Table of Contents

|  |
|--|
|  |
|  |
|  |
|  |

UnitedStates Securities and Exchange Commission

Washington, D.C. 20549

FORM10-KSB

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934

For the fiscalyear ended December  31,  2005

Commission File Number 0-25563

CKRUSH, INC.

(Name ofsmall business issuer in its charter)

|                                                               |  |                                     |  |  |  |  |
|---------------------------------------------------------------|--|-------------------------------------|--|--|--|--|
| Delaware                                                      |  | 65-0648808                          |
| (State orother jurisdiction of incorporation or organization) |  | (I.R.S. Employer IdentificationNo.) |
|                                                               |

1414 Avenue of the Americas, Suite 406New York, NY 10019

(Address & Zipcode of principal executive offices)

(212) 755-1944

(Issuer's telephone number)

Securities registered under Section 12(g) of the ExchangeAct:

Common Stock, par value $0.01 per share

(Title of Class)

Checkwhether the issuer is not required to file reports pursuant to Section13 or 15 (d) of the Exchange Act. 

Check whetherthe issuer (1) filed all reports required to be filed by Section 13 or15(d) of the Exchange Act during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports),and (2) has been subject to such filing requirements for the past 90days.

Yes       No 

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

Indicate by check mark whether theregistrant is a shell company (as defined in rule 12b-2 of the ExchangeAct). Yes       No 

The Company'srevenues from its operations for the fiscal year ended December31,  2005 were $704,016

As of April 10,  2006,the aggregate market value of the voting stock held by non-affiliatesof the registrant (based on The Over-the-Counter Electronic BulletinBoard's last sale price of $.25 on April  10, 2006) wasapproximately $11,199,000.

As of April 10,  2006,there were 71,347,918 shares of the registrant's common stockoutstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

Transitional Small Business DisclosureFormat (check one): Yes       No 

|  |
|--|
|  |
|  |
|  |
|  |

----

CKRUSH,INC. FORM 10-KSB INDEX

|            |  |                                                                                                                |    |                |    |        |  |  |  |  |
|------------|--|----------------------------------------------------------------------------------------------------------------|----|----------------|----|--------|--|--|--|--|
|       |  |                                                                                                           |    | PAGE           |
| PARTI      |
| Item1.     |  | Descriptionof Business                                                                                         |    |           | 1  |   |
| Item2.     |  | Description of Property                                                                                        |    |           | 11 |   |
| Item 3.    |  | LegalProceedings                                                                                               |    |           | 11 |   |
| Item4.     |  | Submission of Matters to a Vote of Security Holders                                                            |    |           | 14 |   |
| PARTII     |
| Item5.     |  | Market for Common Equity and Related Stockholder Matters                                                       |    |           | 14 |   |
| Item6.     |  | Management's Discussion and Analysis or Plan ofOperation                                                       |    |           | 15 |   |
| Item7.     |  | Financial Statements                                                                                           |    | F-1–F-23 |
| Item 8.    |  | Changes in and Disagreementswith Accountants on Accounting andFinancial Disclosure                             |    |           | 22 |   |
| Item8A.    |  | Controls and Procedures                                                                                        |    |           | 22 |   |
| Item8B.    |  | Other Information                                                                                              |    |           | 23 |   |
| PARTIII    |
| Item9.     |  | Directors, Executive Officers, Promoters and ControlPersons; Compliance with Section 16(a) of the Exchange Act |    |           | 24 |   |
| Item10.    |  | Executive Compensation                                                                                         |    |           | 25 |   |
| Item11.    |  | Security Ownership of Certain Beneficial Owners andManagement                                                  |    |           | 26 |   |
| Item12.    |  | Certain Relationships and Related Transactions                                                                 |    |           | 27 |   |
| Item13.    |  | Exhibits                                                                                                       |    |           | 28 |   |
| Item 14.   |  | PrincipalAccountant Fees And Services                                                                          |    |           | 32 |   |
| SIGNATURES |  |                                                                                                           | 32 |           |
|            |

----

Table of Contents

PART I

|               |                         |
|---------------|-------------------------|
| Item 1.  | DESCRIPTION OF BUSINESS |

Forward-looking Statements

Statements in this annualreport on Form 10-KSB that are not historical facts constituteforward-looking statements which are made pursuant to the safe harborprovisions of Section 21E of the Securities Exchange Act of 1934. Thesestatements relate to future events or our future financial performanceand involve known and unknown risks, uncertainties and other factorsthat may cause our or our industry's actual results, levels ofactivity, performance or achievements to be materially different fromany future results, levels of activity, performance or achievementsexpressed or implied by these forward-looking statements. Those factorsinclude, among other things, those listed under ‘‘RiskFactors’’ and elsewhere in this annual report. In somecases, you can identify forward-looking statements by terminology suchas ‘‘may,’’ ‘‘will,’’‘‘should,’’‘‘expects,’’ ‘‘plans,’’‘‘anticipates,’’‘‘believes,’’‘‘estimates,’’‘‘predicts,’’‘‘potential’’ or‘‘continue’’ or the negative of these terms orother comparable terminology. These statements are only predictions.Actual events or results may differ materially. Moreover, neither wenor any other person assumes responsibility for the accuracy orcompleteness of these statements. We are under no duty to update any ofthe forward-looking statements after the date of this annual report toconform these statements to actual results

OVERVIEW

Ckrush, Inc. (the ‘‘Company’’,‘‘we’’, ‘‘our’’, or‘‘our company’’) is an independent producer ofentertainment and sports content for distribution to all mediaplatforms.  We produced, for release in 2006, the feature filmcomedies ‘‘Beer League,’’ starring Artie Lange(the popular comedian and actor who is a regular on the Howard SternShow) and ‘‘TV the Movie,’’ starring Steve O,Preston Lacy and Wee-Man (all of ‘‘Jackass’’fame).   We also co-produced the feature film comedyNational Lampoon's ‘‘Pledge This,’’starring Paris Hilton, anticipated to be released in 2006.  Inaddition, we produce programming for pay-per-view, video-on-demand,international markets, as well as, for retail and direct responsesale.  Further, we produce televised sports events and holdpromotional rights to professional boxers. The Company is headquarteredin New York City.

Corporate Background

We wereincorporated in 1996 under the laws of the State of Delaware. OnApril  30,  2002, we merged with Cedric Kushner Promotions,Inc. As a result of the merger, we began operations as an integratedsports and media company focused on live event television programming,primarily in the area of professional boxing. In December  2005,in response to the expansion of our entertainment businesses, wechanged our name to Ckrush, Inc. and subsequently commenced tradingunder the symbol ‘‘CKRH’’ on December27, 2005. Our principal executive offices are located at 1414Avenue of the Americas, New York, NY 10019 and our telephone number is(212) 755-1944. Our web site address is www.ckrush.net.

In February and March  2006, in connection with thesettlement of a civil action brought against us by the SEC (see Item 3– Legal Proceedings.), we appointed a new team of corporateofficers and directors. Newly appointed as President, CEO and CFO wereJeremy Dallow, Roy Roberts and Jan E.  Chason, respectively. TheBoard of Directors was reconstituted to include independent membersRichard Ascher, Gerry Gilbert, Philip Glassman, and Jonathan Schwartz,as well as Jeremy Dallow and Roy Roberts. Each will serve until theCompany’s next annual meeting of shareholders, at which time theBoard will be restructured to provide for three-year staggered terms,subject to shareholder approval. Messrs. Ascher, Gilbert and Schwartzbecame members of the Audit Committee of the Board, with Mr.Ascher serving as Chairman.

1

----

Table of Contents

Industry Overview

Theworldwide demand for entertainment content is considerable and growing.Demand has been stimulated by increased DVD penetration in the homevideo market and continued growth in the cable and satellite televisionmarkets. Domestic box office revenues for motion picture exhibitionwere approximately $9.5  billion in 2004. The United States homevideo market (inclusive of DVD) is estimated to be $24.0billion, according to Kagan’s 2004 State of Home Video Report.Internationally generated distribution revenues for motion picturesrepresent approximately 46% of total distribution revenues.World-wide adoption of broadband has enabled an additional dimension tomedia content. The application of digital technology toconsumers’ entertainment demand provides a new end-pointdistribution model which appears to be increasing the overall revenuepie rather than simply cannibalizing existing markets.

According to the Motion Picture Association of America, theaverage cost to produce and distribute a major studio film in 2004 was$98 million, including $63.6 million of production costs and$34.4 million of distribution and marketing expenses (typicallycalled ‘‘P&A’’ or ‘‘prints andadvertising’’). In comparison, films released byindependent studios (i.e. not produced by a major studio or one oftheir subsidiaries) typically cost less than $40 million toproduce and market in 2004. Despite the limited resources generallyavailable to independent studios, independent films have gained agrowing market approval and increased share of overall box officereceipts in recent years. Successful motion pictures may continue toplay in theaters for over three months following their initial release.After the initial theatrical release, distributors seek to maximizerevenues by releasing movies in sequential release date windows, whichare generally exclusive against other non-theatrical distributionchannels. Concurrent with their release in the United States, motionpictures are generally released in one or more other foreignmarkets.

The ‘‘home marketplace’’for motion picture includes: (1) Home Video/DVD, which is the promotionand sale of videocassettes, DVDs and videodiscs to video retailers(including video specialty stores, convenience stores, record stores‘‘on-line’’ stores (i.e. – Amazon.com)and other outlets), which then rent or sell the videocassettes andvideodiscs to consumers for private viewing; (2) Pay-per-viewtelevision, whereby cable and satellite television subscribers purchaseindividual programs on a ‘‘per use’’ basis; (3)Pay Cable, which consists primarily of HBO/Cinemax, Showtime/The MovieChannel, Encore/Starz and a number of regional pay services; (4)Broadcast and Basic Cable Television, whereby viewers receive, withoutcharge, programming broadcast over the air by affiliates of the majornetworks (ABC, CBS, NBC, and Fox), recently formed networks (UPN and WBNetwork), independent television stations and cable and satellitenetworks and stations.

With respect to other revenuesources, in general, a very important portion of the financing for‘‘independent’’ motion pictures comes from the‘‘foreign markets’’ (i.e. those markets outsideof the United States and English-speaking Canada). With respect tocertain of the productions we are associated with, the third partyfinancier may take ownership and/or control of these rights and usethem as collateral or purchasethe rights outright in connection withthe funding of the pictures others develop. Utilizing this source offunding could increase our ability to successfully fundproductions.

The worldwide demand for sports content isconsiderable and growing. The proliferation of television networks andother video delivery systems (from broadband to cell phones) on aglobal basis is creating ever more outlets for sports content. Boxingis one of the world’s most popular sports and is an importantprogramming asset for many of the major television networks. Boxing hasproven to be a powerful vehicle for subscription and pay television inparticular. Domestically, the two leading premium networks, HBO andShowtime, use boxing as core programming and it is one of the highestrated program groupings for them. Boxing is also significantprogramming for the pay per view (PPV) industry. The top five PPVevents of all time have been professional boxing events.

2

----

Table of Contents

Our Business

In 2005, wesubstantially completed principal photography on two motion pictureswith production budgets of less than $3 million. We take adisciplined approach to film production with the goal of producingcontent with low production budgets that we can distribute totheatrical and ancillary markets, which include home video and pay andfree television, both domestically and internationally. We review asignificant number of scripts, looking for quality material primarilytargeted to the teen and young adult audience. We develop selectedscripts, working with talent agencies and producers to attract talentthat appeals to the film’s target audience. We believe thecommercial and/or critical success of our films will enhance ourability to attract financing for future projects as well as increaseour ability to access top talent and scripts.

Our focusis to develop and produce films that appeal to the teen and young adultdemographic, a demographic which we believe purchases movie tickets andDVD’s at a higher rate than the general population. We believethe demand among distributors for films appealing to this demographicis consistent and strong. By focusing on teens and young adults, wewill produce films that have an increased likelihood of performing wellat the box office and ancillary markets.

The decisionwhether to ‘‘green light’’ or proceed withproduction of a film is a diligent process that involves our keyexecutives. In this process scripts are discussed for both artisticmerit and commercial viability. We consider the entire packageincluding the script and the talent that may be pursued as well as theinitial budget. We also discuss talent and story elements that couldmake the project more successful. We decide whether the picture isworth pursuing by balancing the production risk against its potentialfor financial success or failure utilizing our estimates of projectedrevenues, the costs of marketing and distributing the film and ourfinancing options. We may seek to mitigate the financial riskassociated with film production by negotiating co-productionagreements, pre-selling international distribution rights on aselective basis and capitalizing on government subsidies and taxcredits, where possible. We may also attempt to minimize our productionexposure by structuring participation arrangements with talent thatprovide for them to share in the financial success of the motionpicture in exchange for reducing up-front payments.

Majorstudios (Fox, Disney, Paramount, Warner Bros., Sony and Universal)spend considerable sums to test the concept in the market. Given thebudget size of these movies, the studios justify this expense as anecessary cost to determine how, when and whether to spend themarketing budget for a film. Independent films of the type that we willproduce rely on a lower-cost model for determining when and how much tospend on marketing a particular film. Taking full advantage ofplatforming (i.e. .limited initial theatrical release whereby screensare added based on box office performance), word-of-mouth reviews,reviews in the press, and the relatively large amount of publicity thatcan attend some of these films, is a relatively efficient indication ofa film’s future box office performance. Moreover, this low-costmethod of reaching an audience serves to diminish the likelihood ofincurring large marketing costs without any positive indication of thefilm’s performance.

The ability to retain A-leveltalent to work ‘‘below quote’’ or less thanmarket can lower our costs and risks. The presence of cast at a reducedrate provides box office and home video value without having to makethe upfront outlay for their regular salaries. In return for workingbelow quote, the talent is usually compensated through some form ofprofit participation.

We intend to distribute motionpictures utilizing third party distributors. The strategy will be torelease approximately 2 to 4 feature films per year for domestic andinternational release. Home video, including television, cable,satellite, pay-per-view, video on demand and DVD will also becomesignificant revenue sources for this segment in the future.

We generally receive a producer fee as part of the budget ofeach film. Profit participation in motion picture projects for ourfilms is generally determined by a calculation that assumes that all‘‘negative costs’’(production costs) of thepicture (including, but not limited to, costs for development,principal photography and post-production) and‘‘distribution expenses’’ (including, but notlimited to, costs for marketing the film at various international filmmarkets as well as costs associated with the delivery of the film andthe physical elements to the various licensees of the film) arerecovered including a 

3

----

Table of Contents

preferred return on the investment. Afterrecoupment of all negative costs, distribution expenses and interestthereon, the distributor is entitled to receive a‘‘distribution fee’’ (often a percentage of thegross income) for performing sales and/or distribution services inconnection with the picture. Following the payment of distribution feesand other costs, any amounts payable to creative elements that arecontingent compensation (including, but not limited to, deferredcompensation and bonuses) are paid to those third parties. The balance,if any, is considered net profits from which profit participation,including to us, is derived.

Some of the product werelease is in DVD format. We believe that the value gained through theability to entertain people at home for a reasonable price atconvenient times, the opportunity to choose from a very broad selectionof programming, the unique and compelling interactive experience of DVDmenus, and the audio and video quality of the DVD format, will continueto make DVD (and subsequent generations of this technology) apreferred, prepackaged medium of home entertainment for millions ofconsumers. Many DVDs also offer special features, enhancements andancillary materials, such as special menu design, multiple audiotracks, behind-the-scenes footage, director commentaries, interviewsand discographies.

Our sports entertainment segmentincludes the promotion of professional boxing events and professionalboxers. We typically acquire the rights to boxing athletes and packagethose rights to television and cable networks, venues, sponsors andother promoters. As of December  31,  2005, we havepromotional rights to several boxing athletes.

COMPETITION

A very large number of companies produce and sellentertainment content. The buyers of content themselves (the filmstudios and television networks, etc.) also produce a large portion oftheir own content.

Motion picture production anddistribution are highly competitive businesses. We face competitionfrom companies within the entertainment business and from alternativeforms of leisure entertainment, such as travel, sporting events,outdoor recreation and other cultural activities. We compete with themajor studios, numerous independent motion picture and televisionproduction companies, television networks and pay television systemsfor the acquisition of literary and film properties, the services ofperforming artists, directors, producers and other creative andtechnical personnel and production financing. In addition, our motionpictures compete for audience acceptance and exhibition outlets withmotion pictures produced and distributed by other companies. As aresult, the success of any of our motion pictures is dependent not onlyon the quality and acceptance of a particular picture, but also on thequality and acceptance of other competing motion pictures released intothe marketplace at or near the same time.

Major studioshave historically dominated the motion picture industry. The term majorstudios is generally regarded in the entertainment industry to mean:Universal Pictures (‘‘Universal’’), whichincludes Focus Features; Warner Bros., which includes New Line Cinema,Castle Rock Entertainment, Fine Line Features and Warner IndependentPictures; Twentieth Century Fox, which includes Fox SearchlightPictures; Sony Pictures Entertainment(‘‘Sony’’), which includes Columbia Pictures,TriStar Pictures, Screen Gems Pictures, Metro-Goldwyn Mayer Pictures(‘‘MGM’’), United Artists Pictures(‘‘UA’’) and Sony Pictures Classics; ParamountPictures, which includes Paramount Classics; and Dreamworks SKG, TheWalt Disney Company (‘‘Disney’’), whichincludes, among others, Buena Vista, Hollywood Pictures, Touchstone,Dimension Films and Miramax Film Corp.(‘‘Miramax’’). Competitors other than the majorstudios include ‘‘independents’’ such as LionsGate Entertainment Corp, The Weinstein Company, Newmarket Films, MotionPicture Distribution LP and IFC Entertainment.

Boxing isdominated by a handful of promoters who work with the world'sleading television networks and venues. There are approximately 20major boxing promoters in the world. Our competitors in the industryinclude Don King Productions, Top Rank, Inc., Golden Boy Promotions andMain Events.

4

----

Table of Contents

BUSINESS GROWTH STRATEGY

The Company's growth plans encompass initiatives in filmfinance, production and distribution, the development of televisionproperties, digital content distribution, and an expansion of directproperties and distribution (e.g. – pay-per-view), whilemaintaining our existing sports business. The strategy consists of:

|  |              |                                                                                                                                                                             |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Acquiring literary and filmproperties, with the intention of developing, financing, producing anddistributing these properties utilizing leading third parties in eacharea; |

|  |              |                                                                                                                |
|--|--------------|----------------------------------------------------------------------------------------------------------------|
|  | •  | Managing the riskassociated with the financing of independent film production bycreating film financing pools; |

|  |              |                                                                                                                |
|--|--------------|----------------------------------------------------------------------------------------------------------------|
|  | •  | Establishing joint ventureswith independent distributors to promote foreign sales of ourentertainment content; |

|  |              |                                                                                                                                                                                                                           |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Expanding ancillary revenuestreams by developing, financing, producing and distributingentertainment product (i.e. video and DVDs) for direct consumer salevia retail, direct response, pay per view and video on demand; |

|  |              |                                                                                                                                                               |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Signing, developing andacquiring new boxing talent, on a selective basis, that can achievemarquee or star status and become premium cable and PPVattractions; |

|  |              |                                                                                                                                     |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Developingadditional channels of distribution and ancillary products for each ofour entertainment and sports-driven categories; and |

|  |              |                                                                               |
|--|--------------|-------------------------------------------------------------------------------|
|  | •  | Exploring acquisitionopportunities in the sport and entertainment industries. |

EMPLOYEES

We have five full time employees as ofApril 10,  2006. We have not experienced any work stoppages andconsider our relations with our employees to be good. None of ouremployees is included in collective bargaining unit.

RISKFACTORS

In evaluating our business, prospectiveinvestors and stockholders should carefully consider the followingrisks in addition to the other information in this 10-KSB or in thedocuments referred to in this 10-KSB. Any of the following risks couldhave a material adverse impact on our business, operating results andfinancial condition and result in a complete loss of yourinvestment.

Our independent accountants have raised substantialdoubts regarding our ability to continue as a going concern.

We have incurred net losses of $7.7  million and$12.4  million during the year ended December  31,2005 and 2004, respectively. In addition, we are not in compliance withthe payment terms for $2.1  million of our outstanding notes andloans payable including unpaid interest. Further, we had astockholders' deficiency in excess of $12  million atDecember  31,  2005. Historically, we have successfullyobtained external financing through short-term borrowings and privateplacements of equity and convertible debt and thus, we hope to remedythese defaults through additional borrowings, conversion of existingdebt to equity, ownership contributions, and/or renegotiation ofexisting terms and conditions of the notes and loans payable indefault. However, if we are unable to cure these defaults, it maysignificantly impede our ability to raise additional funds and/or toconduct normal business operations. These factors raise substantialdoubts about our ability to continue as a going concern.

