved. If an equity financing is achieved, then it is anticipated
  that existing shareholders will suffer dilution.

Page 15 of 29

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CRITICAL ACCOUNTING POLICIES

Revenue and Cost Recognition

Revenue on product sales is recognized when persuasive evidence
  of an arrangement exists, such as when a purchase order or contract is received
  from the customer, the price is fixed, title to the goods has changed and there
  is a reasonable assurance of collection of the sales proceeds. We obtain written
  purchase authorizations from our customers for a specified amount of product
  at a specified price and consider delivery to have occurred at the time of shipment.
  Revenue is recognized at shipment and we record a reserve for estimated sales
  returns, which is reflected as a reduction of revenue at the time of revenue
  recognition.

Use of estimates

The preparation of financial statements in conformity with
  accounting principles generally accepted in the United States requires management
  to make estimates and assumptions that affect the reported amounts of assets
  and liabilities and the disclosure of contingent assets and liabilities at the
  date of the financial statements as well as the reported amounts of revenues
  and expenses during the reporting period. Actual results could differ from those
  estimates. These estimates and assumptions relate to recording net revenue,
  collectibility of accounts receivable, and the realizability of other intangible
  assets, accruals, income taxes, inventory realization and other factors. Management
  has exercised reasonable judgment in deriving these estimates; however, actual
  results could differ from these estimates. Consequently, change in conditions
  could affect our estimates.

Fair value of financial instruments

We have various financial instruments, including cash, cash
  equivalents, accounts receivable, accounts payable and capitalized lease obligations.
  We believe the carrying values of our financial instruments approximate their
  values. The carrying amount of the short- and long-term debt approximates fair
  value at December 31, 2003 based on interest rates available to us and debt
  instruments with similar terms.

Stock-based compensation

We believe that stock-based compensation is a critical accounting
  policy that affects our financial condition and results of operations. Statement
  of Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based
  Compensation defines a fair-value based method of accounting for stock-based
  employee compensation plans and transactions in which an entity issues its equity
  instruments to acquire goods or services from non-employees, and encourages
  but does not require companies to record compensation cost for stock-based employee
  compensation plans at fair value. The Company has chosen to continue to account
  for employee stock-based compensation using the intrinsic value method prescribed
  in Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
  Employees ("APB No. 25") and related interpretations

Foreign Exchange

Our head office is located in Canada, whereas we conduct business
  primarily in United States dollars. Assets and liabilities of the Company, which
  are denominated in foreign currencies, are translated at exchange rates prevailing
  at the balance sheet date. Non-monetary assets and liabilities are translated
  at historical rates. Revenues and expenses are translated at average rates throughout
  the year. The unrealized translation gains and loses are accumulated in a separate
  component of stockholders equity translation exchange gains and losses
  are reflected in net earnings.

Page 16 of 29

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ITEM 7.	FINANCIAL STATEMENTS.

Included with this Annual Report on Form 10-KSB are our audited
  financial statements for the year ended December 31, 2003 that are comprised
  of the following:

|1. | Auditors Report;                                                                  
|-- | -----------------------------------------------------------------------------------
|2. | Audited Financial Statements for the year ended
      December 31, 2003, including:
|   | a.                                                                                 
|   | b.                                                                                 
|   | c.                                                                                 
|   | d.                                                                                 
|   | e.                                                                                 

Page 17 of 29

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IMAGE INNOVATIONS INC.

Audited Financial Statements

December 31, 2003



F-1

---

INDEPENDENT AUDITORS REPORT

To the Board of Directors 
  Image Innovations Holdings Inc.

I have audited the accompanying consolidated balance sheet
  of Image Innovations Holdings Inc.(a development stage company), (Company)
  as of December 31, 2003 and the related consolidated statement of operations,
  consolidated statement of stockholders equity, and consolidated statement
  of cash flows for the period from inception (January 14, 2003) to December 31,
  2003. These financial statements are the responsibility of the Companys
  management. My responsibility is to express an opinion on these statements based
  on my audit.

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

In my opinion, the financial statements referred to above
  present fairly, in all material respects, the financial position of Image Innovations
  Holdings Inc. (a development stage company) as of December 31, 2003 and the
  results of its operations and its cash flows for the period from inception (January
  14, 2003) to December 31, 2003, in conformity with generally accepted accounting
  principles in the United States.

Clyde Bailey P.C.

San Antonio, Texas 
  March 10, 2004

F-2

---

IMAGE INNOVATIONS HOLDINGS INC. (A development stage enterprise) Consolidated Balance Sheet

|                                                         |   | December 31 |  
|-------------------------------------------------------- | - | ----------- | -
|                                                         |   | 2003        |  
|                                                         |   |             |  
|ASSETS                                                   |   |             |  
|                                                         |   |             |  
|Current Assets                                           |   |             |  
|Cash                                                     | $ | 273,111     |  
|Amounts receivable from tax authorities                  |   | 12,000      |  
|Prepaid Expenses                                         |   | 135,554     |  
|Total current assets                                     |   | 420,665     |  
|Equipment (note 4)                                       |   | 17,317      |  
|                                                         |   |             |  
|Total assets                                             | $ | 437,982     |  
|                                                         |   |             |  
|LIABILITIES AND SHAREHOLDER'S EQUITY                     |   |             |  
|                                                         |   |             |  
|Current Liabilities                                      |   |             |  
|Accounts Payable                                         | $ | 22,350      |  
|Demand Loan H.E. Capital S.A. (note 5)                   |   | 175,704     |  
|Total current liabilities                                |   | 198,054     |  
|                                                         |   |             |  
|Stockholders' equity                                     |   |             |  
|Preferred Stock                                          |   | -           |  
|1,000,000 authorized preferred shares,
      par value $ |   |             |  
|Nil shares issued and outstanding                        |   |             |  
|Common Stock (note 6)                                    |   | 19,370      |  
|50,000,000 authorized shares, par
      value $          |   |             |  
|19,370,000 shares issued and outstanding                 |   |             |  
|1,200,000 share warrants issued and
      outstanding    |   |             |  
|Additional Paid in Capital                               |   | 859,253     |  
|                                                         |   |             |  
|Accumulated Deficit                                      |   | (638,695    | )
|Total stockholders' equity                               |   | 239,928     |  
|                                                         |   |             |  
|Total liabilities and equity                             | $ | 437,982     |  

The accompanying notes are integral part of the consolidated
  financial statements.

F-3

---

IMAGE INNOVATIONS HOLDINGS INC. (A development stage enterprise) Consolidated Statement of Operations

|                                            |   | Period ended |  
|------------------------------------------- | - | ------------ | -
|                                            |   | December 31  |  
|                                            |   | 2003         |  
|                                            |   |              |  
|Revenues:                                   |   |              |  
|Revenues                                    | $ | 101,743      |  
|                                            |   | 101,743      |  
|                                            |   |              |  
|                                            |   |              |  
|Cost of Sales                               |   | 54,768       |  
|Gross Margin                                |   | 46,975       |  
|Expenses:                                   |   |              |  
|Advertising & Marketing                     |   | 18,693       |  
|Depreciation                                |   | 1,342        |  
|Automobile Expenses                         |   | 2,762        |  
|Brokerage                                   |   | 3,006        |  
|Consulting                                  |   | 296,408      |  
|Insurance                                   |   | 13,812       |  
|Legal and Audit                             |   | 6,354        |  
|Office & General Expenses                   |   | 25,964       |  
|Postage and Courier                         |   | 7,924        |  
|Product Delivery                            |   | 1,239        |  
|Product Development                         |   | 52,303       |  
|Rent and Utilities                          |   | 19,711       |  
|Royalties                                   |   | 125,000      |  
|Telecommunications                          |   | 12,306       |  
|Transfer Agent and Filing Fees              |   | 2,574        |  
|Travel                                      |   | 74,419       |  
|Warehousing                                 |   | 1,853        |  
|                                            |   | 665,670      |  
|Loss before Taxes                           |   | (618,695     | )
|                                            |   |              |  
|Provision for Income Taxes:                 |   |              |  
|Income Tax                                  |   | -            |  
|                                            |   |              |  
|Net Income (Loss)                           | $ | (618,695     | )
|                                            |   |              |  
|Basic and Diluted Earnings Per Common Share | $ | (0.06        | )
|Weighted Average number of Common Shares    |   |              |  
|used in per share calculations              |   | 9,532,328    |  

The accompanying notes are integral part of consolidated financial
  statements.