There can be no assurance that sufficient funds requiredduring the next year or thereafter will be generated from operations orthat funds will be available from external sources such as debt orequity financings or other potential sources. The lack of additionalcapital resulting from the inability to generate cash flow fromoperations or to raise capital from external sources would force us to

5

----

Table of Contents

substantially curtail or cease operations andwould, therefore, have a material adverse effect on our business.Further, there can be no assurance that any such required funds, ifavailable, will be available on attractive terms or that they will nothave a significant dilutive effect on our existing stockholders.

We face substantial capital requirements and financial risks.

Our businesses require a substantial investment ofcapital.    The production, acquisition and distribution ofmotion pictures require a significant amount of capital. There is asignificant amount of time which may elapse between our expenditure offunds and the receipt of commercial revenues from our motion picturesas well as our other businesses. This time lapse requires us to fund asignificant portion of our capital requirements through loans fromvarious sources. Although we intend to continue to reduce the risks ofour production exposure through the use of borrowings, we cannotpredict with any certainty that we will continue to implementsuccessfully these arrangements or that we will not be subject tosubstantial financial risks relating to the production, acquisition,completion and release of future motion pictures, etc. and thepromotion of boxing. If we increase (through internal growth oracquisition) our production slate or our production budgets, we may berequired to increase overhead and/or make larger up-front payments totalent and consequently bear greater financial risks. Any of theforegoing could have a material adverse effect on our business, resultsof operations and financial condition.

Budget overrunsmay adversely affect our business.    Our business modelrequires that we be efficient in the production of our motion pictures.Actual motion picture costs often exceed their budgets, sometimessignificantly. The production, completion and distribution of motionpictures are subject to a number of uncertainties, including delays andincreased expenditures due to creative differences among key castmembers and other key creative personnel or other disruptions or eventsbeyond our control. Risks such as death or disability of starperformers, technical complications with special effects or otheraspects of production, shortages of necessary equipment, damage to filmnegatives, master tapes and recordings or adverse weather conditionsmay cause cost overruns and delay or frustrate completion of aproduction. If a motion picture or television production incurssubstantial budget overruns, we may have to seek additional financingfrom outside sources to complete production. We cannot make assurancesregarding the availability of such financing on terms acceptable to us,and the lack of such financing could have a material adverse effect onour business, results of operations and financial condition.

In addition, if a motion picture or television productionincurs substantial budget overruns, we cannot assure you that we willrecoup these costs, which could have a material adverse effect on ourbusiness, results of operations and financial condition. Increasedcosts incurred with respect to a particular film may result in any suchfilm not being ready for release at the intended time and thepostponement to a potentially less favorable time, all of which couldcause a decline in box office performance, and thus the overallfinancial success of such film. Budget overruns could also prevent apicture from being completed or released. Any of the foregoing couldhave a material adverse effect on our business, results of operationsand financial condition.

Production costs and marketingcosts are rising at a faster rate than increases in either domesticadmissions to movie theatres or admission ticket prices, leaving usmore dependent on other media, such as home video, television andforeign markets, and new media. If we cannot successfully exploit theseother media, it could have a material adverse effect on our business,results of operations and financial condition.

Failure toachieve and maintain effective disclosure controls or internal controlscould have a material adverse effect on our ability to report ourfinancial results timely and accurately.  

As aresult of our settlement with the SEC, we retained the services of anindependent consultant to analyze our system of internal accountingcontrols and accounting and financial reporting processes and overseethe implementation of improved processes in these areas. In thatconnection, we established an escrow account in the amount of $150,000in order to fund the services of the 

6

----

Table of Contents

independent consultant. The escrow amount isnot necessarily a cap on the cost of the project. We also expect asignificant diversion of management’s time to perform theinternal control systems evaluation, testing and remediation requiredto comply with this settlement.

While have not startedthe comprehensive evaluation and testing of our internal controls overfinancial reporting we have discovered material weaknesses especiallydue to the limited number of company employees. The material weaknesseswe have identified relate to:

|  |              |                                                                                                                                                                                                                                       |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Maintaining sufficientpersonnel with an appropriate level of accounting knowledge, experienceand training in the application of generally accepted accountingprinciples (GAAP) commensurate with our financial reportingrequirements; |

|  |              |                                                             |
|--|--------------|-------------------------------------------------------------|
|  | •  | Maintainingadequate segregation of duties in key functions; |

|  |              |                                                                        |
|--|--------------|------------------------------------------------------------------------|
|  | •  | Adequately documenting certaintransactions and manual journal entries; |

|  |              |                                              |
|--|--------------|----------------------------------------------|
|  | •  | Adhering to a comprehensiveclosing calendar; |

|  |              |                                                                                                                                   |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Management committee in placeto handle decisions relating to our operations, including review ofquarterly and annual filings; and |

|  |              |                                                                |
|--|--------------|----------------------------------------------------------------|
|  | •  | Maintaining formal internalaccounting and disclosure controls. |

In light of thematerial weaknesses related to our internal controls and processes overfinancial reporting we must conclude that our disclosure controls andprocedures and our internal controls and processes over financialreporting are ineffective. There is more than a remote possibility thatwe could have a misstatement that would be material to our financialstatements. Our failure to adequately remediate our material weaknessescould have a material adverse effect on our business, results ofoperations and financial condition by, among other things, impairingour ability to obtain additional financing on favorable terms or toaccess the capital markets. Any such failure could cause current andpotential shareholders could lose confidence in the accuracy andcompleteness of our financial reporting and our share price could benegatively impacted.

Management with the assistance ofthe independent consultant is actively working to correct the materialweaknesses however, we cannot assure you that the measures we havetaken to date or any future measures will remediate the issues or otherissues which we may find.

Our operating results may proveunpredictable, and our common stock price may decrease or fluctuatesignificantly.

Our operating results are likely tofluctuate significantly in the future due to a variety of factors, manyof which are outside of our control. Because our operating results aredifficult to predict, in some future quarters, our operating resultsmay fall below the expectations of securities analysts and investors.If this happens, the trading price of our common stock may fallsignificantly. Factors that affect our quarterly and annual operatingresults include, among other things, the following:

|  |              |                                                                                                      |
|--|--------------|------------------------------------------------------------------------------------------------------|
|  | •  | develop additional sources ofdebt and equity financing to satisfy its current operatingrequirements; |

|  |              |                                                                                                                                                          |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | enter intonew initiatives to develop, produce and distribute film properties aswell as other entertainment projects for direct response and retailsales; |

|  |              |                                                                           |
|--|--------------|---------------------------------------------------------------------------|
|  | •  | continue to pursuethe promotion of selective premium level boxing events; |

|  |              |                                                                    |
|--|--------------|--------------------------------------------------------------------|
|  | •  | pursue production partnershipsand joint ventures to fund projects; |

|  |              |                                                 |
|--|--------------|-------------------------------------------------|
|  | •  | reduce operating costs byreducing overhead; and |

|  |              |                                                                                         |
|--|--------------|-----------------------------------------------------------------------------------------|
|  | •  | continue to negotiate withexisting creditors to convert their indebtedness into equity. |

We have exposure to pending litigation.

We arecurrently involved in several legal disputes concerning contractualrights and breaches of contracts related to our boxers and thepromotion of boxing events, certain service providers, and

7

----

Table of Contents

other issues. If we were not to prevail in anyone or several of these matters there can be no assurances that therewill not be a material adverse affect on us. For further information onany of the present legal matters refer to Item 3. LegalProceedings.

If we do not manage our growth efficiently, we maynot be able to operate our business effectively.

Weexpect to expand our operations and we will seek additional financingto fund such expansion. If we expand our operations, we may strain ourmanagement, operations, systems and financial resources. To manage ourfuture growth, we must improve and effectively utilize our existingoperational, management, marketing and financial systems, successfullyrecruit, hire and manage personnel and maintain close coordinationamong our technical, finance, marketing, sales and production staffs.We may need to hire additional personnel in all areas of our businessduring 2006. In addition, in accordance with our settlement with theSEC, we have to improve our accounting systems, internal controlprocedures, and computer software and hardware systems in order to becompliant with Sarbanes-Oxley as well as to operate our business moreeffectively and manage our expansion. Our failure to effectively manageour growth could disrupt our operations and ultimately prevent us fromgenerating the revenues we anticipate.

We have limitedexperience in the film industry.

The future of ourbusiness depends on a diversified strategy that incorporates a majorinvestment into feature length film properties. There are significantadditional responsibilities that come with entering into a newindustry, including, without limitation, greatly increased contractnegotiations, restrictions on selective disclosure, procuringagreements with established third parties and, potentially, liaisonwith the media and analyst community. We cannot assure you that ourmanagement team will be able to successfully discharge these additionalresponsibilities, and their failure to do so could have a materialadverse effect on the trading price of our common stock and,potentially, our revenues, profits, results of operations, financialcondition and future prospects.

Our revenues and results ofoperations vary from quarter to quarter. If we fail to projectaccurately and experience significant revenue shortfalls, we could beforced to discontinue a portion or all of our operations.

Our revenues and results of operations depend to asignificant degree upon the timing and receipt of revenue fromlicensing, production fees and distribution of motion pictures andtelevision programming. While most of our licensing fees are paidimmediately upon entering into the license agreements, some aredeferred until the licensor's production costs are recouped.Production fees are not earned until the production is begun andexpenses related to the production are incurred. Furthermore, motionpictures often have long production cycles, making it difficult topredict when they will be completed and released for distribution. Allof these factors make it difficult to predict with certainty whenrevenues might be received. Results in any particular quarter may notbe indicative of results in subsequent periods. If, because of thevariance in our quarterly operating results, we fail to plan or projectaccurately, we could be subject to unexpected revenue shortfalls. If wewere unable to obtain financing to cover the revenue shortfalls, wecould have to discontinue a portion or all of our operations for someperiod of time or even indefinitely.

We enter into agreementsto develop ideas and properties; however, we may decide to abandon aproject rather than to complete the development.

Wepursue the acquisition of ideas and properties for original productionfrom a number of sources. For example, we may develop internally a newproperty based on an existing public domain property or create oracquire an entirely new idea. We often enter into agreements with thirdparties to develop these ideas and properties. After we startdevelopment, we may determine that the project is too costly to developor not suited to our purposes, in which case we may abandon theproject. We cannot assure you that we will develop every project weacquire.

8

----

Table of Contents

Competition in the entertainment industryis intense for many reasons, including the domination of the industrybymulti-national, multi-media conglomerates. Because of our lack of fundsand other resources, we may not be able to compete successfully withother producers of entertainment.

The entertainmentindustry is intensely competitive and is evolving into an industry inwhich certain multi-national, multi-media entities, because of theircontrol over key film, magazine, and/or television content, as well askey network and cable outlets, will be able to dominate certainentertainment industry activities in the United States and abroad.Virtually all of these competitors are substantially larger than weare, have been in business longer than we have and have more resources,including money, contacts and personnel, at their disposal. Thesecompetitors have numerous advantages over us, including the ability toacquire financing for their projects and attract superior properties,personnel, actors and/or celebrity hosts. We may not be able to competesuccessfully in the entertainment industry because of our lack ofresources. If we cannot compete successfully, our business andoperating results will be adversely affected.

Dependence on alimited number of projects.

A portion of our revenuesare generated from a limited number of films, direct response products,and other projects that change from period to period. Projects varyfrom period to period due to the opportunities available to us and toaudience response, both of which are unpredictable and subject tochange. The loss or failure of a major project, unless replaced byother projects, could have a material adverse effect on our results ofoperations and financial condition as well as on the market price ofour securities. There is no assurance that any project we invest inwill be successful.

The loss of certain key management andfailure to attract and retain qualified personnel may adversely affectour business.

Our future success depends, to asignificant extent, on the continued services of our senior managementand other key contracted creative personnel. The loss of any our seniormanagement, or certain other key contracted creative personnel, wouldlikely have a material and adverse effect on our business. We alsobelieve that our performance and future success will depend in largepart upon our ability to attract and retain additional highly skilledcreative, technical, sales, marketing and financial personnel,especially those with experience in our industry. If we do not succeedin attracting skilled personnel or in retaining our current talent, ourbusiness could be adversely affected. Competition for talentedpersonnel throughout our industry is intense and we may be unable toretain our current key employees or attract, integrate or retain otherhighly qualified employees in the future. We have in the pastexperienced, and we expect to continue to experience, difficulty inhiring and retaining highly skilled employees with appropriatequalifications. If we do not succeed in attracting new personnel orretaining and motivating our current personnel, our business could beadversely affected.

If we fail to perform our obligations undersecured notes, the secured parties may foreclose on their securityinterests.

In order to induce a group of investors toinvest in and make accommodations in certain properties, we enteredinto agreements whereby we guaranteed the repayment of theirinvestments, plus accrued interest, some of which have not been repaidin accordance with the terms. These investors may foreclose on theircollateral or other actions to cause the repayment of their investmentand if this were to occur, our revenues, profits, results ofoperations, financial condition and future prospects would bematerially and adversely affected.

The sports and entertainmentindustry is extremely competitive and we may not be able to competesuccessfully against other promoters, both large and small, for bothboxers and the public's attention.

The market forthe promotion of boxers, boxing events and boxing-related content isextremely competitive and rapidly changing. We face competitivepressures from numerous actual and potential competitors. Many of ourcompetitors in the promotion business, such as Don King Productions,Top 

9

----

Table of Contents

Rank and Golden Boy Promotions, havesubstantial competitive advantages over us, including longer operatinghistories, significantly greater financial, technical and marketingresources, greater brand name recognition, better distributionchannels, larger existing customer bases' and more popular contentor boxers. Similarly, the content production and distribution side ofour business faces competition from these sources, as well as majormedia concerns such as Walt Disney's ESPN network, which isactively involved in marketing its own library of boxing-relatedcontent.

A majority of the voting power of our stock is held bya limited number of holders

As of December31,  2005, by virtue of their collective ownership ofapproximately 51% of the aggregate voting power of ouroutstanding voting securities, a limited number of shareholders havethe ability to elect all of our directors, in turn elect all executiveofficers, without regard to the votes of other stockholders.Accordingly, our stockholders will have extremely limited power toinfluence our management and operations through the election ofdirectors or otherwise.

Our operations are affected by generaleconomic conditions and public tastes.

Our operationsare affected by general economic conditions and, therefore, our futuresuccess is unpredictable. The demand for entertainment and leisureactivities tends to be highly sensitive to consumers' disposableincomes, and thus a decline in general economic conditions could resultin our customers or potential customers having less discretionaryincome to spend on our live and televised entertainment and brandedmerchandise, which could have an adverse effect on our business and/orprospects. Public tastes are unpredictable and subject to change andmay be affected by changes in the country's political and socialclimate. A change in public tastes or decline in general economicconditions may adversely affect our future success.

We rely oncertain licenses to operate.

In various states in theUnited States and some foreign countries, athletic commissions andother applicable regulatory agencies require us to obtain promoterslicenses, performers' licenses, medical licenses and/or eventpermits in order for us to promote and conduct our live events. In theevent that we fail to comply with the regulations of a particularjurisdiction, we may be prohibited from promoting and conducting ourlive events in that jurisdiction. The inability to present our liveevents over an extended period of time or in a number of jurisdictionswould lead to a decline in the various revenue streams generated fromour live events, which could have an adverse effect on our profits,results of operations, financial condition and future prospects.

Our stock price may decline in the future, and a public market maynot develop or exist for you to sell our common stock.

Our common stock was quoted on the ‘‘PinkSheets’’, and is currently quoted on the‘‘OTCBB’’ with a stock symbol of CKRH. Anactive trading market may not develop in the future, or if one doesdevelop, be sustained. If an active trading market does develop, themarket price of our common stock is likely to be highly volatile dueto, among other things, the nature of our business and because we areeffectively a new public company with a limited operating history. Themarket price of our common stock may also fluctuate significantly inresponse to the following factors, most of which are beyond ourcontrol: variations in our quarterly operating results; changes insecurities analysts' estimates of our financial performance;changes in general economic conditions and in the sports andentertainment industry; changes in market valuations of similarcompanies; announcements by us or our competitors of significant newcontracts, acquisitions, strategic partnerships or joint ventures, orcapital commitments; loss of a partner or joint venture participant;and, the addition or loss of key managerial and creative personnel.

The equity markets have, on occasion, experienced significantprice and volume fluctuations that have affected the market prices formany companies' securities and that have often been unrelated tothe operating performance of these companies. Any such fluctuations mayadversely affect the market price of our common stock, regardless ofour actual operating performance. As a result, stockholders may beunable to sell their shares, or may be forced to sell them at aloss.

10

----

Table of Contents

Purchasers of our securitiesmay be adversely affected by the penny stock regulations.    TheSecurities and Exchange Commission adopted Rule 15g-9 which establishesthe definition of a ‘‘penny stock,’’ for thepurposes relevant to us, as any equity security that has a market priceof less than $5.00 per share or with an exercise price of less than$5.00 per share, subject to certain exceptions. For any transactioninvolving a penny stock, unless exempt, the rules require:

|  |              |                                                                                         |
|--|--------------|-----------------------------------------------------------------------------------------|
|  | •  | that a broker or dealer approvea person's account for transactions in penny stocks; and |

|  |              |                                                                                                                                                                  |
|--|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | the broker or dealer receivefrom the investor a written agreement to the transaction, setting forththe identity and quantity of the penny stock to be purchased. |

In order to approve a person's account for transactionsin penny stocks, the broker or dealer must:

|  |              |                                                                                     |
|--|--------------|-------------------------------------------------------------------------------------|
|  | •  | obtain financial informationand investment experience objectives of the person; and |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | make a reasonable determinationthat the transactions in penny stocks are suitable for that person andthe person has sufficient knowledge and experience in financial mattersto be capable of evaluating the risks of transactions in penny stocks.The broker or dealer must also deliver, prior to any transaction in apenny stock, a disclosure schedule prepared by the Commission relatingto the penny stock market, which, in highlight form, (i) sets forth thebasis on which the broker or dealer made the suitability determination;and (ii) that the broker or dealer received a signed, written agreementfrom the investor prior to the transaction. Disclosure also has to bemade about the risks of investing in penny stocks in both publicofferings and in secondary trading and about the commissions payable toboth the broker-dealer and the registered representative, currentquotations for the securities and the rights and remedies available toan investor in cases of fraud in penny stock transactions. Finally,monthly statements have to be sent disclosing recent price informationfor the penny stock held in the account and information on the limitedmarket in penny stocks. |

|               |                        |
|---------------|------------------------|
| Item 2.  | DESCRIPTIONOF PROPERTY |

We lease approximately 1,860 square feet forour headquarter facilities at 1414 Avenue of the Americas, Suite 406,New York, New York 10019. Minimum annual lease payments areapproximately $77,000 for 2006 and $79,000 for 2007. The lease expiresJanuary  31,  2008. This lease was assigned to our formerPresident, in April  2006, and we leased 4,000 square feet fornew headquarter facilities at 336 West 37th Street, NewYork, New York 10018. Total minimum lease payments are approximately$357,000 for the three year period.

|              |                   |
|--------------|-------------------|
| Item3.  | LEGAL PROCEEDINGS |

Securities &Exchange Commission

On March  24,2004, the United States Securities and Exchange Commission brought acivil action against us, Cedric Kushner, James DiLorenzo and StevenAngel in federal district court. The action alleged several violationsof the Securities Exchange Act of 1934 and the Public CompanyAccounting Reform and Investors Protection Act of 2002 including:Section 10(b) of the 1934 Act, Exchange Rule 10b-5, Section 302(a) ofthe 2002 Act and Exchange Act Rule 13a-14 there under. The SEC furtheralleged that the officers and directors aided and abetted our violationof the Exchange Act and that the Company’s Form 10-KSB for theyear ended December  31,  2002, as originally filed,contained material misstatements and omissions.

TheUnited States District Court entered final judgments confirming thesettlement of this matter with Cedric Kushner individually onNovember  30,  2005 and with us on December2,  2005. Under the settlement, without admitting or denying theallegations of the complaint, we consented to a permanent injunctionagainst future violations of the securities laws and agreed to take thefollowing steps within 60 days (all of which were implemented withinthe required timeframe):

|  |              |                                                                                        |
|--|--------------|----------------------------------------------------------------------------------------|
|  | •  | expand our board of directorsto five members, a majority of whom shall be independent; |

|  |              |                                          |
|--|--------------|------------------------------------------|
|  | •  | establish an independent auditcommittee; |

11

----

Table of Contents

|  |              |                                                                  |
|--|--------------|------------------------------------------------------------------|
|  | •  | hirea chief executive officer and a chief financial officer; and |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                   |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | retain the services of anindependent consultant to analyze our system of internal accountingcontrols and accounting and financial reporting processes, report tothe audit committee, and oversee the implementation of improvedprocesses in these areas. In that connection, we agreed to establish anescrow account in the amount of $150,000 to fund the services of theindependent consultant. |

In addition, we agreed not to payCedric Kushner or James DiLorenzo compensation as officers or directorsfollowing their resignations as officers and directors.