F-4

---

IMAGE INNOVATIONS HOLDINGS INC. Consolidated Statement of Changes in Shareholders' Equity
  (Unaudited)

|                                           |            |   |   | $0.001    |  |   | Additional      |   |   | Accumulated |   |   | Shareholders' |  
|------------------------------------------ | ---------- | - | - | --------- |  | - | --------------- | - | - | ----------- | - | - | ------------- | -
|                                           | Shares     |   |   | Par Value |  |   | Paid-In Capital |   |   | Deficit     |   |   | Equity        |  
|                                           |            |   |   |           |  |   |                 |   |   |             |   |   |               |  
|Shares issued on incorporation on          |            |   |   |           |  |   |                 |   |   |             |   |   |               |  
|January 14, 2003                           | 1,000      |   | $ | -         |  | $ | 1,000           |   | $ | -           |   | $ | 1,000         |  
|                                           |            |   |   |           |  |   |                 |   |   |             |   |   |               |  
|Prior Image share capital, replaced        | (1,000     | ) |   | -         |  |   | -               |   |   | -           |   |   | -             |  
|by Busanda share
      capital upon        |            |   |   |           |  |   |                 |   |   |             |   |   |               |  
|consolidation
      under reverse takeover |            |   |   |           |  |   |                 |   |   |             |   |   |               |  
|accounting                                 |            |   |   |           |  |   |                 |   |   |             |   |   |               |  
|                                           |            |   |   |           |  |   |                 |   |   |             |   |   |               |  
|Current Image share capital, replaced      | 18,170,000 |   |   | 18,170    |  |   | (1,000          | ) |   | (17,170     | ) |   | -             |  
|by
      Busanda share capital upon        |            |   |   |           |  |   |                 |   |   |             |   |   |               |  
|consolidation
      under reverse takeover |            |   |   |           |  |   |                 |   |   |             |   |   |               |  
|accounting                                 |            |   |   |           |  |   |                 |   |   |             |   |   |               |  
|                                           |            |   |   |           |  |   |                 |   |   |             |   |   |               |  
|Net monetary liabilities of Busanda        |            |   |   |           |  |   |                 |   |   |             |   |   |               |  
|acquired by Image                          | -          |   |   | -         |  |   | -               |   |   | (22,377     | ) |   | (22,377       | )
|                                           |            |   |   |           |  |   |                 |   |   |             |   |   |               |  
|Transferred to Additional Paid In          |            |   |   |           |  |   |                 |   |   |             |   |   |               |  
|Capital                                    | -          |   |   | -         |  |   | (39,547         | ) |   | 39,547      |   |   | -             |  
|                                           |            |   |   |           |  |   |                 |   |   |             |   |   |               |  
|Adjustment to Retained Deficit to          |            |   |   |           |  |   |                 |   |   |             |   |   |               |  
|recognize costs related to the             |            |   |   |           |  |   |                 |   |   |             |   |   |               |  
|transaction                                | -          |   |   | -         |  |   | -               |   |   | (20,000     | ) |   | (20,000       | )
|                                           |            |   |   |           |  |   |                 |   |   |             |   |   |               |  
|Shares issue for payment of debt           | 1,200,000  |   |   | 1,200     |  |   | 898,800         |   |   | -           |   |   | 900,000       |  
|                                           |            |   |   |           |  |   |                 |   |   |             |   |   |               |  
|Net Income (Loss)                          | -          |   |   | -         |  |   | -               |   |   | (618,695    | ) |   | (618,695      | )
|                                           |            |   |   |           |  |   |                 |   |   |             |   |   |               |  
|                                           |            |   |   |           |  |   |                 |   |   |             |   |   |               |  
|Balance, December 31, 2003                 | 19,370,000 |   | $ | 19,370    |  | $ | 859,253         |   | $ | (638,695    | ) | $ | 239,928       |  

The accompanying notes are integral part of consolidated financial
  statements.

F-5

---

IMAGE INNOVATIONS HOLDINGS INC. (A development stage enterprise) Consolidated Statement of Cash Flows

|                                               |   | Period ended |  
|---------------------------------------------- | - | ------------ | -
|                                               |   | December 31  |  
|                                               |   | 2003         |  
|                                               |   |              |  
|Cash Flows from Operating Activities:          |   |              |  
|Net loss                                       | $ | (618,695     | )
|Adjustments to reconcile net loss to net cash  |   |              |  
|provided (used) to operating activities:       |   |              |  
|Depreciation                                   |   | 1,342        |  
|Increase (Decrease) in Working Capital         |   | (182,204     | )
|                                               |   | (180,862     | )
|Net Cash Used in Operating Activities          |   | (799,557     | )
|                                               |   |              |  
|                                               |   |              |  
|Cash Flows from Investing Activities:          |   |              |  
|Purchase of equipment                          |   | (18,659      | )
|Net Cash Used in Investing Activities          |   | (18,659      | )
|                                               |   |              |  
|                                               |   |              |  
|Cash Flows from Financing Activities:          |   |              |  
|Proceeds from H.E. Capital S.A. demand loan    |   | 1,075,704    |  
|Issuance of Stock for Cash                     |   | 1,000        |  
|Cash received on acquisition of Image Holdings |   | 14,623       |  
|                                               |   |              |  
|Net Cash Provided for Financing Activities     |   | 1,091,327    |  
|Net increase in cash                           |   | 273,111      |  
|                                               |   |              |  
|Cash Balance, beginning of period              |   | -            |  
|Cash Balance, end of period                    | $ | 273,111      |  
|                                               |   |              |  
|                                               |   |              |  
|Supplemental Disclosures:                      |   |              |  
|Cash Paid for interest                         | $ | -            |  
|Cash Paid for income taxes                     |   | -            |  
|Non-cash transactions                          |   |              |  
|Shares issued to pay H.E. Capital demand loan  |   | 900,000      |  

The accompanying notes are integral part of consolidated financial
  statements.

F-6

---

IMAGE INNOVATIONS HOLDINGS INC. 
  (A development stage enterprise) 
  Notes to Consolidated Financial Statements

|As at December 31, 2003
|-----------------------

|1. | Development Stage Enterprise
      The accompanying financial statements have been prepared
        on a going concern basis, which contemplates the realization of assets
        and the satisfaction of liabilities and commitments in the normal course
        of business. During its first period of operations the Company did not
        generate sufficient revenues to pay its operating costs and has accumulated
        operating losses. The continuation of the Company is dependent upon achieving
        a profitable level of operations as well as maintaining existing long-term
        financing. Management plans to raise equity capital to finance the operations
        and capital requirements of the Company. The Company has committed all
        of its net working capital as at December 31, 2003 to complete the development
        of the Companys business plan. It plans to continue the design,
        installation and operation of promotional licensing and branding and marketing
        efforts to commence the operation of its newly chosen line of business
        and to secure further long-term financing. While the Company is expending
        its best efforts to achieve the above plans, there is no assurance that
        any such activity will generate funds that will be available to sustain
        operations.                                                                                                                                                                                                                                                                                                                           
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|2. | Basis of preparation and presentation:
      The accompanying consolidated financial statements have
        been prepared to reflect the legal acquisition on June 30, 2003 of Image
        Innovations Inc. (Image) by Image Innovations Holdings Inc.
        formerly Busanda Explorations Inc. (Image Holdings) (the Acquisition).
        The consolidated financial statements of Image Holdings give effect to
        the Acquisition under which the shareholders of Image exchanged all of
        their common shares of Image for common shares of Image Holdings.
      Notwithstanding its legal form, the Acquisition has
        been accounted for as a reverse takeover, as the former shareholders of
        Image own in aggregate approximately 55% of the common shares of Image
        Holdings, and so are now the majority shareholders of Image Holdings.
        Also, as Image Holdings was an inactive company with nominal net non-monetary
        assets, the Acquisition has been accounted for as an issuance of stock
        by Image accompanied by a recapitalization (see note 6 Common Stock).
        The net monetary liabilities of Image Holdings acquired by Image have
        been charged to the accumulated deficit.
      As required under reverse takeover accounting, these
        financial statements have been issued under the name of Image Holdings
        and reflect the share capital structure of Image Holdings. However, they
        reflect the financial statements of Image and account for the Acquisition
        as an acquisition of Image Holdings by Image. The consolidated financial
        statements therefore include:
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

F-7

---

IMAGE INNOVATIONS HOLDINGS INC. 
  (A development stage enterprise) 
  Notes to Consolidated Financial Statements

|As at December 31, 2003
|-----------------------

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | December 31, 2003. The results of operations, cash
        flows and changes in shareholders equity (deficit) of Image Holdings
        are included commencing June 30, 2003, the date of the Acquisition.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                             
|   | Image was incorporated on
        January 14, 2003. The consolidated statement of operations has been prepared
        for the period from this date to December 31, 2003. No comparative information
        has been provided as this is the first period of operations for Image.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                             
|3. | Summary of Significant Accounting Policies:
      Organization
      Image Holdings was incorporated under the laws of the
        State of Nevada on March 3, 1998 for the purpose to promote and carry
        on any lawful business for which a corporation may be incorporated under
        the laws of the State of Nevada.
      Prior to the Acquisition Image Holdings, then Busanda
        Explorations Inc., had entered into an agreement to purchase mineral property
        claims in the Laird Mining Division, British Columbia, Canada, but lost
        the claim due to lack of funding. Image Holdings had no other business.
        Image Holdings was therefore an inactive company with nominal net non-monetary
        assets, the shares of which were and continue to be publicly traded on
        the OTC Bulletin Board.
      Image was incorporated under the laws of the State of
        Delaware on January 14, 2003 for the purpose to promote and carry on any
        lawful business for which a corporation may be incorporated under the
        laws of the State of Delaware. Image has a total of 1,500 authorized common
        shares with no par value and has 1,000 common shares issued and outstanding
        as of June 30, 2003.
      Image has been established to become a recognized player
        in the field of promotional licensing and branding. Images goal
        is to add value to a wide variety of relatively low cost, but desirable
        or essential products, by endorsing them with the brand logos of sports
        teams and/or household trademarks.
      Equipment
      Equipment is recorded at cost. The company provides
        for amortization using the straight-line method at rates designed to amortize
        the cost of the equipment over its estimated useful lives. The rates are
        as follows:

|Furniture and equipment | 6 years
|----------------------- | -------
|Computer equipment      | 4 years
|Computer software       | 2 years

F-8

---

IMAGE INNOVATIONS HOLDINGS INC. 
  (A development stage enterprise) 
  Notes to Consolidated Financial Statements

|As at December 31, 2003
|-----------------------

| | Accounting Method
      The Companys financial statements are prepared
        using the accrual method of accounting. Revenues are recognized when earned
        and expenses when incurred. Fixed assets are stated at cost. Depreciation
        and amortization using the straight-line method for financial reporting
        purposes and accelerated methods for income tax purposes.
      Future income taxes
      The Company has adopted the provisions of Financial
        Accounting Standards Board Statement No. 109, Accounting for Income Taxes.
        The Company accounts for income taxes pursuant to the provisions of the
        Financial Accounting Standards Board Statement No. 109, Accounting
        for Income Taxes, which requires an asset and liability approach
        to calculating deferred income taxes. The asset and liability approach
        requires the recognition of deferred tax liabilities and assets for the
        expected future tax consequences of temporary differences between the
        carrying amounts and the tax basis of assets and liabilities.
      Use of Estimates
      The preparation of financial statements in conformity
        with generally accepted accounting principles requires management to make
        estimates and assumptions that affect the reported amounts of assets and
        liabilities and disclosure on contingent assets and liabilities at the
        date of the financial statements, and the reported amounts of revenues
        and expenses during the reporting period. Actual results could differ
        from those estimates.
      Foreign Exchange
      Assets and liabilities of the Company, which are denominated
        in foreign currencies, are translated at exchange rates prevailing at
        the balance sheet date. Non-monetary assets and liabilities are translated
        at historical rates. Revenues and expenses are translated at average rates
        throughout the year. The unrealized translation gains and loses are accumulated
        in a separate component of stockholders equity Translation exchange
        gains and losses are reflected in net earnings.
      Earnings per Common Share
      The Company adopted Financial Accounting Standards (SFAS)
        No. 128, Earnings Per Share, which simplifies the computation
        of earnings per share requiring the restatement of all prior periods.
      Basic earnings per share are computed on the basis of
        the weighted average number of common shares outstanding during each year.
      Diluted earnings per share are computed on the basis
        of the weighted average number of common shares and dilutive securities
        outstanding. Dilutive securities having an anti-dilutive effect on diluted
        earnings per share are excluded from the calculation.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-9

---

IMAGE INNOVATIONS HOLDINGS INC. 
  (A development stage enterprise) 
  Notes to Consolidated Financial Statements