Cedric Kushner, without admitting or denying the allegationsof the SEC’s complaint, entered into a separate settlement inwhich he agreed to:

|  |              |                       |
|--|--------------|-----------------------|
|  | •  | Pay afine of $60,000; |

|  |              |                                                                          |
|--|--------------|--------------------------------------------------------------------------|
|  | •  | Bepermanently enjoined from future violations of the securities laws;and |

|  |              |                                                                                    |
|--|--------------|------------------------------------------------------------------------------------|
|  | •  | Be permanently barredfrom serving as an officer or director of any public company. |

The United States District Court dismissed the claims againstMr.  Angel on his motion for summary judgment and dismissed theaction as to him in its entirety.

The SEC action remainspending against Mr.  DiLorenzo.

ShaneMosley

On August  23,  2002, we settleda matter related to the sharing of profits with Shane Mosley, a boxer.We agreed to pay Mosley approximately $610,000 plus interest byApril  30,  2003. We defaulted and a judgment was enteredin favor of Mosley in the amount of $610,000 in June  2003.

In November  2005, we entered into a settlement withMosley, pursuant to which the Company agreed to pay $565,000 ininstallments representing 60% of the net profits from boxingevents promoted or co-promoted by the Company (retroactively toSeptember  2005) until the outstanding sum, plus accruinginterest, is paid in full. In addition, the Company is entitled to a$100,000 credit against the above settlement amount, contingent uponthe transfer and assignment of the Company's rights to the MosleyVideo Library. Amounts unpaid by December  31,  2008 shallbe immediately due and payable. Our former President personallyguaranteed the Company’s obligation.

FirstEquity

In June  2005, First Equity CapitalCorporation filed an action against us in state court in Florida,alleging that we breached an unsigned agreement pursuant to which weallegedly hired First Equity to provide certain services. First Equityalleges that the we are obligated to pay First Equity $1,525,000 and toissue to First Equity up to 4,000,000 registered shares of our commonstock. We filed an answer denying any liability to First Equity andraising numerous affirmative defenses. We are in the process of takingdiscovery in this matter and intend to vigorously defend.

Dewayne Layfield

On or about March10,  2003, our former subsidiary, Cedric Kushner Promotions, Ltd.(subsequently dissolved) entered into an agreement with AmericaPresents Boxing, Inc. pursuant to which CKP, Ltd. agreed to purchaseAPB's videotaped library of professional boxing contests and allassociated contracts and agreements, for $250,000, payable in equalmonthly installments of $4,000. Pursuant to the APB Agreement, CKP,Ltd. executed a $250,000 non-interest bearing promissory note to APB.APB subsequently assigned its rights under the APB Agreement and/orNote to L. DeWayne Layfield, to whom CKP, Ltd. subsequently executed asubstitute $250,000 promissory note. The note to Layfield is expresslysubject to any defenses which CKP, Ltd. had against APB under 2003 APBAgreement. As of December  31,  2003, the note wasallegedly in default.

In January  2004, Layfieldcommenced arbitration against CKP, Ltd. alleging that CKP, Ltd. haddefaulted on the $250,000 note. The arbitration was settled byrestructuring the payments under the 

12

----

Table of Contents

note and granting Layfield a securityinterest in the library. On December  3,  2004, we, APB,Layfield and Team Freedom Promotions, Inc. entered into an agreementreducing the amount owed to Layfield in exchange for a $50,000 paymentto APB.

In April  2005, Layfield commenced a secondarbitration against CKP, Ltd. alleging breach of the note and theprevious settlement agreement, seeking to recover $171,682.27 plusattorneys' fees and costs. We answered, seeking a declaration thatwe had no further obligation to Layfield due to APB’s breachesof the 2003 Agreement. We also filed a counterclaim and third-partycomplaint against Layfield and APB seeking to recover amountspreviously paid to Layfield and APB. The matter is currentlypending.

Designscape

In April2005 Designscape, Inc. filed an action in New York State Supreme Courtagainst the Company and James DiLorenzo, alleging breach of contractand misrepresentations with respect to an alleged oral agreement toprovide goods and services in connection with the production andstaging of a television series and seeking approximately $550,000 andunspecified damages. The Company has denied the material allegations ofthe complaint and filed a counterclaim seeking damages in excess of$150,000. The matter is currently pending.

Golden Gloves(PTY) Limited

On November  13,  2001,Golden Gloves (PTY) Limited, a boxing promoter based in Johannesburg,South Africa, commenced an action in the Supreme Court of the State ofNew York against the Company and Mr.  Kushner, alleging that webreached an agreement to share certain profits related to certainboxers. In February  2003, we agreed to pay $580,000. We have notmade any payments pursuant to the settlement agreement.

Zomba Recording Corporation 

InJuly  2002, the Company and Mr.  Kushner agreed to astipulation for judgment against him by Zomba Recording Corporationrelated to amounts owed Zomba under a note in the amount of $762,876.In August, 2002, Mr.  Kushner granted a security interest inproperty owned by him as collateral for the payment. As ofDecember  31,  2005, the unpaid balance owed to Zomba wasapproximately $267,000.

J.P. Morgan Chase &Company

On January  13,  2004, J.P.Morgan Chase & Company obtained a judgment in the amount of $95,145against Mr.  Kushner and us in connection with our default on anoutstanding note. In May  2004, we settled by agreeing to pay theoutstanding principal amount, plus interest at 4% per annum, in60 monthly payments of $1,752 each, in exchange for forbearance on anyadditional efforts to collect upon the unsatisfied portion of thebalance. The balance on this obligation at December  31,2005 amounted to $67,000. We are not in compliance with the terms setforth in the forbearance agreement.

National SportsPartners

In May  2003, National SportsPartners, the owner of Fox Sports Net Broadcast Service, commenced anaction in California against us to collect approximately $239,000 foradvertising time and production fees and costs for airing boxing eventson Fox, plus interest, costs and attorney fees. In August  2004,the Company reached an agreement with NSP in which NSP agreed toforbear from further action against us in exchange for full paymentover time of $239,000, plus deferred interest. As of December31,  2005 we have only paid $65,000.

Other

In the opinion of management, on the advice of counsel, wehave made adequate provision for potential liabilities, if any, arisingfrom litigation settlements and other claims arising from the above

13

----

Table of Contents

matters. As of December  31,2005, we had accrued approximately $2.1  million with respect tosuch matters. However, the costs and other effects of pending or futurelitigation, governmental investigations, legal and administrative casesand proceedings (whether civil or criminal), settlements, judgments andinvestigations, claims and changes in those matters (including thosematters described above), and developments or assertions by or againstus relating to contractual rights related to boxers and the promotionof boxing events, intellectual property rights and intellectualproperty licenses, could have a material adverse effect on ourbusiness, financial condition and operating results.

|              |                                                    |
|--------------|----------------------------------------------------|
| Item4.  | SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS |

None.

PART II

|              |                                                                                                               |
|--------------|---------------------------------------------------------------------------------------------------------------|
| Item5.  | MARKET FOR COMMON EQUITY, RELATED STOCKHOLDERMATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES |

Market for Securities

Our common stock was quoted onthe Over the Counter Bulletin Board beginning March  16,1999 until May  21,  2004. Our common stock was quoted onthe ‘‘Pink Sheets’’ beginning May22,  2004 until March  7,  2006. On March8,  2006 our common stock was quoted on the ‘‘Overthe Counter Bulletin Board’’ and currently trades under thesymbol ‘‘CKRH’’. The following table sets forththe high and low sale price of the common stock on a quarterly basis,as reported by NASDAQ:

|                           |  |        |        |        |  |        |        |        |  |  |
|---------------------------|--|--------|--------|--------|--|--------|--------|--------|--|--|
| QuarterEnded:             |  | High*  |        | Low*   |
| 2004                      |  |   |   |   |  |   |   |   |
| March  31,2004            |  | $      | .80    |   |  | $      | .70    |   |
| June  30,2004             |  |   | .51    |   |  |   | .43    |   |
| September  30,2004        |  |   | .50    |   |  |   | .43    |   |
| December  31,2004    |  |   | .70    |   |  |   | .45    |   |
| 2005                      |  |   |   |   |  |   |   |   |
| March  31,2005            |  |   | .58    |   |  |   | .22    |   |
| June  30,2005        |  |   | .50    |   |  |   | .22    |   |
| September  30, 2005  |  |   | .32    |   |  |   | .15    |   |
| December  31, 2005   |  |   | .44    |   |  |   | .13    |   |
| 2006                      |  |   |   |   |  |   |   |   |
| March31, 2006             |  | $      | .28    |   |  | $      | .20    |   |
|                           |

|  |
|--|
|  |  |
|  |

|   |                                                                                                                                                    |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------|
| * | PinkSheet market quotations reflect inter-dealer prices, without retailmark-up, markdown or commissions, and may not represent actualtransactions. |

The per share closing sales price ofthe common stock as reported by the ‘‘Over the CounterBulletin Board’’ on April 10,  2006, was $.25. As ofApril 10,  2006, there were approximately 250 holders of recordof common stock and shares of common stock outstanding. We have notpaid dividends on our common stock outstanding in the past. There areno restrictions that limit our ability to pay dividends in thefuture.

Recent Issuances of Unregistered Securities.

The issuances described in this Item 5 were made in relianceupon the exemption from registration set forth in Section 4(2) of theSecurities Act relating to sales by an issuer not involving any publicoffering. None of the foregoing transactions involved a distribution orpublic offering.

On November  1,  2005, theCompany terminated its loan with a stockholder in consideration of theissuance to the stockholder of 800,000 shares of our common stock andwarrants to purchase 7,500,000 shares of common stock at $.10 pershare. The shares are subject to a registration rights agreement andthe warrants vest 1.5 million per year starting in 2006.

14

----

Table of Contents

On December  21,2005, we issued 605,387 shares of our common stock in settlement of aterm loan in default aggregating $183,931, including unpaidinterest.

In January   2006, we issued428,539 shares of our common stock in settlement of term loans indefault aggregating $130,000, including unpaid interest.

|              |                                                          |
|--------------|----------------------------------------------------------|
| Item6.  | MANAGEMENT'S DISCUSSION AND ANALYSIS ORPLAN OF OPERATION |

INTRODUCTION AND CERTAIN CAUTIONARYSTATMENTS

The following discussion of our financialcondition and results of our operations should be read in conjunctionwith the Financial Statements and Notes thereto. Our fiscal year endsDecember  31. This document contains certain forward-lookingstatements including, among others, planned capital expenditurerequirements, cash and working capital requirements, our expectationsregarding the adequacy of current financing arrangements, fight demandand market growth, other statements regarding future plans andstrategies, anticipated events or trends, and similar expressionsconcerning matters that are not historical facts. These forward-lookingstatements are based largely on our current expectations and aresubject to a number of risks and uncertainties. Actual results coulddiffer materially from these forward-looking statements. Importantfactors to consider in evaluating such forward-looking statementsinclude (i) changes in external factors or in our internal budgetingprocess which might impact trends in our results of operations; (ii)unanticipated working capital or other cash requirements; (iii) changesin our business strategy or an inability to execute our strategy due tounanticipated changes in the industries in which we operate; and (iv)various competitive market factors that may prevent us from competingsuccessfully in the marketplace.

OVERVIEW

We arean independent producer of entertainment and sports content fordistribution to all media platforms.  We produced, for releasein 2006, the feature film comedies ‘‘BeerLeague,’’ starring Artie Lange (the popular comedian andactor who is a regular on the Howard Stern Show) and ‘‘TVthe Movie,’’ starring Steve O, Preston Lacy and Wee-Man(all of ‘‘Jackass’’ fame).   Wealso co-produced the feature film comedy National Lampoon's‘‘Pledge This,’’ starring Paris Hilton,anticipated to be released in 2006.  In addition, we produceprogramming for pay-per-view, video-on-demand, international markets,as well as, for retail and direct response sale.  Further, weproduce televised sports events and hold promotional rights toprofessional boxers. The Company is headquartered in New York City.

Reportable Segments

We have two reportable segments:sports entertainment and media entertainment. The sports segmentproduces boxing events and promotes professional boxers. The mediasegment consists primarily of projects that the we currently produce orwill produce or co produce such as feature films, DVD titles,television programming and other similar products.

CriticalAccounting Policies

The accompanying discussion andanalysis of our financial condition and results of operations are basedupon our consolidated financial statements, which have been prepared inaccordance with accounting principles generally accepted in the UnitedStates of America (‘‘US GAAP’’). Thepreparation of these consolidated financial statements requires us tomake estimates and judgments that affect the reported amounts ofassets, liabilities, revenues and expenses, and related disclosure ofcontingent assets and liabilities. These estimates form the basis formaking judgments about the carrying values of assets and liabilitiesthat are not readily apparent from other sources. We base our estimatesand judgments on historical experience and all available information.However, future events are subject to change, and the best estimatesand judgments routinely require adjustment. US GAAP requires us to makeestimates and judgments in several areas, including those related torecording 

15

----

Table of Contents

various accruals (such as incentivecompensation and restructuring costs), income taxes, the useful livesof long-lived assets, such as property and equipment and intangibleassets, and potential losses from contingencies and litigation. Webelieve the policies discussed below are the most critical to ourconsolidated financial statements because they are affectedsignificantly by management's judgments, assumptions andestimates.

Revenue Recognition

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Media entertainment revenueincludes revenues from the sale or licensing of films and is recognizedupon meeting all recognition requirements of Statement of Position(SOP) 00-2 ‘‘Accounting by Producers or Distributors ofFilms’’. Revenue from the theatrical release of featurefilms is recognized at the time of exhibition based on theCompany’s participation in box office receipts. Revenue from thesale of digital video disks (‘‘DVDs’’) in theretail market, net of an allowance for estimated returns and otherallowances, is recognized on the later of shipment to the customer or‘‘street date’’ (when it is available for saleby the customer). Under revenue sharing arrangements, rental revenue isrecognized when the Company is entitled to receipts and such receiptsare determinable. Revenue from sales to international territories isrecognized when access to the feature has been granted or delivery hasoccurred, as required under the sales contract, and the right toexploit the feature film has commenced |

|  |              |                                                                                                                                                                                              |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Fight revenue, promotionalfight revenue is comprised of box office ticket sales, site fee income,sponsorships and endorsements. Fight revenue is recognized in full onthe date of the event. |

Impairment of Long-Lived Assets

In accordance with Statement of Financial AccountingStandards (‘‘SFAS’’) No. 144,‘‘Accounting for the Impairment or Disposal of Long-LivedAssets’’, the Company continually monitors events andchanges in circumstances that could indicate carrying amounts oflong-lived assets may not be recoverable. An impairment loss isrecognized when expected cash flows are less than the assets'carrying value. Accordingly, when indicators of impairment are present,we evaluate the carrying value of such assets in relation to theoperating performance and future discounted cash flows of theunderlying business. Our policy is to record an impairment loss when itis determined that the carrying amount of the asset may not berecoverable.

Intangible Assets

As a creator anddistributor of sports and entertainment copyrights, we have asignificant and growing number of intangible assets, including videoand television libraries, trademarks and contractual relationships. Inaccordance with accounting principles generally accepted in the UnitedStates of America, the Company does not recognize the fair value ofinternally generated intangible assets. Costs incurred to create andproduce a copyrighted product, such as the television series, areeither expensed as incurred, or capitalized as tangible assets, as inthe case of inventoriable product costs. However, accountingrecognition is not given to any increasing asset value that may beassociated with the collection of the underlying copyrightedmaterial.

Intangibles are being amortized over theirestimated useful lives ranging from 5 to 10 years, utilizing thestraight-line method. Video and television libraries amortized overtheir estimated useful lives of 5 years, utilizing the straight-linemethod.

Income Taxes

We utilize the asset andliability method to account for income taxes whereby deferred taxassets and liabilities are recognized to reflect the future taxconsequences attributable to temporary differences between thefinancial reporting basis of existing assets and liabilities and theirrespective tax losses. Deferred tax assets and liabilities are measuredusing enacted tax rates expected to be recovered and settled.

16

----

Table of Contents

At December  31,  2005and 2004, we provided a 100% valuation allowance for thedeferred tax assets, because the ultimate realizations of those assetsare uncertain. Utilization of net operating loss carry-forwards aresubject to a substantial annual limitation due to the‘‘change in ownership’’ provisions of theInternal Revenue Code. The annual limitation may result in theexpiration of net operating loss carry-forwards before utilization.

YEAR ENDED DECEMBER 31, 2005 VERSUS YEAR ENDED DECEMBER 31,2004

The following represents a comparison of segmentoperating results for the years ended December  31,  2005and 2004.

|                                |  |        |           |         |  |        |        |          |  |        |             |         |  |        |        |          |  |  |
|--------------------------------|--|--------|-----------|---------|--|--------|--------|----------|--|--------|-------------|---------|--|--------|--------|----------|--|--|
|                           |  | 2005   |           | %       |  | 2004   |        | %        |
| Netrevenues               |  |   |      |    |  |   |   |     |  |   |        |    |  |   |   |     |
| Sports                    |  | $      | 602,983   |    |  |   | 85.6   | %   |  | $      | 2,627,827   |    |  |   | 87.2   | %   |
| Media                          |  |   | 101,033   |    |  |   | 14.4   | %   |  |   | 385,077     |    |  |   | 12.8   | %   |
|                           |  |   | 704,016   |    |  |   | 100.0  | %   |  |   | 3,012,904   |    |  |   | 100.0  | %   |
| Costof revenues and othercosts |  |   |      |    |  |   |   |     |  |   |        |    |  |   |   |     |
| Sports                         |  |   | 576,681   |    |  |   | 81.9   | %   |  |   | 4,085,795   |    |  |   | 135.7  | %   |
| Media                          |  |   | 840,962   |    |  |   | 119.5  | %   |  |   | 1,396,308   |    |  |   | 46.3   | %   |
|                           |  |   | 1,417,643 |    |  |   | 201.4  | %   |  |   | 5,482,103   |    |  |   | 182.0  | %   |
| Segmentprofit/(loss)           |  |   |      |    |  |   |   |     |  |   |        |    |  |   |   |     |
| Sports                         |  |   | 26,302    |    |  |   | 3.7    | %   |  |   | (1,457,968  | )  |  |   | (48.4  | )%  |
| Media                          |  |   | (739,929  | )  |  |   | (105.1 | )%  |  |   | (1,011,231  | )  |  |   | (38.6  | )%  |
|                           |  |   | ($713,627 | )  |  |   | (101.4 | )%  |  |   | ($2,469,199 | )  |  |   | (82.0  | )%  |
|                                |

Net revenues decreasedby $2.3  million, or 76.6 %, to $704,000 for the yearended December  31,  2005 from $3.0  million in theprior year.

The decrease in net revenues reflects thereduction in our involvement in the promotion of boxing and alsoreflected, in 2005, the lack of cable supported televised bouts, forwhich we received approximately $1.3  million for the year ending2004. The decrease in media net revenues also declined as our productofferings are still limited as we are shifting from emphasis fromsports related offerings.

Cost of revenues which relateto the production costs for boxing events and production cost, forfilmed products decreased by $2.7  million, or 82.5%, to$574,000 for the year ended December  31,  2005, comparedto $3.3  million incurred in 2004. The decrease in cost ofrevenues is attributable to the greater cost of staging the 2004 eventsprincipally the purse costs. Other segment allocated costs aredepreciation and amortization and impairment charges of aggregating$844,000 in 2005 and $2.2  million in 2004. In 2004, werecognized impairments of our sports and media assets of $515,000 and$782,000, respectively, and, in 2005, the impairments related to mediaassets.

Our segment operating loss decreased $1.8million to $714,000 in 2005 from a loss of $2.5  million for theyear ended December  31,  2004. The improvement inoperating results in 2005 was principally reflective of the reductionin impairment charges.

Selling, general andadministrative expenses increased by 19.1% or $480,000, to$3.0  million for the year ended December  31,  2005,from $2.5  million in the prior year. The increase wasattributable to increased infrastructure for managing the mediabusiness as well as professional services. We also recorded a non-cashexpense, classified as ‘‘compensatory element of stock andwarrant issuances for selling, general and administrativeexpenses’’ of $2.7  million to reflect the use ofstocks and warrants as compensation for services rendered under variousconsulting and employment agreements in 2005 and 2004.