|As at December 31, 2003
|-----------------------

| | Fair Value of Financial Instruments
      The Financial Accounting Standards Board (FASB)
        Statement No. 107 Disclosure About Fair Value of Financial Instruments
        is a part of a continuing process by the FASB to improve information on
        consolidated financial statements. The carrying amounts reported in the
        balance sheets for The consolidated Image Holdings assets and liabilities
        approximate their fair values as of December 31, 2003.
      Recent Accounting Pronouncements
      In November 2002, the FASB issued Interpretation No.
        45, "Guarantor's Accounting and Disclosure Requirements for Guarantees,
        including Indirect Guarantees of Indebtedness of Others" ("Interpretation
        No. 45"). Interpretation No. 45 elaborates on the existing disclosure
        requirements for most guarantees, including loan guarantees such as standby
        letters of credit. It also clarifies that at the time a company issues
        a guarantee, the company must recognize an initial liability for the fair
        market value of the obligations it assumes under that guarantee and must
        disclose that information in its interim and annual financial statements.
        The initial recognition and measurement provisions of Interpretation No.
        45 apply on a prospective basis to guarantees issued or modified after
        December 31, 2002. Interpretation No. 45 did not have an effect on the
        financial statements.
      In January 2003, the FASB issued Interpretation No.
        46, "Consolidation of Variable Interest Entities" ("Interpretation No.
        46"), that clarifies the application of Accounting Research Bulletin No.
        51, "Consolidated Financial Statements," to certain entities in which
        equity investors do not have the characteristics of a controlling financial
        interest or do not have sufficient equity at risk for the entity to finance
        its activities without additional subordinated financial support from
        other parties. Interpretation No. 46 is applicable immediately for variable
        interest entities created after January 31, 2003. For variable interest
        entities created prior to January 31, 2003, the provisions of Interpretation
        No. 46 are applicable no later than July 1, 2003. Interpretation No. 46
        did not have an effect on the financial statements.
      In December 2002, the FASB issued SFAS No. 148, "Accounting
        for Stock-Based Compensation -- Transition and Disclosure, an amendment
        of FASB Statement No. 123" ("SFAS 148"). This Statement amends SFAS 123
        to provide alternative methods of transition for a voluntary change to
        the fair value method of accounting for stock-based employee compensation.
        In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to
        require prominent disclosures in both annual and interim financial statements.
        Certain of the disclosure modifications are required for fiscal years
        ending after December 15, 2002 and are included in the notes to these
        consolidated financial statements.
      Statement of Financial Accounting Standards SFAS No.
        149, "Amendment of Statement 133 on Derivative Instruments and Hedging
        Activities", SFAS No. 150, "Accounting for Certain Financial Instruments
        with Characteristics of both Liabilities and Equity", were recently issued.
        SFAS No, 149, and 150 have no current applicability to the Company or
        their effect on the financial statements would not have been significant.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-10

---

IMAGE INNOVATIONS HOLDINGS INC. 
  (A development stage enterprise) 
  Notes to Consolidated Financial Statements

|As at December 31, 2003
|-----------------------

|4. | Equipment
|-- | ---------

| |                         |   |        |  |   | Accumulated  |  |   |                | 
| | ----------------------- | - | ------ |  | - | ------------ |  | - | -------------- | 
| |                         |   | Cost   |  |   | Amortization |  |   | Net book Value | 
| | Furniture and equipment | $ | 10,659 |  | $ | 137          |  | $ | 10,522         | 
| | Computer equipment      |   | 5,872  |  |   | 762          |  |   | 5,110          | 
| | Computer software       |   | 2,128  |  |   | 443          |  |   | 1,685          | 
| |                         | $ | 18,659 |  | $ | 1,342        |  | $ | 17,317         | 

|   | A total of $1,342 has been recognized as depreciation expense for the
      period ended Decmeber 31, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|5. | Demand Loan H. E. Capital S. A.
      We have been dependent upon H.E. Capital S.A. (H.E
        Capital), a related party in order to fund the business of Image
        to date. H.E. Capital has agreed to advance funds to Image in order to
        finance the start-up of our business operations pursuant to a loan agreement
        between H.E. Capital and Image.
      On December 30 the Company sold 1,200,000 Units consisting
        of one (1) Common Share and one (1) Warrant to H.E. Capital at a purchase
        price equal to US$0.75 per Unit, for an aggregate purchase price of US$900,000.
        In accordance with The Regulation S Subscription Agreement made between
        the Company an H.E. Capital. The Purchase Price was paid by H.E. Capital
        by cancellation of $900,000 of indebtedness of the Company to H.E. Capital.
      H.E. Capital had advanced to Image a total of $175,704
        as of December 31, 2003. The loans are secured by a general security agreement
        granted by Image against all of its assets. There is no assurance that
        H.E. Capital will advance additional amounts in order to fund the business
        of Image.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|6. | Common Stock
      Image Holdings has authorized 50,000,000 common shares
        with a par value of $0.001 per share. At December 31, 2003, Image Holdings
        has issued 19,370,000 shares of common stock to various investors.
      Image Holdings has authorized 1,000,000 preferred shares
        with a par value of $0.01 per share. At December 31, 2003 no preferred
        shares have been issued.
      Image Holdings has issued 1,200,000 Warrants entitling
        the Holder to purchase one common share of the Company at a price of $1.50
        per share on or before December 31, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

F-11

---

IMAGE INNOVATIONS HOLDINGS INC. 
  (A development stage enterprise) 
  Notes to Consolidated Financial Statements

|As at December 31, 2003
|-----------------------

|7. | Federal Income Tax
|-- | ------------------

At December 31, 2003 deferred taxes consisted of the following:

|                                 |   | 2003     |  
|-------------------------------- | - | -------- | -
|Deferred tax assets,             |   |          |  
|Net operating loss carry-forward | $ | 210,356  |  
|Less valuation allowance         |   | (210,356 | )
|Net deferred taxes               | $ | -0-      |  

|   | The valuation allowance offsets the net deferred tax
        asset for which there is no assurance of recovery. The change in the valuation
        allowance for the years ended December 31, 2003 totaled $210,356. The
        net operating loss carry- forward expires in year 2023. The valuation
        allowance will be evaluated at the end of each year, considering positive
        and negative evidence about whether the deferred tax asset will be realized.
      At that time, the allowance will either be increased
        or reduced; reduction could result in the complete elimination of the
        allowance if positive evidence indicates that the value of the deferred
        tax assets is no longer impaired and the allowance is no longer required.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|8. | Commitments
      a. License agreements
      Image has entered into a license agreement with NHL
        Enterprises, LP for the license of the National Hockey League name and
        other NHL logos and indicia for use in connection with batteries and other
        battery related products. The license is a non-exclusive license for the
        United States. The license is for a term expiring December 31, 2004.
      Image has also entered into a letter of intent with
        NFL Properties LLC for the grant of a license to use the National Football
        League mark and other related marks in connection with batteries, flashlights
        with batteries, e-badge with batteries, radios with batteries, and universal
        remote controls with batteries. The license will be limited to the United
        States. The license will be for a term expiring March 31, 2004 and is
        subject to the execution of a definitive license agreement with NFL Properties
        LLC.
      Image has also entered into a license agreement with
        Riddell Sports Group. Riddell is the official supplier of Football helmets
        to the NFL and supplies helmets to most football teams of the NCAA and
        the CFL. Under the terms of the agreement Image Innovations Inc. will
        manufacture and distribute a pocket size AM/FM radio with ear jacks, replicating
        Riddell-style football helmet. The initial term of the agreement is for
        one year with renewal terms up to the year 2005 if certain conditions
        are fulfilled.
      Image has entered into a license agreement with ABC Sports
        the broadcast network of Monday Night Football, Super Bowl XXXVII, the
        National Basketball Association, the Bowl Championship Series, the National
        Hockey League, World Cup soccer, figure skating, professional golf, Indy
        Racing League