Financing costs including interest, charges for thebeneficial conversion features related to convertible indebtedness aswell as fair market valuations of our securities issued in lieu of cashpayments for 

17

----

Table of Contents

financing activities decreased by$5.3  million to $1.3  million in 2005 from $6.8million in the prior year. This decrease is primarily attributable tothe conversion of outstanding indebtedness into equity in bothperiods.

Off-Balance Sheet Arrangements

We hadno off-balance sheet arrangements for the fiscal year endedDecember  31,  2005. Additionally, we review ourrelationships with other entities to identify whether it is the primarybeneficiary of a variable interest entity . If the determination ismade that we are the primary beneficiary, then the entity isconsolidated in accordance with Financial Accounting Standards Board(‘‘FASB’’) Interpretation No.(‘‘FIN’’) 46, ‘‘Consolidation ofVariable Interest Entities’’. Investments in which weexercise significant influence, but do not control, are accounted forusing the equity method of accounting. Investments in which there is nosignificant influence are accounted for using the cost method ofaccounting.

LIQUIDITY AND CAPITAL RESOURCES

Wehave incurred net losses of $7.7  million and $12.4million during the year ended December  31,  2005 and 2004,respectively. In addition, we are not in compliance with the paymentterms for $2.1  million of our outstanding notes and loanspayable including unpaid interest. Further, we had a stockholders'deficiency in excess of $12  million at December31,  2005. Historically, we have successfully obtained externalfinancing through short-term borrowings and private placements ofequity and convertible debt and thus, we hope to remedy these defaultsthrough additional borrowings, conversion of existing debt to equity,ownership contributions, and/or renegotiation of existing terms andconditions of the notes and loans payable in default. However, if weare unable to cure these defaults, it may significantly impede ourability to raise additional funds and/or to conduct normal businessoperations.

We have also taking actions to addressliquidity in the following ways:

|  |              |                                                                                                         |
|--|--------------|---------------------------------------------------------------------------------------------------------|
|  | •  | developing additional sourcesof debt and equity financing to satisfy our current operatingrequirements; |

|  |              |                                                                                                                                                             |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | entering intonew initiatives to develop, produce and distribute film properties aswell as other entertainment projects for direct response and retailsales; |

|  |              |                                                                             |
|--|--------------|-----------------------------------------------------------------------------|
|  | •  | continuing to pursuethe promotion of selective premium level boxing events; |

|  |              |                                                                      |
|--|--------------|----------------------------------------------------------------------|
|  | •  | pursuing productionpartnerships and joint ventures to fund projects; |

|  |              |                                                   |
|--|--------------|---------------------------------------------------|
|  | •  | reducing operating costs byreducing overhead; and |

|  |              |                                                                                           |
|--|--------------|-------------------------------------------------------------------------------------------|
|  | •  | continuing to negotiate withexisting creditors to convert their indebtedness into equity. |

There can be no assurance that sufficient funds requiredduring the next year or thereafter will be generated from operations orthat funds will be available from external sources such as debt orequity financings or other potential sources. The lack of additionalcapital resulting from our inability to generate cash flow fromoperations or to raise capital from external sources would force us tosubstantially curtail or cease operations and would, therefore, have amaterial adverse effect on its business. Furthermore, there can be noassurance that any such required funds, if available, will be availableon attractive terms or that they will not have a significant dilutiveeffect on our existing stockholders.

These factors raisesubstantial doubt about our ability to continue as a going concern andthe accompanying consolidated financial statements do not include anyadjustments related to the recoverability or classification of assetcarrying amounts or the amounts and classification of liabilities thatmay result should we be unable to continue as a going concern.

Commitments and Contingencies

In connectionwith both our sports and media operations, we guaranteed investors andother participants in our projects the return of their investments andin some cases with a preferred return. 

18

----

Table of Contents

In addition to amounts included in minorityinterests and/or participation payables (aggregating $3.4million) we have guaranteed a $1  million investment, along witha co-guarantor.

We are of the opinion, based upon adviseof counsel, that we have made adequate provision for potentialliabilities, if any, arising from litigation settlements and otherclaims described in Item 3  –  Legal Proceedings. Asof December  31,  2005, we had accrued approximately$2.1  million, with respect to such matters. However, the costsand other effects of pending or future litigation, governmentalinvestigations, legal and administrative cases and proceedings (whethercivil or criminal), settlements, judgments and investigations, claimsand changes in those matters (including those matters described above),and developments or assertions by or against us relating to contractualrights related to boxers and the promotion of boxing events,intellectual property rights and intellectual property licenses, couldhave a material adverse effect on the our business, financial conditionand operating results.

Cash Flows

AtDecember  31,  2005, the Company's cash positionreflected a balance of $58,000, exclusive of a restricted depositrequired by our consent decree with the SEC to cover the cost of aspecial consultant, compared to $219,000 in the prior year.

Operating Cash Flows.    Our principal operatingsource of cash is from the revenues from the promotion boxing eventsand media sales.  Our principal operating uses of cash relate tocosts of the events and film costs. For the year ended December31,  2005, we used cash of $5.4  million in operatingactivities principally to fund the loss of $3.3  million,excluding non cash items of $4.4  million and the acquisition offilm costs of $3.9  million. Cash from operations was principallyprovided by the increase in amounts due for payables and other accrualsof $1.8  million.

For the year endedDecember  31,  2004, we used $3.2  million of cash inoperating activities. Our net loss of $12.4  million wasprincipally attributable to the $8.2  million of depreciating andamortization and certain non-cash charges related to use of equity tofund expenses. This was partially offset by increases in cashattributable to an increase in notes payable and accrued expenses of$1  million.

Investing CashFlows.    Cash provided from investing activities for the yearended December  31, 2005 was principally related to proceeds fromsale of rights net of purchases of computer equipment and leaseholdimprovements of $27,000. In 2004 cash was used in investing activitieswas for the acquisition of boxing assets of $320,000 net of proceedsfrom sale of rights of $145,000.

Financing CashFlows.    Net cash generated from financing activities for theyear ended December  31,  2005 was $5.2  millionwhich consisted of net proceeds of $6.3  million from theissuance of equity securities and short-term borrowings, net ofrepayments of indebtedness of $1.1  million. In 2004, net cashgenerated from financing activities was $3.7  million whichconsisted of net proceeds $4.5  million from equity and debtissuances, net of indebtedness repayments of $823,000.

EFFECTOF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

InDecember  2004, the Financial Accounting Standards Board(‘‘FASB’’) issued Statement No. 123R(‘‘SFAS 123R’’) ‘‘Share BasedPayment,’’ a revision of Statement No. 123,‘‘Accounting for Stock Based Compensation.’’This standard requires the Company to measure the cost of employeeservices received in exchange for equity awards based on grant datefair value of the awards. The Company is required to adopt SFAS 123Reffective January  1,  2006. The standard provides for aprospective application. Under this method, the Company will beginrecognizing compensation cost for equity based compensation for all newor modified grants after the date of adoption. In addition, the Companywill recognize the unvested portion of the grant date fair value ofawards issued prior to the  adoption based on the fair valuespreviously calculated for disclosure purposes. At December31,  2005, the Company had no unvested options.

InDecember  2004, the FASB issued SFAS No. 153,‘‘Exchanges of Nonmonetary Assets,’’(‘‘SFAS 153’’). SFAS 153 amends AccountingPrinciples Board (‘‘APB’’) Opinion No. 29,‘‘Accounting for 

19

----

Table of Contents

Nonmonetary Transactions,’’ torequire exchanges of nonmonetary assets be accounted for at fair value,rather than carryover basis. Nonmonetary exchanges that lack commercialsubstance are exempt from this requirement. SFAS 153 is effective fornonmonetary exchanges entered into in fiscal years beginning afterJune  15,  2005. The Company does not routinely enter intoexchanges that could be considered nonmonetary, accordingly the Companydoes not expect adoption of SFAS 153 to have a material impact on theCompany's financial statements.

20

----

Table of Contents

|               |                     |
|---------------|---------------------|
| ITEM 7.  | FINANCIALSTATEMENTS |

The financial statements required by thisitem are submitted in a separate section beginning on Page F–1 ofthis report.

21

----

Indexto Consolidated Financial Statements

Ckrush,Inc. and Subsidiaries

|                                                                                                 |  |                                                   |  |  |  |  |
|-------------------------------------------------------------------------------------------------|--|---------------------------------------------------|--|--|--|--|
|                                                                                            |  | Page                                              |
| Reports of Independent Registered Public AccountingFirms                                        |  | F-2   –   F-3 |
| ConsolidatedBalance Sheet – December 31, 2005                                             |  | F-4                                               |
| Consolidated Statements of Operations – Year EndedDecember 31, 2005 and 2004              |  | F-5                                               |
| Consolidated Statements of Stockholders' Deficiency– Year Ended December 31, 2005and 2004 |  | F-6   –   F-7 |
| ConsolidatedStatements of Cash Flows – Year Ended December 31,2005 and 2004               |  | F-8  –  F-9             |
| Notes to Consolidated Financial Statements                                                      |  | F-10  –  F-25           |
|                                                                                                 |

F-1

----

Table of Contents

Reportof Independent Registered Public Accounting Firm

To theBoard of Directors and Stockholders of CKRUSH, Inc. andSubsidiaries

We have audited the accompanying consolidatedbalance sheet of CKRUSH, Inc. and Subsidiaries as of December 31, 2005and the related consolidated statements of operations,stockholders' deficiency, and cash flows for the year then ended.These financial statements are the responsibility of theCompany's management. Our responsibility is to express an opinionon these financial statements based on our audit.

We conductedour audit in accordance with the standards of the Public CompanyAccounting Oversight Board (United States). Those standards requirethat we plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides areasonable basis for our opinion.

In our opinion, the financialstatements referred to above present fairly, in all material respects,the consolidated financial position of CKRUSH, Inc. and Subsidiaries asof December 31, 2005 and the consolidated results of their operationsand their cash flows for the year then ended, in conformity with U.S.generally accepted accounting principles.

The accompanyingfinancial statements have been prepared assuming that the Company willcontinue as a going concern. As discussed in the notes to the financialstatements, the Company's significant operating losses andsignificant working capital deficiency raise substantial doubt aboutits ability to continue as a going concern. The financial statements donot include any adjustments that might result from the outcome of thisuncertainty.

Rosenberg Rich Baker Berman &Company

Bridgewater, New JerseyApril 11,2006

F-2

----

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLICACCOUNTING FIRM

Board of Directors and StockholdersCkrush, Inc. and Subsidiaries

We have audited the accompanyingconsolidated statements of operations, stockholders' deficiencyand cash flows for the year ended December 31, 2004 of Ckrush, Inc. andSubsidiaries (formerly Cedric Kushner Promotions, Inc.) (the"Company'). These consolidated financial statementsare the responsibility of the Company's management. Ourresponsibility is to express an opinion on these consolidated financialstatements based on our audit

We conducted our audit inaccordance with the standards of the Public Company AccountingOversight Board (United States). Those standards require that we planand perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. The Company isnot required to have, nor were we engaged to perform, an audit of itsinternal control over financial reporting. Our audit includedconsideration of internal control over financial reporting as a basisfor designing audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Company's internal control over financialreporting. Accordingly, we express no such opinion. Also, an auditincludes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements, assessing the accountingprinciples used and significant estimates made by management, as wellas evaluating the overall financial statement presentation. We believethat our audit provides a reasonable basis for our opinion.

Inour opinion, the consolidated financial statements referred to abovepresent fairly, in all material respects, the consolidated results ofoperations and consolidated cash flows of Ckrush, Inc. and Subsidiariesfor the year ended December 31, 2004, in conformity with accountingprinciples generally accepted in the United States of America.

The accompanying consolidated financial statements have beenprepared assuming the Company will continue as a going concern. Asdiscussed in Note 2 to the consolidated financial statements, theCompany has incurred significant operating losses for the year endedDecember 31, 2004 and has a significant stockholders' deficiencythat raise substantial doubt about its ability to continue as a goingconcern. Management's plans regarding those matters are alsodescribed in Note 2. The consolidated financial statements do notinclude any adjustments that might result from the outcome of thisuncertainty.

WOLINETZ, LAFAZAN & COMPANY,P.C.

Rockville Centre, New York April 13,2005

F-3

----

Table of Contents

CKRUSH,INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETDecember31,  2005

|                                                                                                                                 |  |        |             |         |  |  |
|---------------------------------------------------------------------------------------------------------------------------------|--|--------|-------------|---------|--|--|
| Assets                                                                                                                          |  |   |        |    |
| Cash                                                                                                                            |  | $      | 57,533      |    |
| Accounts receivable                                                                                                             |  |   | 15,431      |    |
| Prepaid expenses and otherassets                                                                                                |  |   | 143,955     |    |
| Film costs                                                                                                                      |  |   | 3,998,746   |    |
| Assets held for sale to formerpresident                                                                                         |  |   | 213,559     |    |
| Property andequipment – net                                                                                               |  |   | 18,962      |    |
| Cash– restricted                                                                                                          |  |   | 150,000     |    |
| Total Assets                                                                                                                    |  | $      | 4,598,186   |    |
| Liabilities and Stockholders'Deficiency                                                                                         |  |   |        |    |
| Accounts payable andaccrued expenses                                                                                            |  | $      | 4,900,440   |    |
| Accruedlitigation and judgments payable                                                                                         |  |   | 2,135,103   |    |
| Notes and loans payable, including accrued interest                                                                             |  |   | 2,671,231   |    |
| Deferred gain                                                                                                                   |  |   | 1,478,845   |    |
| Due to related parties                                                                                                          |  |   | 606,939     |    |
| Participation payables                                                                                                          |  |   | 400,000     |    |
| TotalLiabilities                                                                                                                |  |   | 12,192,558  |    |
| Minority Interest                                                                                                               |  |   | 4,708,130   |    |
| Commitments, Contingencies and OtherMatters                                                                                     |  |   |        |    |
| Stockholders'Deficiency                                                                                                         |  |   |        |    |
| Series D, $.01 par value,authorized 399,752 shares, 399,752 shares issued and outstanding(liquidation preference of $2,430,000) |  |   | 3,998       |    |
| Series E, $.01 par value, authorized 14,000 shares,1,388 shares issued and outstanding (liquidation preference of$499,680)      |  |   | 14          |    |
| Common stock, $.01 parvalue, authorized 100,000,000 shares 70,994,163 shares issued andoutstanding                              |  |   | 709,942     |    |
| Additionalpaid-in capital                                                                                                       |  |   | 40,872,945  |    |
| Accumulated deficit                                                                                                             |  |   | (48,363,005 | )  |
| Deferred compensation                                                                                                           |  |   | (5,441,396  | )  |
| Treasury stock, at cost – 104,784 shares of commonstock                                                                   |  |   | (85,000     | )  |
| Total Stockholders' Deficiency                                                                                                  |  |   | (12,302,502 | )  |
| Total Liabilities and Stockholders' Deficiency                                                                                  |  | $      | 4,598,186   |    |
|                                                                                                                                 |

Seenotes to consolidated financial statements

F-4

----

Table of Contents

CKRUSH, INC. ANDSUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                                                      |  |                       |             |         |  |        |              |         |  |  |
|------------------------------------------------------------------------------------------------------|--|-----------------------|-------------|---------|--|--------|--------------|---------|--|--|
|                                                                                                 |  | Year ended December31 |
|                                                                                                 |  | 2005                  |             | 2004    |
| Net revenues                                                                                         |  | $                     | 704,016     |    |  | $      | 3,012,904    |    |
| Operating costs andexpenses                                                                          |  |                  |        |    |  |   |         |    |
| Cost of revenues                                                                                     |  |                  | 574,075     |    |  |   | 3,271,805    |    |
| Selling,general and administrative                                                         |  |                  | 2,990,923   |    |  |   | 2,510,988    |    |
| Depreciation and amortization                                                                   |  |                  | 391,941     |    |  |   | 921,190      |    |
| Impairment charges                                                                                   |  |                  | 460,422     |    |  |   | 1,296,746    |    |
| Compensatory element of equityissuances for selling, general and administrative expenses        |  |                  | 2,679,394   |    |  |   | 2,619,315    |    |
| Reversal of stockbased compensation                                                                  |  |                  |        |    |  |   | (2,055,000   | )  |
|                                                                                                 |  |                  | 7,096,755   |    |  |   | 8,565,044    |    |
| Loss from operations                                                                                 |  |                  | (6,392,739  | )  |  |   | (5,552,120   | )  |
| Other income(expenses)                                                                               |  |                  |        |    |  |   |         |    |
| Interest expense– related parties                                                    |  |                  | (7,049      | )  |  |   | (234,104     | )  |
| Interest expense –other                                                              |  |                  | (1,159,777  | )  |  |   | (1,273,326   | )  |
| Financing costs paid incommon stock and warrants                                                     |  |                  | (110,250    | )  |  |   | (3,543,157   | )  |
| Financing costs paid inpreferred stock in connection with debt conversion – relatedparty  |  |                  |        |    |  |   | (1,824,357   | )  |
| Other                                                                                           |  |                  |        |    |  |   | 62,341       |    |
|                                                                                                 |  |                  | (1,277,076  | )  |  |   | (6,812,603   | )  |
| Net loss                                                                                             |  |                  | (7,669,815  | )  |  |   | (16,364,743  | )  |
| Deemeddividend on Series E preferred stock                                                           |  |                  | (280,452    | )  |  |   |         |    |
| Dividend – Series Apreferred stock                                                             |  |                  |        |    |  |   | (32,330      | )  |
| Netloss attributable to common stockholders                                                     |  |                  | ($7,950,267 | )  |  |   | ($12,397,073 | )  |
| Net loss per common share(basic and diluted)                                                         |  |                  | ($0.13      | )  |  |   | ($0.25       | )  |
| Weighted average number of commonshares outstanding(basic and diluted)                               |  |                  | 62,461,790  |    |  |   | 50,585,161   |    |
|                                                                                                      |

See notes to consolidatedfinancial statements

F-5

----

Table of Contents

CKRUSH,INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS'DEFICIENCY

|                                                                                    |  |                     |          |                      |  |                          |        |                          |  |                      |          |                      |  |                        |        |                |  |                              |         |         |  |        |        |         |  |        |         |        |  |        |        |        |  |        |        |        |  |        |        |        |  |        |            |        |  |        |         |        |  |        |             |         |  |        |             |         |  |        |            |         |  |        |              |         |  |        |             |         |  |        |          |         |  |        |          |         |  |        |           |         |  |        |              |         |  |  |
|------------------------------------------------------------------------------------|--|---------------------|----------|----------------------|--|--------------------------|--------|--------------------------|--|----------------------|----------|----------------------|--|------------------------|--------|----------------|--|------------------------------|---------|---------|--|--------|--------|---------|--|--------|---------|--------|--|--------|--------|--------|--|--------|--------|--------|--|--------|--------|--------|--|--------|------------|--------|--|--------|---------|--------|--|--------|-------------|---------|--|--------|-------------|---------|--|--------|------------|---------|--|--------|--------------|---------|--|--------|-------------|---------|--|--------|----------|---------|--|--------|----------|---------|--|--------|-----------|---------|--|--------|--------------|---------|--|--|
|                                                                               |  | PreferredStock      |          | Common Stock         |  | Common Stockto be issued |        | AdditionalPaid inCapital |  | AccumulatedDeficit   |          | DeferredCompensation |  | DeferredFinancingCosts |        | Treasury Stock |  | TotalStockholders'Deficiency |
|                                                                               |  | ConvertibleSeries A |          | Convertible Series B |  | Convertible Series C     |        | Series D                 |  | Convertible Series E |          |                 |  |                   |        |           |
|                                                                               |  | Shares              |          | Amount               |  | Shares                   |        | Amount                   |  | Shares               |          | Amount               |  | Shares                 |        | Amount         |  | Shares                       |         | Amount  |  | Shares |        | Amount  |  | Shares |         | Amount |  | Shares |        | Amount |
| Balance – December  31,2003                                                  |  |                | 117,500  |                 |  | $                        | 1,175  |                     |  |                 | 399,752  |                 |  | $                      | 3,998  |           |  |                         | 27,923  |    |  | $      | 279    |    |  |   | 399,752 |   |  |   | 3,998  |   |  |   |   |   |  |   |   |   |  |   | 10,768,991 |   |  | $      | 107,690 |   |  |   | 8,205,692   |    |  | $      | 7,663,071   |    |  | $      | 9,473,017  |    |  |   | ($27,910,683 | )  |  |   | ($1,127,918 | )  |  |   | ($32,152 | )  |  |   | (120,284 | )  |  |   | ($201,298 | )  |  |   | ($12,018,823 | )  |
| Issuance ofSeries B Preferred Stock – conversion of related party debt       |  |                |     |                 |  |                     |   |                     |  |                 | 65,156   |                 |  |                   | 652    |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |       |   |  |   |    |   |  |   |        |    |  |   |        |    |  |   | 3,452,616  |    |  |   |         |    |  |   |        |    |  |   |     |    |  |   |     |    |  |   |      |    |  |   | 3,453,268    |    |
| Issuance of Series E Preferred Stock                                               |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   | 4,243  |   |  |   | 42     |   |  |   |       |   |  |   |    |   |  |   |        |    |  |   |        |    |  |   | 1,527,490  |    |  |   |         |    |  |   |        |    |  |   |     |    |  |   |     |    |  |   |      |    |  |   | 1,527,532    |    |
| Issuance of common stock in connection with conversion ofSeries A Preferred Stock  |  |                | (117,500 | )               |  |                     | (1,175 | )                   |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   | 1,175,000  |   |  |   | 11,750  |   |  |   |        |    |  |   |        |    |  |   | (10,575    | )  |  |   |         |    |  |   |        |    |  |   |     |    |  |   |     |    |  |   |      |    |  |   |         |    |
| conversionof Series B Preferred Stock                                              |  |                |     |                 |  |                     |   |                     |  |                 | (464,908 | )               |  |                   | (4,650 | )         |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   | 23,245,390 |   |  |   | 232,454 |   |  |   |        |    |  |   |        |    |  |   | (227,804   | )  |  |   |         |    |  |   |        |    |  |   |     |    |  |   |     |    |  |   |      |    |  |   |         |    |
| conversionof Series C Preferred Stock                                              |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         | (27,923 | )  |  |   | (279   | )  |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   | 2,792,210  |   |  |   | 27,922  |   |  |   |        |    |  |   |        |    |  |   | (27,643    | )  |  |   |         |    |  |   |        |    |  |   |     |    |  |   |     |    |  |   |      |    |  |   |         |    |
| Commonstock to be issued in connection with boxer's exclusivepromotional agreement |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |       |   |  |   |    |   |  |   | 250,000     |    |  |   | 212,500     |    |  |   | (75,000    | )  |  |   |         |    |  |   | (212,500    | )  |  |   |     |    |  |   |     |    |  |   |      |    |  |   | (75,000      | )  |
| consulting agreement                                                               |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |       |   |  |   |    |   |  |   | 3,000,000   |    |  |   | 1,740,000   |    |  |   |       |    |  |   |         |    |  |   | (1,740,000  | )  |  |   |     |    |  |   |     |    |  |   |      |    |  |   |         |    |
| Plege ThisHolding, LLC                                                             |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |       |   |  |   |    |   |  |   | 1,000,000   |    |  |   | 510,000     |    |  |   |       |    |  |   |         |    |  |   |        |    |  |   |     |    |  |   |     |    |  |   |      |    |  |   | 510,000      |    |
| services by a consultant                                                           |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |       |   |  |   |    |   |  |   | 175,000     |    |  |   | 70,000      |    |  |   |       |    |  |   |         |    |  |   |        |    |  |   |     |    |  |   |     |    |  |   |      |    |  |   | 70,000       |    |
| conversion of debt                                                                 |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |       |   |  |   |    |   |  |   | 5,113,029   |    |  |   | 1,949,596   |    |  |   |       |    |  |   |         |    |  |   |        |    |  |   |     |    |  |   |     |    |  |   |      |    |  |   | 1,949,596    |    |
| consulting agreement debt                                                          |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |       |   |  |   |    |   |  |   | 732,500     |    |  |   | 293,000     |    |  |   |       |    |  |   |         |    |  |   |        |    |  |   |     |    |  |   |     |    |  |   |      |    |  |   | 293,000      |    |
| Warrants issued in connection with boxer  exclusivepromotional agreement           |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |       |   |  |   |    |   |  |   |        |    |  |   |        |    |  |   | 205,000    |    |  |   |         |    |  |   | (205,000    | )  |  |   |     |    |  |   |     |    |  |   |      |    |  |   |         |    |
| consultingagreement                                                                |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |       |   |  |   |    |   |  |   |        |    |  |   |        |    |  |   | 315,000    |    |  |   |         |    |  |   | (315,000    | )  |  |   |     |    |  |   |     |    |  |   |      |    |  |   |         |    |
| convertibledebt                                                                    |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |       |   |  |   |    |   |  |   |        |    |  |   |        |    |  |   | 931,957    |    |  |   |         |    |  |   |        |    |  |   |     |    |  |   |     |    |  |   |      |    |  |   | 931,957      |    |
| fees for convertible debt                                                          |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |       |   |  |   |    |   |  |   |        |    |  |   |        |    |  |   | 82,548     |    |  |   |         |    |  |   |        |    |  |   |     |    |  |   |     |    |  |   |      |    |  |   | 82,548       |    |
| Cancellation of consulting agreement                                               |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |       |   |  |   |    |   |  |   | (3,000,000  | )  |  |   | (1,740,000  | )  |  |   | (315,000   | )  |  |   |         |    |  |   |        |    |  |   |     |    |  |   |     |    |  |   |      |    |  |   | (2,055,000   | )  |
| Issuance of common stock fromcommon stock to beissued                              |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   | 15,476,221 |   |  |   | 154,762 |   |  |   | (15,476,221 | )  |  |   | (10,698,167 | )  |  |   | 10,543,405 |    |  |   |         |    |  |   |        |    |  |   |     |    |  |   |     |    |  |   |      |    |  |   |         |    |
| Commonstock issued in connection with dispute                                      |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   | 425,000    |   |  |   | 4,250   |   |  |   |        |    |  |   |        |    |  |   | 269,250    |    |  |   |         |    |  |   |        |    |  |   |     |    |  |   |     |    |  |   |      |    |  |   | 273,500      |    |
| Treasury stock issued for professional fees                                        |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |       |   |  |   |    |   |  |   |        |    |  |   |        |    |  |   |       |    |  |   | (104,983     | )  |  |   |        |    |  |   |     |    |  |   | 15,500   |    |  |   | 116,298   |    |  |   | 11,315       |    |
| Amortization of deferred consultingfees                                            |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |       |   |  |   |    |   |  |   |        |    |  |   |        |    |  |   |       |    |  |   |         |    |  |   | 2,264,500   |    |  |   |     |    |  |   |     |    |  |   |      |    |  |   | 2,264,500    |    |
| Accrueddividends on Preferred Stock – Series A Convertible                   |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |       |   |  |   |    |   |  |   |        |    |  |   |        |    |  |   |       |    |  |   | (32,330      | )  |  |   |        |    |  |   |     |    |  |   |     |    |  |   |      |    |  |   | (32,330      | )  |
| Amortization of deferredsigning bonus                                              |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |       |   |  |   |    |   |  |   |        |    |  |   |        |    |  |   |       |    |  |   |         |    |  |   | 686,878     |    |  |   |     |    |  |   |     |    |  |   |      |    |  |   | 686,878      |    |
| Beneficialconversion feature of convertible debt                                   |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |       |   |  |   |    |   |  |   |        |    |  |   |        |    |  |   | 1,924,920  |    |  |   |         |    |  |   |        |    |  |   |     |    |  |   |     |    |  |   |      |    |  |   | 1,924,920    |    |
| Amortization of financing costs                                                    |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |       |   |  |   |    |   |  |   |        |    |  |   |        |    |  |   |       |    |  |   |         |    |  |   |        |    |  |   | 32,152   |    |  |   |     |    |  |   |      |    |  |   | 32,152       |    |
| Sale of portion ofdeferred signing bonuses                                         |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |       |   |  |   |    |   |  |   |        |    |  |   |        |    |  |   |       |    |  |   |         |    |  |   | 82,000      |    |  |   |     |    |  |   |     |    |  |   |      |    |  |   | 82,000       |    |
| Net loss                                                                           |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |       |   |  |   |    |   |  |   |        |    |  |   |        |    |  |   |       |    |  |   | (12,364,743  | )  |  |   |        |    |  |   |     |    |  |   |     |    |  |   |      |    |  |   | (12,364,743  | )  |
| Balance – December  31, 2004                                                 |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   | 399,752 |   |  |   | 3,998  |   |  |   | 4,243  |   |  |   | 42     |   |  |   | 53,882,812 |   |  |   | 538,828 |   |  |   |        |    |  |   |        |    |  |   | 28,069,181 |    |  |   | (40,412,739  | )  |  |   | (567,040    | )  |  |   |     |    |  |   | (104,784 | )  |  |   | (85,000   | )  |  |   | (12,452,730  | )  |
| Issuance of preferred stock                                                        |  |                |     |                 |  |                     |   |                     |  |                 |     |                 |  |                   |   |           |  |                         |    |    |  |   |   |    |  |   |    |   |  |   |   |   |  |   | 2,316  |   |  |   | 24     |   |  |   |       |   |  |   |    |   |  |   |        |    |  |   |        |    |  |   | 833,840    |    |  |   |         |    |  |   |        |    |  |   |     |    |  |   |     |    |  |   |      |    |  |   | 833,864      |    |
|                                                                                    |

F-6

----

Table of Contents

|                                                          |  |                     |                                                                    |                      |  |                          |                                                                    |                          |  |                      |                                                                    |                      |  |                        |                                                                    |                |  |                              |                                                                    |        |  |        |                                                                    |        |  |        |         |        |  |        |        |        |  |        |        |         |  |        |        |         |  |        |            |         |  |        |         |         |  |        |                                                                    |        |  |        |                                                                    |        |  |        |            |         |  |        |              |         |  |        |             |         |  |        |                                                                    |        |  |        |          |         |  |        |          |         |  |        |              |         |  |  |
|----------------------------------------------------------|--|---------------------|--------------------------------------------------------------------|----------------------|--|--------------------------|--------------------------------------------------------------------|--------------------------|--|----------------------|--------------------------------------------------------------------|----------------------|--|------------------------|--------------------------------------------------------------------|----------------|--|------------------------------|--------------------------------------------------------------------|--------|--|--------|--------------------------------------------------------------------|--------|--|--------|---------|--------|--|--------|--------|--------|--|--------|--------|---------|--|--------|--------|---------|--|--------|------------|---------|--|--------|---------|---------|--|--------|--------------------------------------------------------------------|--------|--|--------|--------------------------------------------------------------------|--------|--|--------|------------|---------|--|--------|--------------|---------|--|--------|-------------|---------|--|--------|--------------------------------------------------------------------|--------|--|--------|----------|---------|--|--------|----------|---------|--|--------|--------------|---------|--|--|
|                                                     |  | PreferredStock      |                                                                    | Common Stock         |  | Common Stockto be issued |                                                                    | AdditionalPaid inCapital |  | AccumulatedDeficit   |                                                                    | DeferredCompensation |  | DeferredFinancingCosts |                                                                    | Treasury Stock |  | TotalStockholders'Deficiency |
|                                                     |  | ConvertibleSeries A |                                                                    | Convertible Series B |  | Convertible Series C     |                                                                    | Series D                 |  | Convertible Series E |                                                                    |                 |  |                   |                                                                    |           |
|                                                     |  | Shares              |                                                                    | Amount               |  | Shares                   |                                                                    | Amount                   |  | Shares               |                                                                    | Amount               |  | Shares                 |                                                                    | Amount         |  | Shares                       |                                                                    | Amount |  | Shares |                                                                    | Amount |  | Shares |         | Amount |  | Shares |        | Amount |
| Issuance of common stockand warrants inconnectionwith:   |  |                |                                                               |                 |  |                     |                                                               |                     |  |                 |                                                               |                 |  |                   |                                                               |           |  |                         |                                                               |   |  |   |                                                               |   |  |   |    |   |  |   |   |   |  |   |   |    |  |   |   |    |  |   |       |    |  |   |    |    |  |   |                                                               |   |  |   |                                                               |   |  |   |       |    |  |   |         |    |  |   |        |    |  |   |                                                               |   |  |   |     |    |  |   |     |    |  |   |         |    |
| conversionof preferred stock                             |  |                |                                                               |                 |  |                     |                                                               |                     |  |                 |                                                               |                 |  |                   |                                                               |           |  |                         |                                                               |   |  |   |                                                               |   |  |   |    |   |  |   |   |   |  |   | (5,171 | )  |  |   | (52    | )  |  |   | 5,171,258  |    |  |   | 51,713  |    |  |   |                                                               |   |  |   |                                                               |   |  |   | (51,661    | )  |  |   |         |    |  |   |        |    |  |   |                                                               |   |  |   |     |    |  |   |     |    |  |   |         |    |
| consultingfees                                           |  |                |                                                               |                 |  |                     |                                                               |                     |  |                 |                                                               |                 |  |                   |                                                               |           |  |                         |                                                               |   |  |   |                                                               |   |  |   |    |   |  |   |   |   |  |   |   |    |  |   |   |    |  |   | 3,500,000  |    |  |   | 35,000  |    |  |   |                                                               |   |  |   |                                                               |   |  |   | 7,525,000  |    |  |   |         |    |  |   | (7,560,000  | )  |  |   |                                                               |   |  |   |     |    |  |   |     |    |  |   |         |    |
| conversion of notes andloanspayable                      |  |                |                                                               |                 |  |                     |                                                               |                     |  |                 |                                                               |                 |  |                   |                                                               |           |  |                         |                                                               |   |  |   |                                                               |   |  |   |    |   |  |   |   |   |  |   |   |    |  |   |   |    |  |   | 5,411,827  |    |  |   | 54,118  |    |  |   |                                                               |   |  |   |                                                               |   |  |   | 1,566,205  |    |  |   |         |    |  |   |        |    |  |   |                                                               |   |  |   |     |    |  |   |     |    |  |   | 1,620,324    |    |
| accrued professional fees                                |  |                |                                                               |                 |  |                     |                                                               |                     |  |                 |                                                               |                 |  |                   |                                                               |           |  |                         |                                                               |   |  |   |                                                               |   |  |   |    |   |  |   |   |   |  |   |   |    |  |   |   |    |  |   | 145,000    |    |  |   | 1,450   |    |  |   |                                                               |   |  |   |                                                               |   |  |   | 188,650    |    |  |   |         |    |  |   |        |    |  |   |                                                               |   |  |   |     |    |  |   |     |    |  |   | 190,100      |    |
| deferredsettlement                                       |  |                |                                                               |                 |  |                     |                                                               |                     |  |                 |                                                               |                 |  |                   |                                                               |           |  |                         |                                                               |   |  |   |                                                               |   |  |   |    |   |  |   |   |   |  |   |   |    |  |   |   |    |  |   | 800,000    |    |  |   | 8,000   |    |  |   |                                                               |   |  |   |                                                               |   |  |   | 1,352,000  |    |  |   |         |    |  |   |        |    |  |   |                                                               |   |  |   |     |    |  |   |     |    |  |   | 1,360,000    |    |
| private placement                                        |  |                |                                                               |                 |  |                     |                                                               |                     |  |                 |                                                               |                 |  |                   |                                                               |           |  |                         |                                                               |   |  |   |                                                               |   |  |   |    |   |  |   |   |   |  |   |   |    |  |   |   |    |  |   | 1,001,600  |    |  |   | 10,016  |    |  |   |                                                               |   |  |   |                                                               |   |  |   | 240,384    |    |  |   |         |    |  |   |        |    |  |   |                                                               |   |  |   |     |    |  |   |     |    |  |   | 250,400      |    |
| services                                                 |  |                |                                                               |                 |  |                     |                                                               |                     |  |                 |                                                               |                 |  |                   |                                                               |           |  |                         |                                                               |   |  |   |                                                               |   |  |   |    |   |  |   |   |   |  |   |   |    |  |   |   |    |  |   | 150,000    |    |  |   | 1,500   |    |  |   |                                                               |   |  |   |                                                               |   |  |   | 28,500     |    |  |   |         |    |  |   |        |    |  |   |                                                               |   |  |   |     |    |  |   |     |    |  |   | 30,000       |    |
| filmproject guarantee                                    |  |                |                                                               |                 |  |                     |                                                               |                     |  |                 |                                                               |                 |  |                   |                                                               |           |  |                         |                                                               |   |  |   |                                                               |   |  |   |    |   |  |   |   |   |  |   |   |    |  |   |   |    |  |   | 750,000    |    |  |   | 7,500   |    |  |   |                                                               |   |  |   |                                                               |   |  |   | 216,486    |    |  |   |         |    |  |   |        |    |  |   |                                                               |   |  |   |     |    |  |   |     |    |  |   | 223,986      |    |
| financing fees                                           |  |                |                                                               |                 |  |                     |                                                               |                     |  |                 |                                                               |                 |  |                   |                                                               |           |  |                         |                                                               |   |  |   |                                                               |   |  |   |    |   |  |   |   |   |  |   |   |    |  |   |   |    |  |   | 100,000    |    |  |   | 1,000   |    |  |   |                                                               |   |  |   |                                                               |   |  |   | 109,250    |    |  |   |         |    |  |   |        |    |  |   |                                                               |   |  |   |     |    |  |   |     |    |  |   | 110,250      |    |
| ‘‘cashless’’ exercise ofwarrants |  |                |                                                               |                 |  |                     |                                                               |                     |  |                 |                                                               |                 |  |                   |                                                               |           |  |                         |                                                               |   |  |   |                                                               |   |  |   |    |   |  |   |   |   |  |   |   |    |  |   |   |    |  |   | 206,666    |    |  |   | 2,067   |    |  |   |                                                               |   |  |   |                                                               |   |  |   | (2,067     | )  |  |   |         |    |  |   |        |    |  |   |                                                               |   |  |   |     |    |  |   |     |    |  |   |         |    |
| Issuance of warrantsto joint venture partners            |  |                |                                                               |                 |  |                     |                                                               |                     |  |                 |                                                               |                 |  |                   |                                                               |           |  |                         |                                                               |   |  |   |                                                               |   |  |   |    |   |  |   |   |   |  |   |   |    |  |   |   |    |  |   |       |    |  |   |    |    |  |   |                                                               |   |  |   |                                                               |   |  |   | 100,000    |    |  |   |         |    |  |   | (100,000    | )  |  |   |                                                               |   |  |   |     |    |  |   |     |    |  |   | 100,000      |    |
| Amortization of deferred consulting fees                 |  |                |                                                               |                 |  |                     |                                                               |                     |  |                 |                                                               |                 |  |                   |                                                               |           |  |                         |                                                               |   |  |   |                                                               |   |  |   |    |   |  |   |   |   |  |   |   |    |  |   |   |    |  |   |       |    |  |   |    |    |  |   |                                                               |   |  |   |                                                               |   |  |   |       |    |  |   |         |    |  |   | 2,611,833   |    |  |   |                                                               |   |  |   |     |    |  |   |     |    |  |   | 2,511,833    |    |
| Amortization ofdeferred signing bonuses                  |  |                |                                                               |                 |  |                     |                                                               |                     |  |                 |                                                               |                 |  |                   |                                                               |           |  |                         |                                                               |   |  |   |                                                               |   |  |   |    |   |  |   |   |   |  |   |   |    |  |   |   |    |  |   |       |    |  |   |    |    |  |   |                                                               |   |  |   |                                                               |   |  |   |       |    |  |   |         |    |  |   | 67,561      |    |  |   |                                                               |   |  |   |     |    |  |   |     |    |  |   | 67,561       |    |
| Repurchase of sharesissued for signing bonuses           |  |                |                                                               |                 |  |                     |                                                               |                     |  |                 |                                                               |                 |  |                   |                                                               |           |  |                         |                                                               |   |  |   |                                                               |   |  |   |    |   |  |   |   |   |  |   |   |    |  |   |   |    |  |   | (125,000   | )  |  |   | (1,250  | )  |  |   |                                                               |   |  |   |                                                               |   |  |   | (105,000   | )  |  |   |         |    |  |   | 106,250     |    |  |   |                                                               |   |  |   |     |    |  |   |     |    |  |   |         |    |
| Beneficial conversion feature of convertibleinstruments  |  |                |                                                               |                 |  |                     |                                                               |                     |  |                 |                                                               |                 |  |                   |                                                               |           |  |                         |                                                               |   |  |   |                                                               |   |  |   |    |   |  |   |   |   |  |   |   |    |  |   |   |    |  |   |       |    |  |   |    |    |  |   |                                                               |   |  |   |                                                               |   |  |   | 802,177    |    |  |   | (280,451     | )  |  |   |        |    |  |   |                                                               |   |  |   |     |    |  |   |     |    |  |   | 521,725      |    |
| Net loss                                                 |  |                |                                                               |                 |  |                     |                                                               |                     |  |                 |                                                               |                 |  |                   |                                                               |           |  |                         |                                                               |   |  |   |                                                               |   |  |   |    |   |  |   |   |   |  |   |   |    |  |   |   |    |  |   |       |    |  |   |    |    |  |   |                                                               |   |  |   |                                                               |   |  |   |       |    |  |   | (7,669,815   | )  |  |   |        |    |  |   |                                                               |   |  |   |     |    |  |   |     |    |  |   | (7,669,815   | )  |
| Balance, December  31,2005                               |  |                |             |                 |  |                     |             |                     |  |                 |             |                 |  |                   |             |           |  |                         |             |   |  |   |             |   |  |   | 399,752 |   |  | $      | 3,998  |   |  |   | 1,388  |    |  | $      | 14     |    |  |   | 70,994,163 |    |  | $      | 709,942 |    |  |   |             |   |  |   |             |   |  | $      | 40,872,945 |    |  |   | ($48,363,005 | )  |  |   | ($5,441,396 | )  |  |   |             |   |  |   | (104,784 | )  |  |   | ($85,000 | )  |  |   | ($12,302,502 | )  |
|                                                          |