F-12

---

IMAGE INNOVATIONS HOLDINGS INC. 
  (A development stage enterprise) 
  Notes to Consolidated Financial Statements

|As at December 31, 2003
|-----------------------

| | and Formula One. The License secured will be for the
        development and marketing of officially licensed fiber optic apparel products
        in the United States and Canada for Monday Night Football, ABC Sports,
        ABC Wide World of Sports and ABCs Bowl Championship Series.
      Image plans to pursue negotiations with further sports
        leagues and sports teams to obtain additional license rights.
      The annual payments for these licenses for the next
        three years are as follow:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2004 | $85,000
|---- | -------
|2005 | 130,000
|2006 | 40,000 

| | b. Lease commitments
      The company has entered into a lease commencing April
        1, 2004 for a five year term for office space. The annual payments under
        this lease for the next five years are as follows:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2004 | $21,584
|---- | -------
|2005 | 32,376 
|2006 | 32,376 
|2007 | 32,376 
|2008 | 32,376 

|9. | Subsequent Events
      On March 15, 2004 the Company announced it had acquired
        the assets and operations of MDK Sports and Entertainment in exchange
        for 8 million common shares of the Company.
      On January 2, 2004 the Board of Directors of the Company
        established a stock option plan (the "2004 Plan") to attract, retain and
        motivate directors, officers and employees of and consultants to the Company
        and its subsidiaries, and other eligible persons, and thereby advance
        the Companys interests by affording such persons with an opportunity
        to acquire an equity interest in the Company through the issuance of stock
        options.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-13

---

|ITEM 8.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
      AND FINANCIAL DISCLOSURE.
|--------------------------------------------------------------------------------------------------
|                                                                                                  
|Not applicable.                                                                                   
|                                                                                                  
|ITEM 8A.CONTROLS AND PROCEDURES.                                                                  

As required by Rule 13a-15 under the Securities Exchange Act
  of 1934 (the Exchange Act), we carried out an evaluation of the
  effectiveness of the design and operation of our disclosure controls and procedures
  as of December 31, 2003, being the date of our most recently completed fiscal
  year end. This evaluation was carried out under the supervision and with the
  participation of our Chief Executive Officer, Alain Kardos, and our Chief Financial
  Officer, Derick Sinclair. Based upon that evaluation, our Chief Executive Officer
  and Chief Financial Officer concluded that our disclosure controls and procedures
  are effective in timely alerting management to material information relating
  to us required to be included in our periodic SEC filings. There have been no
  significant changes in our internal controls or in other factors that could
  significantly affect internal controls subsequent to the date we carried out
  our evaluation.

Disclosure controls and procedures are controls and other
  procedures that are designed to ensure that information required to be disclosed
  our reports filed or submitted under the Exchange Act is recorded, processed,
  summarized and reported, within the time periods specified in the Securities
  and Exchange Commission'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.

During our most recently completed fiscal year ended December
  31, 2003, there were no changes in our internal control over financial reporting
  that have materially affected, or are reasonably likely to affect, our internal
  control over financial reporting.

The term internal control over financial reporting
  is defined as a process designed by, or under the supervision of, the registrant's
  principal executive and principal financial officers, or persons performing
  similar functions, and effected by the registrant's board of directors, management
  and other personnel, to provide reasonable assurance regarding the reliability
  of financial reporting and the preparation of financial statements for external
  purposes in accordance with generally accepted accounting principles and includes
  those policies and procedures that:

| | (1) | Pertain to the maintenance of records
        that in reasonable detail accurately and fairly reflect the transactions
        and dispositions of the assets of the registrant;                                                                                                                                                                                                 
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Provide reasonable assurance that transactions
        are recorded as necessary to permit preparation of financial statements
        in accordance with generally accepted accounting principles, and that
        receipts and expenditures of the registrant are being made only in accordance
        with authorizations of management and directors of the registrant; and
| | (3) | Provide reasonable assurance regarding
        prevention or timely detection of unauthorized acquisition, use or disposition
        of the registrant's assets that could have a material effect on the financial
        statements.                                                                                                                                          

Page 18 of 29

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PART III

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

Our executive officers and directors and their respective
  ages as of March 31, 2004 are as follows:

Name of Directors:

Alain Kardos 
  Derick Sinclair 
  Michael Radcliffe 
  James Armenakis 
  David Whittle

|Executive Officers | Office                                          
|------------------ | ------------------------------------------------
|                   |                                                 
|Alain Kardos       | President, Secretary and Chief Executive Officer
|Derick Sinclair    | Treasurer and Chief Financial Officer           

Set forth below is the background and experience of each of our current officers and directors.

Derick Sinclair  Mr. Sinclair has been our chief
  financial officer and a director since February 24, 2004. Mr. Sinclair was president,
  secretary and treasurer of Busanda Explorations Inc., now Image Innovations
  Holdings Inc., from its inception in 1998 to June 30, 2003. Since March 1998,
  he has also been President of Natalma Industries Inc., a publicly-traded exploration
  stage mining company traded on the OTCBB:NTAL. Since March 1997, he has also
  been the President of Cosmah Industries, Inc., a privately-held exploratory
  mining company in Vancouver, Canada. From March, 1996 to November 2003, he was
  CFO and Vice President of Administration for Navigata Communications Inc, formerly
  RSL COM Canada Inc., and Westel Telecommunications in Vancouver, B.C. Based
  in North Vancouver, British Columbia with regional offices in Ontario, Quebec
  and Alberta, Navigata is a communications company providing data and voice services.
  From December, 1992 to March, 1996, he was Director of Fleet Management for
  BC Rail, Ltd., a freight train service in Vancouver, B.C., Canada. Mr. Sinclair
  received a Bachelors Degree in Commerce from the University of Windsor, Canada
  in 1982 and has been a member of the Institute of Chartered Accountants of British
  Columbia since 1985.

Alain Kardos Mr. Kardos has been our president
  and a director since June 30, 2003. Mr. Kardos has been our chief executive
  officer since December 1, 2003. Mr. Kardos has been the president and a director
  of Image Innovations since January 14, 2003 and its chief executive officer
  since December 1, 2003. After graduating from the Montreal Institute of Technology,
  Mr. Kardos began a successful corporate career at IBM, following which, he held
  senior executive positions at Nortel and Wang. His success at Wang encouraged
  him to move to Los Angeles to co-found Kardos-Long Inc., a sports, promotion
  and marketing company responsible for promoting Americas return to Grand
  Prix racing in Phoenix, Arizona. Mr. Kardos returned to Canada to assist AVCAN
  Systems Corp., a CDNX listed company develop a US presence. Mr. Kardos was vice-president
  of AVCAN Systems Corp. from June 1999 to February 2001. Mr. Kardos then moved
  on to become president and chief executive officer of Fibre Crown Manufacturing,
  a Vancouver based company, a position he held from April 2001 to August 2002.
  Mr. Kardos was an executive vice-president of RedCell Battery Corp. of Vancouver,
  British Columbia from August 2002 to December 2002. Mr. Kardos has been president,
  chief operating officer and a director of Image Innovations since its incorporation
  on January 14, 2003.

Mr. Radcliffe is one of our directors and is the chief
  operating officer of Image Sports. Mr. Radcliffe joined us following the acquisition
  of the operations and inventory of MDK Sports on March 5, 2004. Mr Radcliffe
  has over 15 years experience in the sports and entertainment industry. Along
  with creating many significant relationships with athletes and celebrities,
  he has successfully developed and launched many innovative products. He has
  been the CEO of several private companies that he has helped become public companies.
  Currently, Mr Radcliffe is working with many fine artists to increase their

Page 19 of 29

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revenue base by finding new distribution channels and creating
  new products based on their work. Mr. Radcliffe was a principal of MDK Sports
  prior to March 5, 2004.