Seenotes to consolidated financialstatements

F-7

----

Table of Contents

CEDRICKUSHNER PROMOTIONS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTSOF CASH FLOWS

|                                                                                                               |  |                       |            |         |  |        |             |         |  |  |
|---------------------------------------------------------------------------------------------------------------|--|-----------------------|------------|---------|--|--------|-------------|---------|--|--|
|                                                                                                          |  | Year Ended December31 |
|                                                                                                          |  | 2005                  |            | 2004    |
| Cash Flows From OperatingActivities                                                                           |  |                  |       |    |  |   |        |    |
| Net loss                                                                                                      |  | $                     | (7,669,815 | )  |  | $      | (12,364,743 | )  |
| Adjustments to reconcile net loss to net cashused in operatingactivities:                                     |  |                  |       |    |  |   |        |    |
| Depreciation andamortization                                                                                  |  |                  | 391,941    |    |  |   | 932,023     |    |
| Amortization of debt discount                                                                                 |  |                  | 507,792    |    |  |   |        |    |
| Impairment charges                                                                                            |  |                  | 460,422    |    |  |   | 1,296,746   |    |
| Stock-based compensation– services                                                                      |  |                  | 220,100    |    |  |   |        |    |
| Compensatory element of stock and warrantissuances for selling, general and administrative expenses      |  |                  | 2,679,394  |    |  |   | 2,619,315   |    |
| Reversal ofcompensatory element of stock and warrant issuances due to expirationand nullification of contract |  |                  |       |    |  |   | (2,055,000  | )  |
| Financing costs paid in stocks and warrants                                                                   |  |                  | 110,250    |    |  |   | 3,543,157   |    |
| Financing costs incurred in preferred stock inconnection with debt conversion – related party           |  |                  |       |    |  |   | 1,824,357   |    |
| Other                                                                                                         |  |                  |       |    |  |   | (33,341     | )  |
| (Increase)decrease in operatingassets:                                                                        |  |                  |       |    |  |   |        |    |
| Accounts receivable                                                                                           |  |                  | 77,899     |    |  |   | (49,209     | )  |
| Film costs                                                                                                    |  |                  | (3,938,746 | )  |  |   |        |    |
| Prepaid expenses andother assets                                                                              |  |                  | (70,429    | )  |  |   | (51,248     | )  |
| Restricted cash                                                                                               |  |                  | (150,000   | )  |  |   |        |    |
| Increase (decrease) in operatingliabilities:                                                                  |  |                  |       |    |  |   |        |    |
| Accounts payable andaccrued expenses                                                                          |  |                  | 1,564,146  |    |  |   | 286,172     |    |
| Accrued litigation and judgments payable                                                                      |  |                  | 184,743    |    |  |   | (64,396     | )  |
| Notes andloans payable – accrued interest                                                               |  |                  | 260,062    |    |  |   | 931,497     |    |
| Net Cash Used In Operating Activities                                                                         |  |                  | (5,372,241 | )  |  |   | (3,184,670  | )  |
| Cash Flows FromInvesting Activities                                                                           |  |                  |       |    |  |   |        |    |
| Purchasesof property and equipment                                                                            |  |                  | (26,682    | )  |  |   | (25,146     | )  |
| Expenditures for prepaidsigning bonuses                                                                       |  |                  |       |    |  |   | (225,000    | )  |
| Payments for distribution rights                                                                              |  |                  |       |    |  |   | (109,957    | )  |
| Proceeds from sale ofrights                                                                                   |  |                  | 50,000     |    |  |   | 145,000     |    |
| Investment in movie rights                                                                                    |  |                  | (7,468     | )  |  |   | (112,000    | )  |
| Assets held for sale                                                                                          |  |                  |       |    |  |   | 7,146       |    |
| Net Cash Provided From (Used In) Investing Activities                                                         |  |                  | 15,850     |    |  |   | (319,957    | )  |
| Cash Flows From FinancingActivities                                                                           |  |                  |       |    |  |   |        |    |
| Repayments tostockholders and related parties – net                                                     |  |                  | (577,705   | )  |  |   | (119,692    | )  |
| Proceeds fromissuance of:                                                                                     |  |                  |       |    |  |   |        |    |
| preferred stock                                                                                               |  |                  | 634,800    |    |  |   | 1,477,532   |    |
| commonstock                                                                                                   |  |                  | 250,400    |    |  |   |        |    |
| productioninterests (minority interests)                                                                      |  |                  | 4,648,130  |    |  |   |        |    |
| notes and loans payable – other                                                                         |  |                  | 730,000    |    |  |   | 1,066,466   |    |
| convertibledebt                                                                                               |  |                  |       |    |  |   | 1,782,500   |    |
| Repayment ofnotes and loans payable – other                                                             |  |                  | (491,000   | )  |  |   | (703,150    | )  |
| Proceeds of preferred stockescrow account                                                                     |  |                  |       |    |  |   | 199,064     |    |
| NetCash Provided From Financing Activities                                                                    |  |                  | 5,194,625  |    |  |   | 3,702,720   |    |
|                                                                                                               |

F-8

----

Table of Contents

|                                                                                                                  |  |                       |           |         |  |        |           |        |  |  |
|------------------------------------------------------------------------------------------------------------------|--|-----------------------|-----------|---------|--|--------|-----------|--------|--|--|
|                                                                                                             |  | Year Ended December31 |
|                                                                                                             |  | 2005                  |           | 2004    |
| Net (Decrease)Increase In Cash                                                                                   |  |                  | (161,766  | )  |  |   | 198,093   |   |
| Cash –Beginning of Year                                                                                    |  |                  | 219,299   |    |  |   | 21,206    |   |
| Cash – End of Year                                                                                         |  | $                     | 57,533    |    |  | $      | 219,299   |   |
| SupplementalDisclosures:                                                                                         |  |                  |      |    |  |   |      |   |
| Cash paid duringthe period for:                                                                                  |  |                  |      |    |  |   |      |   |
| Interest                                                                                                         |  | $                     | 131,420   |    |  | $      | 194,900   |   |
| Non-cash investing andfinancingactivities:                                                                       |  |                  |      |    |  |   |      |   |
| Issuance ofcommon stock for                                                                                      |  |                  |      |    |  |   |      |   |
| deferredcompensation                                                                                             |  | $                     | 7,660,000 |    |  |   |      |   |
| uponconversion of notes and loans payable                                                                        |  |                  | 1,620,324 |    |  |   |      |   |
| conversion of officer loan                                                                                       |  |                  | 620,284   |    |  |   |      |   |
| conversion of note payable– related party                                                                  |  |                  | 1,360,000 |    |  |   |      |   |
| film project guarantee                                                                                           |  |                  | 223,986   |    |  |   |      |   |
| conversion Series E preferred stock                                                                              |  |                  | 51,713    |    |  |   |      |   |
| cashless' exercise ofwarrants                                                                                    |  |                  | 2,067     |    |  |   |      |   |
| conversion ofconvertible debt                                                                                    |  |                  |      |    |  | $      | 1,949,596 |   |
| accrued expenses                                                                                                 |  |                  |      |    |  |   | 293,000   |   |
| Issuance of preferred stock for accrued expenses                                                                 |  |                  | 199,064   |    |  |   |      |   |
| Issuance of notes payablefor accrued expenses                                                                    |  |                  | 876,377   |    |  |   | 101,340   |   |
| Issuance of common stock and warrants in connectionwith the purchase of a boxer's exclusive promotionalagreement |  |                  |      |    |  |   | 417,500   |   |
| Issuance of Series B preferredstock                                                                              |  |                  |      |    |  |   |      |   |
| conversion of notespayable/stockholders                                                                          |  |                  |      |    |  |   | 1,628,911 |   |
| notes payable                                                                                                    |  |                  |      |    |  |   | 50,000    |   |
| Investment in film cost – minority interest                                                                |  |                  | 60,000    |    |  |   |      |   |
|                                                                                                                  |

See notes to consolidatedfinancial statements

F-9

----

Table of Contents

CKRUSH,INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIALSTATEMENTS

|               |                        |
|---------------|------------------------|
| Note 1.  | Description ofBusiness |

Ckrush, Inc. and subsidiaries the(‘‘Company’’) is an independent producer ofinnovative entertainment and sports programming for global distributionto all media platforms We recently produced the feature film comedies‘‘Beer League,’’ for release in 2006, and‘‘TV the Movie’’. We also co-produced NationalLampoon's ‘‘Pledge This’’ also anticipatedto be released in the later part of 2006. In addition, we produceprogramming for pay-per-view, video-on-demand and other video channels,as well as, retail and direct response. Further, we are promoters ofprofessional boxers, boxing events and other sports ventures.

|               |                       |
|---------------|-----------------------|
| Note 2.  | Basis of Presentation |

The Company has incurred net losses of $7.7  millionand $12.4  million during the year ended December31,  2005 and 2004, respectively. In addition, the Company is notin compliance with the payment terms for $2.1  million of itsoutstanding notes and loans payable including unpaid interest. Further,the Company had a stockholders' deficiency in excess of $12million at December  31,  2005. Historically, the Companyhas successfully obtained external financing through short-termborrowings and private placements of equity and convertible debt andthus, the Company hopes to remedy these defaults through additionalborrowings, conversion of existing debt to equity, ownershipcontributions, and/or renegotiation of existing terms and conditions ofthe notes and loans payable in default. However, if the Company isunable to cure these defaults, it may significantly impede our abilityto raise additional funds and/or to conduct normal businessoperations.

The Company is also taking actions to addressliquidity in the following ways:

|  |              |                                                                                                         |
|--|--------------|---------------------------------------------------------------------------------------------------------|
|  | •  | developing additional sourcesof debt and equity financing to satisfy our current operatingrequirements; |

|  |              |                                                                                                                                                             |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | entering intonew initiatives to develop, produce and distribute film properties aswell as other entertainment projects for direct response and retailsales; |

|  |              |                                                                             |
|--|--------------|-----------------------------------------------------------------------------|
|  | •  | continuing to pursuethe promotion of selective premium level boxing events; |

|  |              |                                                                      |
|--|--------------|----------------------------------------------------------------------|
|  | •  | pursuing productionpartnerships and joint ventures to fund projects; |

|  |              |                                                   |
|--|--------------|---------------------------------------------------|
|  | •  | reducing operating costs byreducing overhead; and |

|  |              |                                                                                           |
|--|--------------|-------------------------------------------------------------------------------------------|
|  | •  | continuing to negotiate withexisting creditors to convert their indebtedness into equity. |

There can be no assurance that sufficient funds requiredduring the next year or thereafter will be generated from operations orthat funds will be available from external sources such as debt orequity financings or other potential sources. The lack of additionalcapital resulting from the Company’s inability to generate cashflow from operations or to raise capital from external sources wouldforce it to substantially curtail or cease operations and would,therefore, have a material adverse effect on its business. Furthermore,there can be no assurance that any such required funds, if available,will be available on attractive terms or that they will not have asignificant dilutive effect on the Company’s existingstockholders.

These factors raise substantial doubt aboutthe Company’s ability to continue as a going concern and theaccompanying consolidated financial statements do not include anyadjustments related to the recoverability or classification of assetcarrying amounts or the amounts and classification of liabilities thatmay result should the Company be unable to continue as a goingconcern.

|               |                                           |
|---------------|-------------------------------------------|
| Note 3.  | Summary of SignificantAccounting Policies |

Principles of Consolidation

The consolidated financial statements include the accounts ofCkrush, Inc. (formerly Cedric Kushner Productions, Inc.) and all of itsmajority-owned and controlled subsidiaries, with a provision for

F-10

----

Table of Contents

minority interests. The Company reviews itsrelationships with other entities to identify whether it is the primarybeneficiary of a variable interest entity(‘‘VIE’’). If the determination is made thatthe Company is the primary beneficiary, then the entity is consolidatedin accordance with Financial Accounting Standards Board(‘‘FASB’’) Interpretation No.(‘‘FIN’’) 46, ‘‘Consolidation ofVariable Interest Entities’’. Investments in which theCompany exercises significant influence, but does not control, areaccounted for using the equity method of accounting. Investments inwhich there is no significant influence are accounted for using thecost method of accounting. All inter-company accounts and transactionshave been eliminated in consolidation.

Revenue Recognition

Sports entertainment revenues, principally promotional fightrevenue is comprised of box office ticket sales, site fee income,sponsorships and endorsements. Fight revenue is recognized in full onthe date of the event.

Media entertainment revenueincludes revenues from the sale or licensing of films and is recognizedupon meeting all recognition requirements of Statement of Position(SOP) 00-2 ‘‘Accounting by Producers or Distributors ofFilms’’. Revenue from the theatrical release of featurefilms is recognized at the time of exhibition based on theCompany’s participation in box office receipts. Revenue from thesale of digital video disks (‘‘DVDs’’) in theretail market, net of an allowance for estimated returns and otherallowances, is recognized on the later of shipment to the customer or‘‘street date’’ (when it is available for saleby the customer). Under revenue sharing arrangements, rental revenue isrecognized when the Company is entitled to receipts and such receiptsare determinable. Revenue from sales to international territories isrecognized when access to the feature has been granted or delivery hasoccurred, as required under the sales contract, and the right toexploit the feature film has commenced.

Shipping andhandling costs are included under distribution and marketing expensesin the consolidated statements of operations.

Cash

Cash and cash equivalents include cash and highly liquid debtinvestments with original maturities of ninety days or less whenpurchased, which are carried at the lower of cost and fair marketvalue.

Investment in Films

Investment in filmsincludes the unamortized costs of completed films which have beenproduced by the Company or for which the Company has acquireddistribution rights, films in progress and in development and homevideo product inventory. For films produced by the Company, capitalizedcosts include all direct production and financing costs, capitalizedinterest and production overhead. For acquired films, capitalized costsconsist of minimum guarantee payments to acquire the distributionrights. Costs of producing films are amortized using theindividual-film-forecast method, whereby costs are amortized andparticipation and residual costs are accrued in the proportion thatcurrent year’s revenue bears to management’s estimate ofultimate revenue at the beginning of the current year expected to berecognized from the exploitation, exhibition or sale of the films.Ultimate revenue includes estimates over a period not to exceed tenyears following the date of initial release. Investment in films andtelevision programs is stated at the lower of amortized cost orestimated fair value on an individual film basis. The valuation ofinvestment in films is reviewed on a title-by-title basis, when anevent or change in circumstances indicates that the fair value of afilm is less than its unamortized cost. The fair value of the film isdetermined using management’s future revenue and cost estimatesand a discounted cash flow approach. Additional amortization isrecorded in the amount by which the unamortized costs exceed theestimated fair value of the film. Estimates of future revenue involvemeasurement uncertainty and it is therefore possible that reductions inthe carrying value of investment in films and television programs maybe required as a consequence of changes in management’s futurerevenue estimates. Films in progress include the accumulated costs ofproductions, which have not yet been completed by the Company. Films indevelopment include costs 

F-11

----

Table of Contents

of acquiring film rights to books, stageplays or original screenplays and costs to adapt such projects. Suchcosts are capitalized and, upon commencement of production, aretransferred to production costs. Projects in development are writtenoff at the earlier of the date they are determined not to berecoverable or when abandoned, or three years from the date of theinitial investment.

Property and Equipment

Property and equipment consists of office equipment and isstated at cost less accumulated depreciation and amortization.Depreciation and amortization is determined by using the straight-linemethod over the estimated useful lives of the related assets, generallyfive to seven years.

Advertising and Marketing Expenses

The costs of advertising and marketing expenses are expensedas incurred. Advertising expenses for the years ended December31,  2005 and 2004 were $48,500 and $88,000, respectively.

Stock Based Compensation

The Company follows theprovisions of Statement of Financial Accounting Standards(‘‘SFAS’’) No.  123,‘‘Accounting for Stock-Based Compensation’’ andSFAS No. 148, ‘‘Accounting for Stock-Based Compensation,Transition and Disclosure’’. The provisions of SFAS 123allow companies either to expense the estimated fair value of stockoptions or to continue to follow the intrinsic value method set forthin Accounting Principles Board Opinion No. 25, ‘‘Accountingfor Stock Issued to Employees’’ (‘‘APB25’’), but disclose the pro forma effects on net income(loss) had the fair value of the options been expensed. The Company haselected to apply APB 25 in accounting for its stock option incentiveplans. The provisions of SFAS 148 require that disclosures of the proforma effect of using the fair value method of accounting forstock-based employee compensation be displayed prominently and in atabular format. All outstanding employee options vested prior to 2004,therefore there would be no impact on compensation cost for theCompany's stock option plans during the years presented utilizingthe fair value method set forth in SFAS 123. See Note 9 for otherdisclosures required by SFAS 123 and SFAS 148.

Inaccordance with APB 25 and related interpretations, compensationexpense for stock options is recognized in income based on the excess,if any, of the quoted market price of the stock at the grant date ofthe award or other measurement date over the amount an employee mustpay to acquire the stock. Generally, the exercise price for stockoptions granted to the Company's employees equals or exceeds thefair market value of the Company's common stock at the date ofgrant, thereby resulting in no recognition of compensation expense. Forawards that generate compensation expense as defined under APB 25, theCompany calculates the amount of compensation expense and recognizesthe expense over the vesting period of the award.

IncomeTaxes

The Company accounts for income taxes under theasset and liability method using SFAS No. 109, ‘‘Accountingfor Income Taxes.’’ Deferred tax assets and liabilities arerecognized for the future tax consequences attributable to differencesbetween the financial statement carrying amounts of existing assets andliabilities and their respective tax bases and operating loss and taxcredit carry-forwards. Deferred tax assets and liabilities are measuredusing enacted tax rates expected to apply to taxable income in theyears in which those temporary differences are expected to be recoveredor settled. The effect on deferred tax assets and liabilities of achange in tax rates is recognized in income in the period that includesthe enactment date.

The tax effects of temporarydifferences that gave rise to the deferred tax assets and deferred taxliabilities at December  31,  2005 and 2004 were primarilyattributable to net operating loss carry-forwards. Since the Companyhas a history of losses, a full valuation allowance has beenestablished. In addition, utilization of net operating losscarry-forwards are subject to a substantial annual limitation due tothe ‘‘change in ownership’’ provisions of theInternal Revenue Code. The annual limitation may result in theexpiration of net operating loss carry-forwards before utilization.

F-12

----

Table of Contents

Loss per share

Loss percommon share is based upon the weighted average number of common sharesoutstanding during the year. Diluted loss per common share is the sameas basic loss per share, as the effect of potentially dilutedsecurities (options – 299,000 (2005 and 2004) and warrants– 30,051,373 (2005) and 9,823,113 (2004)) are anti-dilutive.

Use of Estimates

The preparation of financialstatements in conformity with accounting principles generally acceptedin the United States of America requires management to make estimatesand assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at thedate of the financial statements and the reported amounts of revenuesand expenses during the reporting period. Actual results could differfrom those estimates. Significant estimates relate to ultimate revenueand costs for investment in films, provision for doubtful accounts,income taxes and accruals for contingent liabilities; and impairmentassessments for investment in films and other projects, property andequipment, and intangible assets. Actual results could differ from suchestimates.

Value of Financial Instruments

Thecarrying amounts reported in the consolidated balance sheets for cash,accounts receivable, accounts payable and accrued expenses approximatetheir fair values due to the short term maturities of these financialinstruments.