Mr. Armenakis joined the company as a director on March
  15, 2004. Mr. Armenakis is an attorney admitted to the practice of law in the
  states of New York and South Carolina. He is a graduate of NYU where he received
  an LLM in International Law. He has specialized in international transactions,
  litigation, mergers and acquisitions and negotiation of complex transnational,
  commercial and real estate transactions. His responsibilities have included
  advising and restructuring companies and their operations in the United States,
  Canada and Europe. He has sat on a number of public and private boards of directors.

Mr. Whittlejoined the company as a director on March
  15, 2004. Mr. Whittle is based in Vancouver BC, is a Canadian-qualified Chartered
  Accountant, and is an experienced senior management executive having held positions
  as President/CEO, CFO and outside director in both public and private company
  environments. His responsibilities have included strategic planning initiatives,
  operations and all aspects of corporate and financial management and administration,
  with extensive experience in public company regulatory filings and compliance
  in both Canada and the US. He has negotiated and closed as the senior financial
  executive numerous corporate and financing transactions, both in North America
  and overseas.

Term of Office

Our Directors are appointed for a one-year term to hold office
  until the next annual general meeting of our shareholders or until removed from
  office in accordance with our bylaws. Our officers are appointed by our board
  of directors and hold office until removed by the board.

Significant Employees

We have no significant employees other than the officers and
  directors described above.

AUDIT COMMITTEE

We have an audit committee comprised of Mr. David Whittle,
  one of our directors. Our board of directors has determined that Mr. Whittle
  is a financial expert based on his qualification as a chartered
  accountant and his prior experience.

CODE OF ETHICS

We adopted a Code of Ethics applicable to our Chief Executive
  Officer, Chief Financial Officer and certain other finance executives, which
  is a "code of ethics" as defined by applicable rules of the SEC. Our Code of
  Ethics is attached to this Annual Report on Form 10-KSB. If we make any amendments
  to our Code of Ethics other than technical, administrative, or other non-substantive
  amendments, or grant any waivers, including implicit waivers, from a provision
  of our Code of Ethics to our chief executive officer, chief financial officer,
  or certain other finance executives, we will disclose the nature of the amendment
  or waiver, its effective date and to whom it applies in a Current Report on
  Form 8-K filed with the SEC.

Page 20 of 29

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ITEM 10.	EXECUTIVE COMPENSATION.

The following table sets forth certain compensation information
  as to our current Chief Executive Officer, Mr. Alain Kardos, and our former
  Chief Executive Officer, Mr. Clifford Wilkins. Mr. Kardos was our President
  from June 30, 2003 and became our CEO on December 1, 2003. Mr. Kardos was president
  and a director of Image Innovations from January 14, 2003, the incorporation
  date of Image Innovations. Mr. Wilkins served as our Chief Executive Officer
  from June 30, 2003 until his resignation on December 1, 2003. Mr. Wilkins was
  chief executive officer of Image Innovations from January 14, 2003 to December
  1, 2003. None of our executive officers earned more than $100,000 during our
  most recently completed fiscal year. Accordingly, we have not included any compensation
  information for any of our executive officers other than Mr. Kardos and Mr.
  Wilkins.

SUMMARY COMPENSATION TABLE

|Name                                 | Title                                                      | Year                       | ANNUAL COMPENSATION        | LONG TERM COMPENSATION
|------------------------------------ | ---------------------------------------------------------- | -------------------------- | -------------------------- | ----------------------
|Salary                               | Bonus                                                      | Other AnnualCompensation   | AWARDS                     | PAYOUTS               
|Restricted
      Stock
      Awarded | Options/
      SARs * (#)                                  | LTIP payouts
      ($)    
|Alain Kardos(1)                      | Director and Current Chief Executive Officer and President | 2003
      2002
      2001 | 90,000
      N/A
      N/A | 0
      N/A
      N/A 
|Clifford Wilkins(2)                  | Former Director and Former Chief Executive Officer         | 2003
      2002
      2001 | 0
      N/A
      N/A      | 0
      N/A
      N/A 

Notes:

|(1) | Mr. Kardos was appointed
        our chief executive officer effective December 1, 2003. Mr. Kardos is
        paid in Canadian dollars. Compensation is calculated based on $1.33 CDN
        per $1.00 US as at April 9, 2004.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Mr. Wilkins was our chief
        executive officer from June 30, 2003 to December 1, 2003.                                                                                                                                     

STOCK OPTION GRANTS

We did not grant any stock options to any of our officers,
  directors or employees during our most recent fiscal year ended December 31,
  2003. Subsequent to December 31, 2003, we have granted 1,435,000 common stock
  options to our officers, directors and employees in 2004.

EXERCISES OF STOCK OPTIONS AND YEAR-END OPTION VALUES

No stock options were exercised by our officers, directors
  or employees during the financial year ended December 31, 2003. No stock options
  have been exercised since December 31, 2003.

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MANAGEMENT AGREEMENT

We presently do not have any written agreements with any of
  our officers of directors, other than a consultant agreement between Michael
  Radcliffe and Image Sports, as described below. We anticipate entering into
  written compensation agreements with Alain Kardos, our president and chief executive
  officer, and Derick Sinclair, our chief financial officer, during the current
  fiscal year.

Image Sports has entered into a consultant agreements with
  Michael Radcliffe, one of our directors and the chief operating officer of Image
  Sports, whereby he is required to use his experience in the sports and entertainment
  field and (i) create new projects and identify new products in order to increase
  the distribution of Image Sports; (ii) to bring new artists and sports figures
  to Image Sports; (iii) to organize manage and attend events and exhibitions;
  and (iv) to conduct silent auctions of the products of Image Sports. In consideration
  of these services, Image Sports will pay to Mr. Radcliffe a consultant fee of
  $7,508 per month and will cause to be granted to Mr. Radcliffe options to purchase
  75,000 shares of our common stock. See Item 12  Certain Relationships
  and Related Transactions.

COMPENSATION OF DIRECTORS

We do not pay to our directors any compensation for each director
  serving as a director on our board of directors. Our directors are eligible
  to receive grants of incentive stock options pursuant to our 2004 Stock Option
  Plan.

LONG-TERM INCENTIVE PLANS

We do not have any long-term incentive plans, pension plans,
  or similar compensatory plans for our directors or executive officers.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE
  ACT

Section 16(a) of the Exchange Act requires our executive officers
  and directors, and persons who beneficially own more than ten percent of our
  equity securities, to file reports of ownership and changes in ownership with
  the Securities and Exchange Commission. Officers, directors and greater than
  ten percent shareholders are required by SEC regulation to furnish us with copies
  of all Section 16(a) forms they file. Based on our review of the copies of such
  forms received by us, we believe that during the fiscal year ended December
  31, 2003 all such filing requirements applicable to our officers and directors
  were complied with except for the following reports that were filed late by
  the following persons:

|                            | Number  | Transactions | Known Failures    
|--------------------------- | ------- | ------------ | ------------------
|                            | Of Late | Not Timely   | To File a Required
|Name and Principal Position | Reports | Reported     | Form              
|                            |         |              |                   
|Alain Kardos, Director      | 1       | 1            | None              
|President                   |         |              |                   
|                            |         |              |                   
|Clifford Wilkins,           | 1       | 1            | None              
|Former Director and CEO     |         |              |                   
|                            |         |              |                   
|Christopher Smith           | 1       | 1            | None              
|Former Director and CFO     |         |              |                   

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ITEM 11.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of March 31, 2004by: (i) each person (including any group) known to us to own more than five percent (5%) of any
class of our voting securities, (ii) each of our directors and each of our named executive officers, (iii) each person proposed to be appointed as a director of the Company and (iv) officers and directors as a group. Unless otherwise indicated, the
shareholders listed possess sole voting and investment power with respect to the shares shown.