The fair value of the Company's debtobligations approximates its carrying value as it is based on or aboutthe current rates offered to the company for debt of the samematurities with similar collateral.

Reclassifications

Certain items in these consolidated financial statements havebeen reclassified to conform to the current period presentation.

Recently Issued Accounting Pronouncements

InDecember  2004, the Financial Accounting Standards Board(‘‘FASB’’) issued SFAS No. 123®(‘‘Share-Based Payment’’ SFAS 123(R) revisesSFAS No. 123 and eliminates the alternative to use the intrinsic methodof accounting under APB No. 25. SFAS 123(R) requires all publiccompanies accounting for share-based payment transactions in which anenterprise receives employee services in exchange for (a) equityinstruments of the enterprise or (b) liabilities that are based on thefair value of the enterprise’s equity instruments or that may besettled by the issuance of such equity instruments to account for thesetypes of transactions using a fair value-based method. The Companycurrently accounts for share-based payments to employees using theintrinsic value method as set forth in APB No. 25‘‘Accounting for Stock Issued to Employees’’.As such, the Company generally recognizes no compensation cost foremployee stock options. SFAS No. 123(R) eliminates the alternative touse APB No. 25’s intrinsic value method of accounting.Accordingly, the adoption of SFAS No. 123(R)’s fair value methodwill have an impact on our results of operations, although it will haveno impact on our overall financial position. The impact of adoption ofSFAS No. 123(R) cannot be predicted at this time because it will dependon levels of share-based payments granted in the future. This statementwill be effective for the Company with the quarter beginningJanuary  1,  2006.

In December  2004,the FASB issued SFAS No. 153, ‘‘Exchanges of NonmonetaryAssets’’. SFAS 153 amends ‘‘APB’’Opinion No. 29, ‘‘Accounting for NonmonetaryTransactions,’’ to require exchanges of nonmonetary assetsbe accounted for at fair value, rather than carryover basis.Nonmonetary exchanges that lack commercial substance are exempt fromthis requirement. SFAS 153 is effective for nonmonetary exchangesentered into in fiscal years beginning after June  15,2005. The Company does not routinely enter into exchanges that could beconsidered nonmonetary, accordingly the Company does not expectadoption of SFAS 153 to have a material impact on the Company'sfinancial statements.

F-13

----

Table of Contents

|               |                                  |
|---------------|----------------------------------|
| Note 4.  | Film Costsand Minority Interests |

Film costs consist of:

|                   |  |        |           |        |  |  |
|-------------------|--|--------|-----------|--------|--|--|
| In progress       |  | $      | 3,802,400 |   |
| Indevelopment     |  |   | 127,600   |   |
| Product inventory |  |   | 68,746    |   |
|              |  | $      | 3,998,746 |   |
|                   |

OnJune  27,  2005, the Company entered into a joint ventureoperating agreement for the purpose of arranging, developing andproducing film, television, music, publishing and related properties tobe acquired by the joint venture including certain propertiescontributed by the other joint venture partner. The Company is to makecapital contributions of $748,000 over a 2 year period, of which theCompany contributed $198,000 in 2005 for which the Company obtained a51% voting interest. The Company may elect to renew theoperating agreement beyond its initial term of 2 years for 5consecutive 1-year renewal periods by making additional annualcontributions increasing by 5% each year. Net income isallocated as follows: (i) 85% to the Company until the Companyaggregate capital contributions plus 20% has been recouped(‘‘minimum preferred return’’); (ii) 60%to the Company until the Company’s has received its minimumpreferred return plus $500,000 (the ‘‘maximum preferredreturn’’); and (iii) 50% to the Company after itreceives the maximum preferred return. In addition, the Company has theright of first refusal to provide or to arrange for financing for eachproject or property pursued or developed by the joint venture.

In connection with entering into the joint venture operatingagreement, the Company issued warrants exercisable at $.30 per share tothe 2 principals of the other joint venture member to purchase 200,000shares of the Company’s common stock and, an additional, 200,000shares of common stock which will vest upon the Company being allocatedits maximum preferred return, as defined in the operatingagreement.

During  2005, the Company through aprivate placement offering pursuant to which two of theCompany’s subsidiaries sold and issued an aggregate ofapproximately 84 units of revenue participation rights(‘‘RPRs’’) in film projects for an aggregatepurchase price of approximately $4.7 million representing a minorityownership interests in the subsidiaries. To the extent of availablecash flow from the Company’s subsidiaries, the RPRs entitle theinvestors to a return of 100% of their respective purchase priceplus a 20% preferred return. If the $2.8  million perpicture funding amount (the ‘‘Per Picture FundingAmount’’) is fully funded in the aggregate amount of$5.5  million, the investors are entitled to an aggregate15% interest in the residual cash flow. In the event that lessthan the Per Picture Funding Amount is raised for each motion picture,the aggregate share of the residual cash flow to the investors shall bereduced on a proportionate basis. In addition, the Company guaranteedthe repayment of one investor’s investment of $3  millionin the RPR’s. The investor has the right to enforce the guarantyat any time commencing in June  2007, or earlier under certaincircumstances. The Company also granted the investor a securityinterest in the Company’s rights and interests in the relatedfilm projects and to escrow a maximum of 9,000,000 shares of its commonstock as further security for repayment of the obligation.

In connection with distribution rights for the motion picture‘‘Pauly Shore is Dead’’, the Company incurredcosts totaling $109,957 in 2004 which were being amortized over a twoyear period. As of December  31,  2005 the Company recouped$50,000 of its costs and the balance was written off asunrecoupable.

F-14

----

Table of Contents

|               |                                      |
|---------------|--------------------------------------|
| Note 5.  | AccountsPayable and Accrued Expenses |

Accounts payable andaccrued expenses consists of:

|                   |  |        |           |        |  |  |
|-------------------|--|--------|-----------|--------|--|--|
| Trade payables    |  | $      | 2,148,404 |   |
| Professional fees |  |   | 1,651,476 |   |
| Payroll taxes     |  |   | 398,327   |   |
| Dividendspayable  |  |   | 114,946   |   |
| Sundry            |  |   | 587,287   |   |
|              |  | $      | 4,900,440 |   |
|                   |

|              |                         |
|--------------|-------------------------|
| Note6.  | Notes and Loans Payable |

Notes andloan payable includes accrued interest (at rates ranging from none to23%) of $454,000. The Company is not in compliance with thepayment terms for $2.1  million of the notes and loans payableincluding unpaid interest.

During 2005, the holders of$1,383,806 of notes payable, including accrued interest, converted theindebtedness into 5,161,829 shares of common stock. In connection withthe notes payable aggregating $175,000, the Company issued warrants topurchase 200,000 shares of common stock at an exercise price of $.20.Also in connection with the issuance of these notes and warrants, theCompany recorded interest expense of $507,792 which represents the fairvalue of the beneficial conversion feature of the below marketconversion rate using the Black-Scholes pricing model. The beneficialconversion feature was recorded pursuant to Emerging Issues Task Force(‘‘EITF’’) 00-27: Application of EITF No. 98-5,‘‘Accounting for Convertible Securities with BeneficialConversion Features or Contingently Adjustable ConversionRatios,’’ to certain convertible instruments. In accordancewith EITF 00-27, the Company evaluated the value of the beneficialconversion feature and recorded this amount as a reduction to thecarrying amount of the convertible debt and as an addition to paid-incapital. The unamortized imputed discount of $14,000 will be amortizedover the remaining period that the indebtedness is outstanding.

|               |               |
|---------------|---------------|
| Note 7.  | Deferred Gain |

OnNovember  1,  2005, the Company entered into a an agreementwith Livingston Investments, LLC(‘‘Livingston’’) and the Mackin CharitableRemainder Trust (the ‘‘Mackin Trust’’) tosettle the following outstanding indebtedness of the Company payable toLivingston and the Mackin Trust:

|  |              |                                                                                                                     |
|--|--------------|---------------------------------------------------------------------------------------------------------------------|
|  | •  | A loan payable of $1,000,000,dated March  15,  2002, with all accrued and unpaidinterest of approximately $355,000; |

|  |              |                                                                                                                 |
|--|--------------|-----------------------------------------------------------------------------------------------------------------|
|  | •  | A note payable with anoutstanding balance of $110,000, together with accrued and unpaidinterest of $68,000; and |

|  |              |                                                                                                                                                                                                                    |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | All sums due and/or payable inthe future by the Company to Livingston ($1,562,000 based upon thepresent value of the obligation) pursuant to a certain ten yearconsulting agreement, dated as of April  30,  2002. |

Pursuant to the agreement, the Company paid (or will pay) thefollowing amounts and issue the following securities in settlement:

|  |              |                                                                                                                                                   |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | $400,000 in cash ininstallments, of which $143,000 was paid and the balance is to be paidin connection with the transaction described in Note 17; |

|  |              |                                                                                                                                                                      |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | ten (10) year warrants topurchase an aggregate of 7,500,000 shares, exercisable at $0.10 pershare, 1,500,000 of which vest on an annual basis commencing in 2006;and |

|  |              |                                |
|--|--------------|--------------------------------|
|  | •  | 800,000 shares ofcommon stock. |

In addition, the Company granted to anaffiliate of Livingston the exclusive right to license the electronicmedia rights to the boxing libraries owned by the Company throughoutthe world 

F-15

----

Table of Contents

(excluding the United States) for a three (3)year period. Pursuant to the license, the affiliate will be entitled toa 20% commission from the license fees received and may alsoretain 75% of proceeds received from such license fees startingin February 2006.

The shares of common stock issued andthe shares of common stock underlying the warrants have piggy-backregistration rights, as well as on demand registration rights in theevent that the holder has not been able to utilize such piggy-backregistration rights by February  10,  2007. The warrantsalso provide that they may be exercised on a cashless basis.

In consideration, and upon satisfaction, of the foregoing,Livingston and the Mackin Trust have agreed to (i) forgive the balanceof the loans, (ii) release the security interest in the boxing filmlibrary, (iii)  terminate the consulting agreement and to forgiveall payments due and to be due there under, (iv)  waive anyrights that they may have to accelerate the consulting agreement, and(v) pay the Company an amount equal to the proceeds from the sale, ifany, by another affiliate of Livingston of 66,658 shares of the capitalstock in M.P.I. Media Partners International BV, a Netherlands companyengaged in television rights management as well as sponsorship andadvertising rights management.

As a result of thistransaction the Company will have a gain of $1.5  million whichwas has been deferred at December  31,  2005 until theCompany complies with its obligation to make the required final paymentof $257,000, included in "Due to relatedparties" in the accompanying consolidated balancesheet.

|               |                           |
|---------------|---------------------------|
| Note 8.  | Related PartyTransactions |

Due to related parties at December31,  2005 includes Company obligations for advances made by itsthen President and Executive Vice President on the Company’sbehalf of $263,000 and $2,000, respectively. The advances areunsecured, have no specific terms, conditions or maturities. Subsequentto December  31,  2005, these individuals resigned theirpositions with the Company. In addition, a shareholder (who became theCompany’s President in 2006) is due $78,000 including accruedinterest.

The Company entered into a consulting agreementwith an entity controlled by the shareholder mentioned above forcertain general business and boxing promotion related consultingservices which commenced on January  1,  2003 and continuesthrough April  30,  2008. As compensation the Companyissued 700,000 shares of its common stock valued at $560,000 which wasrecorded as deferred compensation in 2003. Amortization expense relatedto this agreement of $112,000 was charged to operations in each of 2005and 2004. The entity also advanced $550,000 for payments during 2005 tothe Company’s trade and other vendors all of which was repaidprior to December  31,  2005. The entity was alsocompensated $270,000 for assistance in connection with certainfinancing transactions,

In February  2004, theCompany and Cedric Kushner, who was then the Company’sPresident, agreed to convert the Company's outstanding debt to himinto equity. Pursuant to the agreement, the aggregate amountoutstanding of $1.6  million relating to various personal loansmade by Kushner to the Company was converted into 65,156 shares ofSeries B preferred stock which was subsequently converted into3,257,800 shares of common stock. Accordingly, the Company recognizedfinancing costs of approximately $1.8  million based upon thefair value of the common stock at the time of the agreement.

|               |                        |
|---------------|------------------------|
| Note 9.  | Participation payables |

In December  2002, the Company sold 50% of itseconomic interest in an exclusive promotional agreement with David Tua,a then leading heavyweight contender to various participants for anaggregate of $400,000. The participation agreements provide, amongother things, that the first $400,000 of net revenues derived from thepromotional agreement would be remitted to the participants.Subsequently, the Company, Kushner, and two of the participants(representing interests amounting to $200,000) entered into separateagreements whereby the Company agreed that if the participants had notrecouped their investments by February  23,  2005, they hadthe right to put their participation rights to the Company at a priceequal to the difference between their original investment and theamount recouped. On February  28,  2005, the Company wasnotified by the 

F-16

----

Table of Contents

participants that they were exercising theirright to sell their rights and interest as a result of their failure torecoup their investment. In June 2005, the participants extended thedue date to October 31, 2005 as a result of Kushner transfering to theparticipants 300,000 shares of common stock that he had owned. TheCompany and the participants are negotiating an extension. Kushner hasguaranteed the repayment of the participants’ interestsamounting to $200,000.

|               |                          |
|---------------|--------------------------|
| Note10.  | Stockholders' Deficiency |

Preferred Stock

The Company's Board ofDirectors may, without further action by the Company'sstockholders, direct the issuance of preferred stock in series and atthe time of issuance, determine the rights, preferences and limitationsof each series.

Series D Preferred Stock

Inconnection with the amendment of the Series B preferred stock in 2002,the Series B preferred stockholders received shares of Series Dpreferred stock, par value $0.01 per share which have no right toreceive dividends but are entitled to vote together with theCompany's common stockholders, with each share of Series Dpreferred stock having 50 votes. The Series D preferred stock has anaggregate liquidation preference value of $2,430,000 at December31,  2005. In April  2006, the Board eliminated theliquidation preference (see Note 17).

Series E ConvertiblePreferred Stock

In connection with a private placementoffering, the Company sold 4,243 (2004) and 2,316 (2005) shares ofSeries E convertible preferred stock for price of $360 per share. Inconnection with this offering, the Company's Board of Directorsauthorized the issuance of 14,000 shares of the Series E convertiblepreferred stock, each share convertible into 1,000 shares of commonstock, subject to adjustment upon specified events. The conversionratio established was below market price, and, accordingly, the Companyrecorded a deemed dividend in the amount of $ 280,000 which representedthe fair value of the beneficial conversion feature of the below marketconversion rate using the Black-Scholes pricing model. In 2005, theholders of 5,171 shares of the Series E preferred stock converted theirpreferred shares into 5,171,000 shares of common stock.

CommonStock

Common stock issuances in addition to those issuedin connection with the conversion of outstanding indebtedness andpreferred stocks mentioned elsewhere during 2005 and 2004 were asfollows:

On January  10,  2005, inconnections with a three year consulting agreement, the Company issued3  million shares of common stock and warrants to purchase anaggregate of 12  million shares of common stock at an initialexercise price of $0.10 cents per share. Warrants to purchase fourmillion shares vested immediately and the balance of the warrants vestin equal installments on the first and second anniversary of theexecution of the agreement. The warrants allow for a cashless exercise.The issued shares, as well as, the shares underlying the warrants wereregistered with the Securities and Exchange Commission on Form S-8Registration Statement filed with the Commission on January18,  2005. The issuance of the common stock and warrants wasvalued at approximately $7,400,000 and for financial reporting purposeswill be treated as compensation and amortized over the life of theagreement.

On January  23,  2005, the Companyentered into a debt settlement agreement with a service provider whichwas owed approximately $120,000 for past services. In accordance withthe agreement, the Company will pay an aggregate of $37,500 and issued145,000 shares of common stock and granted a warrant to purchase245,000 share of common stock at an exercise price of $.10. The shares,including the shares underlying the warrant have piggyback registrationrights and the warrant contains a cashless exercise provision. As aresult of fair valuing the consideration ($191,000), the Companyrecorded additional compensation expense of approximately $109,000 forthe settlement.

F-17

----

Table of Contents

On February  9,  2005,the Company began to offer up to $3  million in common stock forsale to accredited investors, on a ‘‘bestefforts’’ basis, at a price of $.36 per share which wassubsequently revised to $.25 per share. As a result of the offeringwhich closed on May  5,  2005, the Company sold 1,001,600shares for $250,400. The shares have‘‘piggy-back’’ registration rights.

On August  30,  2005, as full compensation toproduce the film project titled ‘‘TV theMovie’’, the Company agreed to pay $100,000 and issue150,000 shares of common stock. The shares have piggy-back registrationrights.

Pursuant to a consulting agreement for servicesrelated to the boxing segment, dated September  24,  2005,the Company and issued 500,000 shares of common stock at $.10 per shareand granted a warrant to purchase 500,000 shares of common stock at anexercise price of $.10. The issuance of the common stock was valued at$210,000 and for financial reporting purposes will be treated ascompensation and amortized over the life of the agreement.

During 2004, the Company borrowed $1.8  million byissuing convertible notes payable with interest at 10% per year.As a result of the Company not paying the principal and accruedinterest by the due date, the indebtedness including $240,000 borrowedin 2003 was converted in accordance with its terms into 5,113,029shares of common stock. Additionally in connection with the issuance ofthe convertible debt, the Company issued 931,957 warrants to purchaseshares of common stock in connection with the notes at an exerciseprice of $.50 per share and recorded interest expense of $1,925,000which represents the fair value of the beneficial conversion feature ofthe below market conversion rate using the Black-Scholes pricing model.The warrants are exercisable over a five-year period. Financing costsinclude $144,000 paid in cash and $980,000 for warrants.

In December  2004, the Company, with shareholderapproval, increased the authorized common shares from 20,000,000 to100,000,000 and merged the then two classes of common stockoutstanding. Upon the increase in the authorized common shares, theCompany issued an aggregate of 15,476,221 shares of common stockpreviously reported as common stock to be issued. In addition, theCompany converted the outstanding 117,500, 464,908 and 27,923 shares ofSeries A, B and Series C convertible preferred stocks, respectively,into 1,175,000, 23,245,390 and 2,792,210, shares of common stock,respectively.

In December  2004, the Company issued425,000 shares of common stock valued at $274,000 in connection withthe settlement of a dispute relating to services arising in a prioryear and 175,000 shares of common stock valued at $70,000 for servicesrendered by another consultant.

In January 2004 theCompany entered into a twelve-month agreement, as amended, with aconsultant to provide general consulting services to the Company andthe Company was to issue to the consultant 3,000,000 restricted sharesof common stock. In addition, the Company agreed to issue theconsultant an option to purchase 1,000,000 shares of common stock;500,000 with an exercise price of $1.00 and 500,000 with an exerciseprice of $2.00 per share. The shares and the shares underlying theoption were not issuable until after the Company had obtainedstockholder approval to increase the number of authorized shares ofcommon stock of the Company but not later than June 30, 2004. TheCompany recorded the fair value of the securities issued or $2.1million as deferred compensation to be amortized over the contractperiod. As stockholder approval to increase the number of authorizedshares was not obtained, the Company recognized the remaining deferredcosts of $1 million as a non-cash expense as of June 30, 2004. ByDecember 31, 2004, the Company ended negotiations with the consultant,and, in accordance with the terms of the agreement, determined thecontract to be null and void. Accordingly, no compensation was due theconsultant and therefore the Company reversed all previously recordedtransactions associated with this agreement, resulting in a credit forthe reversal of stock-based compensation of $2,055,000 in theCompany's Consolidated Statement of Operations for the year endedDecember 31, 2004.

Treasury Stock

In April,2004, the Company issued 15,500 shares of common stock, held intreasury, as compensation for legal services. The fair value of thecommon stock was $11,000 and was included in compensatory element ofstock issuance expense during the year ended December  31,2004.

F-18

----

Table of Contents

Warrants

As described inthe accompanying notes to the financial statements, the Company granted20,870,000 and 1,789,127 common stock warrants during the years endedDecember 31, 2005 and 2004, respectively.

During the yearended December 31, 2005, a warrant holder exercised 333,332 warrants ina "cashless" exercise. Accordingly, theholder was issued a net amount of 206,667 common shares as netsettlement based on market value of common stock at the date ofexercise.