|Title of class          | Name and addressof beneficial owner                                                                                                                | Number of Sharesof Common Stock | Percentage ofCommon Stock(1)
|----------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------- | ----------------------------
|DIRECTORS AND OFFICERS:
|Common Stock            | Alain Kardos,
       President, Chief Executive Officer and
      Director Suite 615, 100 Park Royal West Vancouver, British Columbia
      Canada | 766,667 (2)                     | 3.2%                        
|Common Stock            | Derick Sinclair
       Chief Financial Officer, Treasurer and
      Director 1550 Ostler Court North Vancouver, BC                                 | 50,000 (3)                      | 0.2%                        
|Common Stock            | Michael Radcliffe
       P.O. Box 180 Elka Park, NY 12427                                                                                          | 165,000 (4)                     | 0.7%                        
|Common Stock            | James Armenakis                                                                                                                                    | 20,000 (5)                      | 0.1%                        
|Common Stock            | David Whittle
       1787 Coldwell Road, North Vancouver,
      British Columbia Canada                                                            | 25,000 (6)                      | 0.1%                        
|Common Stock            | All Officers and Directors as a Group (5 persons)                                                                                                  | 1,026,667                       | 4.2%                        
|5% BENEFICIAL OWNERS   
|Common Stock            | H.E. Capital S.A.
       Case Del Sol MJ19 Paseo Marino Perla
      Marina Sosua Dominican Republic                                                | 1,536,500 (7)                   | 6.4%                        
|Common Stock            | RFH Investments
       Blue Cotil Samaras Inner Road St.
      Clement JE2 6ON United Kingdom                                                      | 1,250,000 (8)                   | 5.2%                        

|(1) | Under Rule 13d-3, a beneficial owner of a security
        includes any person who, directly or indirectly, through any contract,
        arrangement, understanding, relationship, or otherwise has or shares:
        (i) voting power, which includes the power to vote, or to direct the voting
        of shares; and (ii) investment power, which includes the power to dispose
        or direct the disposition of shares. Certain shares may be deemed to be
        beneficially owned by more than one person (if, for
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|    | example, persons share the power to
        vote or the power to dispose of the shares). In addition, shares are deemed
        to be beneficially owned by a person if the person has the right to acquire
        the shares (for example, upon exercise of an option) within 60 days of
        the date as of which the information is provided. In computing the percentage
        ownership of any person, the amount of shares outstanding is deemed to
        include the amount of shares beneficially owned by such person (and only
        such person) by reason of these acquisition rights. As of March 31, 2004,
        there were 24,020,000 shares of our common stock issued and outstanding.                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Represents 700,000 shares held by Mr.
        Kardos and 66,667 shares that may be acquired upon exercise of options
        held by Mr. Kardos that will vest on June 1, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(3) | Represents 50,000 shares that may be
        acquired upon exercise of options held by Mr. Sinclair that will vest
        on June 1, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(4) | Represents 140,000 shares held by Mr.
        Radcliffe and 25,000 shares that may be acquired upon exercise of options
        held by Mr. Radcliffe that will vest on June 1, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(5) | Represents 20,000 shares that may be acquired upon exercise
      of options held by Mr. Armenakis that will vest on June 1, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(6) | Represents 25,000 shares that may be
        acquired upon exercise of options held by Mr. Whittle that will vest on
        June 1, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(7) | H.E. Capital is a financial brokerage
        institution, both domestically and internationally. Mr. Christopher Smith,
        who was our Chief Financial Officer and a director from June 30, 2003
        until his resignation of February 24, 2004 is a director of H.E Capital.
        Mr. Clifford Wilkins, who was our Chief Executive Officer from June 30,
        2003 until his resignation on December 1, 2003 and a Director and the
        chairman of our board of directors from June 30, 2003 until his resignation
        on February 24, 2004 is a Director of H.E. Capital. Mr. Wilkins indirectly
        has a 50% shareholding in H.E. Capital. Mr. Smith is not a shareholder
        of H.E. Capital, but is the Chief Financial Officer of H.E. Capital.

CHANGE IN CONTROL

We are not aware of any arrangement that might result in a change in control in the future.

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ITEM 12.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Except as described below, none of the following parties has,
  during the last two years, had any material interest, direct or indirect, in
  any transaction with us or in any presently proposed transaction that has or
  will materially affect us:

Any of our directors or officers;
    Any person proposed as a nominee for election as a director;
    Any person who beneficially owns, directly or indirectly, shares carrying
      more than 5% of the voting rights attached to our outstanding shares of
      common stock;
    Any of our promoters;
    Any relative or spouse of any of the foregoing persons who has the same
      house as such person.


HE Capital

H.E. Capital S.A. (H.E. Capital) is the owner
  of more than 5% of our common stock. H.E. Capital originally agreed to advance
  up to $500,000 to Image Innovations in order to finance the start-up of our
  business operations pursuant to a loan agreement between H.E. Capital and Image
  Innovations dated January 14, 2003. We entered into an amendment to the loan
  agreement with H.E. Capital on November 5, 2003 whereby H.E. Capital agreed
  to advance up to $1,000,000 under the terms of the loan agreement. H.E. Capital
  has advanced to Image Innovations a total of $1,175,704 as of December 31, 2003
  and an amount of $175,704 was payable to H.E. Capital S.A. as of December 31,
  2003. The loans bear interest at the rate of 9% per annum and are repayable
  upon demand. The loans are secured by a general security agreement granted by
  Image Innovations against all of its assets. There is no assurance that H.E.
  Capital S.A. will advance any additional amounts in order to fund our business.

On December 29, 2003, we completed a private placement
  with H.E. Capital whereby we sold 1,200,000 units at a price of $0.75 per unit
  for a purchase price of $900,000. The purchase price for the units was paid
  for by cancellation of indebtedness in the amount of $900,000 owed by us to
  H.E. Capital. Each unit consisted of one common share and one common share purchase
  warrant. Each common share purchase warrant entitles the warrant holder to purchase
  one common share at a price of $1.50 per share until December 29, 2005.

On March 30, 2004, we completed a private placement with H.E.
  Capital whereby we sold 400,000 units at a price of $1.50 per unit for a purchase
  price of $600,000. The purchase price for the units was paid for by cancellation
  of indebtedness in the amount of $400,000 owed by us to H.E. Capital and the
  additional advance of $200,000 to us. Each unit consisted of one common share
  and one common share purchase warrant. Each common share purchase warrant entitles
  the warrant holder to purchase one common share at a price of $2.00 per share
  until March 30, 2006.

MDK Sports

Image Sports acquired all of the inventory, personal property
  and material contracts of the celebrity image memorabilia business carried by
  MDK Sports. MDK Sports is a private company controlled by Michael Radcliffe,
  one of our directors and the chief operating officer of Image Sports, and Dennis
  Radcliffe, who is a brother of Michael Radcliffe and Kenneth Radcliffe who is
  a cousin of Michael Radcliffe. The acquisition of assets was completed pursuant
  to an asset purchase agreement dated March 4, 2004 between Image Innovations
  Holdings, Image Sports and MDK Sports (the Asset Purchase Agreement).
  As consideration of the sale, transfer and assignment of the assets by MDK Sports
  to Image Sports, Image Innovations Holdings issued to MDK Sports an aggregate
  of 4,000,000 restricted shares of Image Innovation Holdings common stock on
  closing.

Image Sports has also agreed to deliver to MDK Sports the
  following additional shares of our common stock upon achievement of the milestones
  set forth below, provided that no shares will be issuable in the event that
  the milestone is not achieved for whatever reason:

|(a) | an aggregate of 2,500,000 shares of Image Innovations
        Holdings common stock will be issued to MDK Sports in the event that each
        of the conditions listed below are met:
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Page 25 of 29

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|    | (i)                                                                                                                                                                                                                                                                                 | The trademark License Agreement made on the 25thday of June 2003, by and among Roush Corporation d/b/a Roush Racing
        and Pfizer Inc. and Authentic Legends is transferred to Image Sports;                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | (ii)                                                                                                                                                                                                                                                                                | The Authentic Legends Affiliations Agreement by and
        between Millennium International Sports and Entertainment, LLC and Carlo
        Beninati dated 5thday of November, 2003 whereby Carlo Beninati
        is to create a unique original work of art on canvas using the likeness
        of Mark Martin is transferred to Image Sports; and
|(b) | an aggregate of 1,500,000
        shares of Image Innovations Holdings common stock will be issued to MDK
        Sports in the event that a Trademark License Agreement is made by and
        among Tony Stewarts Race team and Tony Stewarts Sponsor and
        Image Sports.

Image Sports has entered into consultant agreements with each
  of Michael Radcliffe, Dennis Radcliffe and Kenneth Radcliffe. Each consultant
  agreement requires the consultant to use his experience in the sports and entertainment
  field and (i) create new projects and identify new products in order to increase
  the distribution of Image Sports; (ii) to bring new artists and sports figures
  to Image Sports; (iii) to organize manage and attend events and exhibitions;
  and (iv) to conduct silent auctions of the products of Image Sports. In consideration
  of these services, Image Sports will pay to each consultant a consultant fee
  of $7,508 per month and will cause to be granted to each consultant options
  to purchase 75,000 shares of our common stock. The consultant agreements are
  terminable by Image Sports by delivering notice of termination and paying an
  amount equal to two months consultant fee. Each consultant agreement is
  to remain in effect until such time as the consultant agreements are superceded
  by employment agreements which are contemplated to take place on or before June
  30, 2004.



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ITEM 13.	EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits and Index of Exhibits

|Exhibit Number |  |                                                                                                                                                                                                     
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |  |                                                                                                                                                                                                     
|3.1            |  | Articles of Incorporation (1)                                                                                                                                                                       
|               |  |                                                                                                                                                                                                     
|3.2            |  | Bylaws (1)                                                                                                                                                                                          
|               |  |                                                                                                                                                                                                     
|3.3            |  | Certificate of Amendment to Articles of
      Incorporation (4)                                                                                                                                     
|               |  |                                                                                                                                                                                                     
|10.1           |  | Offer Letter dated June 23, 2003 to the
      shareholders of Image Innovations Inc. to acquire all of the issued and
      outstanding shares of Image Innovations Inc., a Delaware corporation (2)
|               |  |                                                                                                                                                                                                     
|10.2           |  | Loan Agreement dated January 14, 2003 between
      H.E. Capital SA and Image Innovations Inc. (3)                                                                                                  
|               |  |                                                                                                                                                                                                     
|10.3           |  | Amendment to Loan Agreement dated November
      5, 2003 between H.E. Capital SA and Image Innovations Inc. (4)                                                                                     
|               |  |                                                                                                                                                                                                     
|10.4           |  | Asset Purchase Agreement dated
      March 4, 2004 between Image Innovations Holdings Inc., Image Innovations
      Sports & Entertainment Inc. and MDK Sports & Entertainment Inc.
      (5)       
|               |  |                                                                                                                                                                                                     
|14.1           |  | Code of Ethics
      (5)                                                                                                                                                                            
|               |  |                                                                                                                                                                                                     
|31.1           |  | Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002 (5)                                                                                  
|               |  |                                                                                                                                                                                                     
|31.2           |  | Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002 (5)                                                                                  
|               |  |                                                                                                                                                                                                     
|32.1           |  | Certification
      of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (5)                                   
|               |  |                                                                                                                                                                                                     
|32.2           |  | Certification
      of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (5)                                   

|    |                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Previously filed with the Securities
        and Exchange Commission as an exhibit to our Form 10-SB registration statement
        filed on December 6, 2002, as amended.        
|(2) | Previously filed with the Securities
        and Exchange Commission as an exhibit to our Current Report on Form 8-K
        filed on July 11, 2003.                              
|(3) | Previously filed with the Securities
        and Exchange Commission as an exhibit to Amendment No. 2 to our Current
        Report on Form 8-K originally filed on July 11, 2003.
|(4) | Previously filed as an Exhibit to our
        Quarterly Report on Form 10-QSB filed on November 14, 2003.                                                                         
|(5) | Filed as an Exhibit to this Annual Report
        on Form 10-KSB.                                                                                                                 
|    |                                                                                                                                                                                   

REPORTS ON FORM 8-K

We filed a Current Report on Form 8-K on July 11, 2003 to
  disclose our acquisition of Image Innovations. This Current Report on Form 8-K
  was further amended on July 21, 2003 and on September 23, 2003.

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ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

During fiscal years 2003 and 2002, we retained our independent
  auditor to provide services in the following categories and amounts:

|Fee Category       | 2003   | 2002  
|------------------ | ------ | ------
|Audit Fees         | $1,500 | $1,000
|Audit Related Fees | $0     | $0    
|Tax Fees           | $0     | $0    
|All Other Fees     | $0     | $0    
|Total of all Fees  | $1,500 | $1,000

Our auditor has not provided us with any non-audit services
  during the last two fiscal years.

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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.

IMAGE INNOVATIONS HOLDINGS INC.

|By:                                                                                                                                                                                                      | /s/ Alain Kardos                     
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------
|                                                                                                                                                                                                         | Alain Kardos                         
|                                                                                                                                                                                                         | President and Chief Executive Officer
|                                                                                                                                                                                                         | (Principal Executive Officer)        
|                                                                                                                                                                                                         | Director                             
|                                                                                                                                                                                                         | Date:                                
|                                                                                                                                                                                                         |                                      
|In accordance with the Securities Exchange
        Act, this report has been signed below by the following persons on behalf
        of the registrant and in the capacities and on the dates indicated.
|                                                                                                                                                                                                         |                                      
|By:                                                                                                                                                                                                      | /s/ Derick Sinclair                  
|                                                                                                                                                                                                         | Derick Sinclair                      
|                                                                                                                                                                                                         | Chief Financial Officer and Treasurer
|                                                                                                                                                                                                         | (Principal Executive Officer)        
|                                                                                                                                                                                                         | Director                             
|                                                                                                                                                                                                         | Date:                                
|                                                                                                                                                                                                         |                                      
|By:                                                                                                                                                                                                      | /s/ Michael Radcliffe                
|                                                                                                                                                                                                         | Michael Radcliffe                    
|                                                                                                                                                                                                         | Director                             
|                                                                                                                                                                                                         | Date:                                
|                                                                                                                                                                                                         |                                      
|By:                                                                                                                                                                                                      | /s/ Alain Kardos                     
|                                                                                                                                                                                                         | Alain Kardos                         
|                                                                                                                                                                                                         | President, Secretary and Treasurer   
|                                                                                                                                                                                                         | Director                             
|                                                                                                                                                                                                         | Date:                                

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