A summary of warrant activity for the yearsended December  31,  2004 and 2005 is as follows:

|                                   |  |                  |           |                               |  |        |         |                               |  |        |            |         |  |        |     |        |  |  |
|-----------------------------------|--|------------------|-----------|-------------------------------|--|--------|---------|-------------------------------|--|--------|------------|---------|--|--------|-----|--------|--|--|
|                              |  | 2004             |           | 2005                          |
|                              |  |             |           | WeightedAverageExercise Price |  |   |         | WeightedAverage ExercisePrice |
|                              |  | NumberofWarrants |           | NumberofWarrants              |
| Balance – beginning of year |  |             | 8,033,986 |                          |  | $      | .64     |                          |  |   | 9,823,113  |    |  | $      | .61 |   |
| Issued                            |  |             | 1,789,127 |                          |  |   | .47     |                          |  |   | 20,870,000 |    |  |   | .10 |   |
| Exercised                         |  |             | —   |                          |  |   |    |                          |  |   | (333,332   | )  |  |   | .19 |   |
| Expired                           |  |             | —   |                          |  |   | — |                          |  |   | (308,408   | )  |  |   | .66 |   |
| Balance– end of year        |  |             | 9,823,113 |                          |  | $      | .61     |                          |  |   | 30,051,373 |    |  | $      | .26 |   |
|                                   |

StockOptions

The Company has issued in prior years stockoptions to employees and consultants which are fully vested.

Stock option share activity and weighted average exerciseprice under these plans for the years ended December  31,2004 and 2005 were as follows:

|                                       |  |                  |         |                                |  |        |       |         |  |  |
|---------------------------------------|--|------------------|---------|--------------------------------|--|--------|-------|---------|--|--|
|                                  |  | Number ofOptions |         | Weighted AverageExercise Price |
| Balance,January  1, 2004              |  |             | 308,666 |                           |  | $      | 1.13  |    |
| Expired in 2004                       |  |             | (9,666  | )                         |  |   | (2.36 | )  |
| Balance, December  31,  2004 and 2005 |  |             | 299,000 |                           |  | $      | 1.09  |    |
|                                       |

Optionsoutstanding and exercisable by price range as of December31,  2005 were as follows:

|                             |  |                                            |         |                                                  |  |                               |        |        |  |        |        |        |  |  |
|-----------------------------|--|--------------------------------------------|---------|--------------------------------------------------|--|-------------------------------|--------|--------|--|--------|--------|--------|--|--|
|  Rangeof               |  | Number ofOutstandingandExercisable Options |         | WeightedAverageRemainingContractual Lifein years |  | WeightedAverageExercise Price |
| $0.23 -$0.38                |  |                                       | 75,000  |                                             |  |                          | 2.3    |   |  | $      | 0.32   |   |
| $1.07 - $1.43               |  |                                       | 224,000 |                                             |  |                          | 1.7    |   |  | $      | 1.35   |   |
| Balance, December  31, 2005 |  |                                       | 299,000 |                                             |  |                          |   |   |  |   |   |   |
|                             |

|               |                       |
|---------------|-----------------------|
| Note11.  | Deferred Compensation |

Deferredcompensation expense consists of amortization of prepaid consultingfees of $2.5  million and $336,000 and prepaid signing bonuses(included in other assets) to boxers of $153,000 and $231,000, 2005 and2004, respectively.

In 2004, the Company entered intoexclusive promotional agreements (‘‘EPA’’) with2 boxers whereby the fighters granted the Company the exclusive rightto promote the fighter and arrange professional boxing bouts for eachboxer for a two year term which can be extended under certaincircumstances. In consideration, one agreement, the boxer received anon-refundable payment of $125,000 and 250,000 shares of common stockvalued at $213,000. The Company additionally agreed to repurchase halfof the boxer's shares, upon certain conditions, for $75,000. Thetotal cost of $338,000 is being amortized as deferred compensation overthe two year term of the EPA. In 2005, the boxer elected to

F-19

----

Table of Contents

have the Company repurchase 125,000 shares.In connection with the second agreement, the fighter received anon-refundable payment of $75,000, which has been recorded as prepaidsigning bonuses, plus warrants to purchase 500,000 shares of commonstock at exercise prices of $.40 per share. The fair value of thewarrants of $205,000 was recorded as deferred signing bonus.

|                |             |
|----------------|-------------|
| Note 12.  | Impairments |

Inaccordance with SFAS No. 144, Accounting for the Impairment or Disposalof Long-Lived Assets, an impairment analysis was performed inDecember  2004 of certain of the Company's long-term assets,including intangibles applicable to its boxing activities. The fairvalue of these assets was determined by calculating its discounted,estimated future operating cash flow and comparing it to the carryingamount of the assets. This testing resulted in the determination thatthe carrying amount at December  31,  2004 exceeded thepotential amount that could be recovered from future, discounted cashflows, and accordingly, the Company recorded an impairment charge of$1.3  million. In 2005, the Company has similarly recordedimpairment charges related to investments in film properties amountingto $460,000.

|                |              |
|----------------|--------------|
| Note 13.  | Income Taxes |

At December  31,  2005, the Company had netoperating loss carryforwards for Federal tax purposes of approximately$38  million, which are available to offset future taxableincome, if any, through 2024. Under Federal Tax Law IRC Section 382,certain significant changes in ownership of the Company, including thereverse merger transaction of 2002, may restrict the future utilizationof these tax loss carryforwards.

At December31,  2005, the Company had a deferred tax asset of approximately$13  million representing the benefit of its net operating losscarryforwards. The Company has not recognized the tax benefit becauserealization of the tax benefit is uncertain and thus a valuationallowance has been fully provided against the deferred tax asset. Thedifference between the Federal Statutory Rate of 34% and theCompany's effective tax rate of 0% is due to an increase inthe valuation allowance of approximately $2.4  million.

|                |              |
|----------------|--------------|
| Note 14.  | Segment Data |

SFAS No.131 ‘‘Disclosures About Segments of an Enterprise andRelated Information’’ requires the Company to make certaindisclosures about each reportable segment. The Company’sreportable segments are determined based on the distinct nature oftheir operations and each segment is a strategic business unit thatoffers different products and services and is managed separately. SFASNo.  131 defines operating segments as components of an enterpriseabout which separate financial information is available that isevaluated regularly by the chief operating decision maker in decidinghow to allocate resources and in assessing performance.

The Company has two reportable segments: sports entertainmentand media entertainment. The sports entertainment segment consists ofpromotion of professional boxers and boxing events. The mediaentertainment segment consists of development and production of digitaland filmed content for global distribution to all media platformsincluding feature films, DVD titles, television programming and othersimilar products.

F-20

----

Table of Contents

Segmented information by businessis as follows:

|                                                                                                    |  |                             |             |                              |  |        |         |        |  |        |           |         |  |        |              |         |  |        |             |         |  |        |           |        |  |  |
|----------------------------------------------------------------------------------------------------|--|-----------------------------|-------------|------------------------------|--|--------|---------|--------|--|--------|-----------|---------|--|--------|--------------|---------|--|--------|-------------|---------|--|--------|-----------|--------|--|--|
|                                                                                               |  | Year ended December 31,2005 |             | Year ended December 31, 2004 |
|                                                                                               |  |                        |             | Sports                       |  | Media  |         |   |  | Sports |           | Media   |
| Net Revenues                                                                                       |  | $                           | 704,016     |                         |  | $      | 602,983 |   |  | $      | 101,033   |    |  | $      | 3,012,904    |    |  | $      | 2,627,827   |    |  | $      | 385,077   |   |
| Operating cost andexpenses                                                                         |  |                        |        |                         |  |   |    |   |  |   |      |    |  |   |         |    |  |   |        |    |  |   |      |   |
| Cost ofrevenues                                                                                    |  |                        | 574,075     |                         |  |   | 421,204 |   |  |   | 152,871   |    |  |   | 3,271,805    |    |  |   | 2,970,842   |    |  |   | 300,963   |   |
| Amortization                                                                                       |  |                        | 383,146     |                         |  |   | 155,477 |   |  |   | 227,669   |    |  |   | 913,552      |    |  |   | 600,040     |    |  |   | 313,512   |   |
| Impairment charges                                                                                 |  |                        | 460,422     |                         |  |   |    |   |  |   | 460,422   |    |  |   | 1,296,746    |    |  |   | 514,913     |    |  |   | 781,833   |   |
|                                                                                               |  |                        | 1,417,643   |                         |  |   | 576,681 |   |  |   | 840,962   |    |  |   | 5,482,103    |    |  |   | 4,085,795   |    |  |   | 1,396,308 |   |
| Segment profit/(loss)                                                                         |  |                        | (713,627    | )                       |  | $      | 26,302  |   |  |   | ($739,929 | )  |  |   | (2,469,199   | )  |  |   | ($1,457,968 | )  |  | $      | 1,011,231 |   |
| Less:Selling,general and administrative                                                            |  |                        | 2,990,923   |                         |  |   |    |   |  |   |      |    |  |   | 2,510,988    |    |  |   |        |    |  |   |      |   |
| Depreciation                                                                                       |  |                        | 8,795       |                         |  |   |    |   |  |   |      |    |  |   | 7,638        |    |  |   |        |    |  |   |      |   |
| Compensatory element ofstock and warrant issuances for selling, general and administrativeexpenses |  |                        | 2,679,394   |                         |  |   |    |   |  |   |      |    |  |   | 2,619,315    |    |  |   |        |    |  |   |      |   |
| Reversal of stock basedcompensation                                                                |  |                        |        |                         |  |   |    |   |  |   |      |    |  |   | (2,055,000   | )  |  |   |        |    |  |   |      |   |
| Interest expense                                                                                   |  |                        | 1,166,826   |                         |  |   |    |   |  |   |      |    |  |   | 1,507,430    |    |  |   |        |    |  |   |      |   |
| Financingcosts paid in stocks and warrants                                                         |  |                        | 110,250     |                         |  |   |    |   |  |   |      |    |  |   | 5,367,514    |    |  |   |        |    |  |   |      |   |
| Other                                                                                              |  |                        |        |                         |  |   |    |   |  |   |      |    |  |   | (62,341      | )  |  |   |        |    |  |   |      |   |
| Net Loss                                                                                           |  |                        | ($7,669,815 | )                       |  |   |    |   |  |   |      |    |  |   | ($12,364,743 | )  |  |   |        |    |  |   |      |   |
|                                                                                                    |

Revenuefrom four customers accounted for approximately 64% of revenuesfor the year ended December  31,  2005, compared to31% from a single customer for the same period in 2004.

Foreign revenue disclosure

The Company's boxingpromoted boxing events were principally located in the United Statesand Europe.

The Company had net revenues from foreignsources in the amounts of approximately $162,000 (2005) and $485,000(2004).

|                |               |
|----------------|---------------|
| Note 15.  | Other Matters |

On June  30,  2004, the Company and other partiesentered into an agreement to form and become members of Pledge ThisHoldings, LLC (‘‘PTH’’). PTH was formed tofinance, produce and distribute a feature-length motionpicture.   In order to induce a group of investors toinvest in and make other accommodations to PTH, as well as, in partialconsideration of its then 22.5% membership interest in PTH, theCompany entered into an agreement to guarantee the repayment of theinvestors’ investment of $1  million if not recouped on orbefore June  30,  2005 and to pay interest on theinvestment at the rate of 12%. As further consideration, theCompany issued 1,000,000 shares of its common stock, fair valued at$510,000, which amount was recognized as financing costs during theyear ended December  31,  2004. In connection with PTHobtaining additional financing, in 2005, the Company’smembership interest was reduced to 10% and another investoragreed to participate in the guarantee of the aforementioned $1million investment to a maximum of 80%. As of December31,  2005, the investors have not been repaid and are entitled totake the following action until such time as they have been repaid: (i)take control of the film property of PHL; and (ii) seize 

F-21

----

Table of Contents

the Company's interest in PHL. If this were to occur, our revenues, profits, results ofoperations, financial condition and future prospects would bematerially and adversely affected. The Company and the investors arenegotiating an extension until October  31,  2006. In 2004and 2005, the Company paid to the investors $60,000 and $120,000 (ofwhich 750,000 shares were issued in lieu of cash) for interest on theinvestment.

Mr.  DiLorenzo, a consultant to theCompany and former officer, originally had a 7% membershipinterest in PTH which was relinquished in connection with obtaining ofadditional financing for PTH. Also, an affiliate of LivingstonInvestments, LLC, a related party of the Company, has a 6%membership interest in PTH.

The Company leasesapproximately 1,860 square feet for its headquarter facilities at 1414Avenue of the Americas, Suite 406, New York, New York 10019. Minimumannual lease payments are approximately $77,000 for 2006 and $79,000for 2007. The lease expires January  31,  2008. Rentexpense for 2005 and 2004 was $75,000 and $74,000.

|               |            |
|---------------|------------|
| Note16.  | Litigation |

Securities &Exchange Commission

On March  24,2004, the United States Securities and Exchange Commission (the‘‘SEC’’) brought a civil action against theCompany, Cedric Kushner, James DiLorenzo and Steven Angel in federaldistrict court. The action alleged several violations of the SecuritiesExchange Act of 1934 and the Public Company Accounting Reform andInvestors Protection Act of 2002 including: Section 10(b) of the 1934Act, Exchange Rule 10b-5, Section 302(a) of the 2002 Act and ExchangeAct Rule 13a-14 there under. The SEC further alleged that the officersand directors aided and abetted our violation of the Exchange Act andthat the Company’s Form 10-KSB for the year endedDecember  31,  2002, as originally filed, containedmaterial misstatements and omissions.

The United StatesDistrict Court entered final judgments confirming the settlement ofthis matter with Cedric Kushner individually on November30,  2005 and with the Company on December  2,  2005.Under the settlement, without admitting or denying the allegations ofthe complaint, the Company consented to a permanent injunction againstfuture violations of the securities laws and agreed to take thefollowing steps within 60 days (all of which was implemented within therequired timeframe):

|  |              |                                                                                                       |
|--|--------------|-------------------------------------------------------------------------------------------------------|
|  | •  | expandthe Company’s board of directors to five members, a majority ofwhom shall be independent; |

|  |              |                                          |
|--|--------------|------------------------------------------|
|  | •  | establish an independent auditcommittee; |

|  |              |                                                                  |
|--|--------------|------------------------------------------------------------------|
|  | •  | hire a chiefexecutive officer and a chief financial officer; and |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | retain the services of anindependent consultant to analyze the Company’s system ofinternal accounting controls and accounting and financial reportingprocesses, report to the audit committee, and oversee theimplementation of improved processes in these areas. In thatconnection, the Company agreed to establish an escrow account in theamount of $150,000 to fund the services of the independentconsultant. |

In addition, the Company agreed that it wouldnot pay Cedric Kushner or James DiLorenzo compensation as officers ordirectors following their resignations as officers and directors.

Cedric Kushner, without admitting or denying the allegationsof the Commission's complaint, entered into a separate settlementin which he agreed to:

|  |              |                       |
|--|--------------|-----------------------|
|  | •  | Paya fine of $60,000; |

|  |              |                                                                          |
|--|--------------|--------------------------------------------------------------------------|
|  | •  | Bepermanently enjoined from future violations of the securities laws;and |

|  |              |                                                                                    |
|--|--------------|------------------------------------------------------------------------------------|
|  | •  | Be permanently barredfrom serving as an officer or director of any public company. |

The United States District Court dismissed the claims againstMr.  Angel on his motion for summary judgment and dismissed theaction as to him in its entirety.

F-22

----

Table of Contents

The SEC action remains pendingagainst Mr.  DiLorenzo.

Shane Mosley

On August  23,  2002, the Company settled amatter related to the sharing of profits with Shane  Mosley, aboxer. The Company agreed to pay Mosley approximately $610,000 plusinterest by April  30,  2003. The Company defaulted and ajudgment was entered in favor of Mosley in the amount of $565,000 inJune  2003.

In November 2005, the Company enteredinto a settlement with Mosley, pursuant to which the Company agreed topay $565,000 in installments representing 60% of the net profitsfrom boxing events promoted or co-promoted by the Company(retroactively to September 2005) until the outstanding sum, plusaccruing interest, is paid in full. In addition, the Company isentitled to a $100,000 credit against the above settlement amount,contingent upon the transfer and assignment of the Company'srights to the Mosley Video Library. Amounts unpaid by December 31, 2008shall be immediately due and payable. Our former President personallyguaranteed the Company's obligation.

FirstEquity

In June  2005, First Equity CapitalCorporation filed an action against us in state court in Florida,alleging that the Company breached an unsigned agreement pursuant towhich the Company allegedly hired First Equity to provide certainservices. First Equity alleges that the Company is obligated to payFirst Equity $1.5millionand to issue First Equity up to 4,000,000registered shares of our common stock. The Company has filed an answerdenying any liability to First Equity and raising numerous affirmativedefenses. The Company is in the process of taking discovery in thismatter and intends to vigorously defend.

DewayneLayfield

On or about March  10,  2003,our former subsidiary, Cedric Kushner Promotions, Ltd. (subsequentlydissolved) (‘‘CKP, Ltd.’’) entered into anagreement with America Presents Boxing, Inc.(‘‘APB’’) pursuant to which CKP, Ltd. agreed topurchase APB's videotaped library of professional boxing contestsand all associated contracts and agreements, for $250,000, payable inequal monthly installments of $4,000. Pursuant to the APB Agreement,CKP, Ltd. executed a $250,000 non-interest bearing promissory note toAPB. APB subsequently assigned its rights under the APB Agreementand/or Note to L. DeWayne Layfield, to whom CKP, Ltd. subsequentlyexecuted a substitute $250,000 promissory note. The note to Layfield isexpressly subject to any defenses which CKP, Ltd. had against APB under2003 APB Agreement. As of December  31,  2003, the note wasallegedly in default.

In January  2004, Layfieldcommenced arbitration against CKP, Ltd. alleging that CKP, Ltd. haddefaulted on the $250,000 note. The arbitration was settled byrestructuring the payments under the note and granting Layfield asecurity interest in the library. On December  3,  2004,the Company, APB, Layfield and Team Freedom Promotions, Inc. enteredinto an agreement reducing the amount owed to Layfield in exchange fora $50,000 payment to APB.

In April  2005, Layfieldcommenced a second arbitration against CKP, Ltd. alleging breach of thenote and the previous settlement agreement, seeking to recover $172,000plus attorneys' fees and costs. The Company answered, seeking adeclaration that the Company had no further obligation to Layfield dueto APB’s breaches of the 2003 Agreement. The Company also fileda counterclaim and third-party complaint against Layfield and APBseeking to recover amounts previously paid to Layfield and APB. Thematter is currently pending.

Designscape

In April  2005 Designscape, Inc. filed an action in NewYork State Supreme Court against the Company and James DiLorenzo,alleging breach of contract and misrepresentations with respect to analleged oral agreement to provide goods and services in connection withthe production and staging of 

F-23

----

Table of Contents

a television series and seekingapproximately $550,000 and unspecified damages. The Company has deniedthe material allegations of the complaint and filed a counterclaimseeking damages in excess of $150,000. The matter is currentlypending.

Golden Gloves (PTY) Limited

OnNovember  13,  2001, Golden Gloves (PTY) Limited, a boxingpromoter based in Johannesburg, South Africa, commenced an action inthe Supreme Court of the State of New York against the Company andMr.  Kushner, alleging that the Company breached an agreement toshare certain profits related to certain boxers. In February2003, the Company agreed to pay $570,000. The Company has not made anypayments pursuant to the settlement agreement..

ZombaRecording Corporation

In July  2002, theCompany and Mr.  Kushner agreed to a stipulation for judgmentagainst our President by Zomba Recording Corporation related to amountsowed Zomba under a note in the amount of $763,000 In August, 2002,Mr.  Kushner granted a security interest in property owned by himas collateral for the payment. As of December  31,  2005,the unpaid balance owed to Zomba was approximately $267,000.

J.P. Morgan Chase & Company

OnJanuary  13,  2004, J.P. Morgan Chase & Companyobtained a judgment in the amount of $95,000 against Mr.  Kushnerand us in connection with our default on an outstanding note. InMay  2004, the Company settled by agreeing to pay the outstandingprincipal amount, plus interest at 4% per annum, in 60 monthlypayments of $2,000 each, in exchange for forbearance on any additionalefforts to collect upon the unsatisfied portion of the balance. Thebalance on this obligation at December  31,  2005 amountedto $67,000. The Company is not in compliance with the terms set forthin the forbearance agreement.

National SportsPartners

In May  2003, National SportsPartners, the owner of Fox Sports Net Broadcast Service, commenced anaction in California against us to collect approximately $239,000 foradvertising time and production fees and costs for airing boxing eventson Fox, plus interest, costs and attorney fees. In August  2004,the Company reached an agreement with NSP in which NSP agreed toforbear from further action against us in exchange for full paymentover time of $239,000, plus deferred interest. As of December31,  2005 the Company had only paid $65,000.

Other

In the opinion of management, on theadvice of counsel, the Company has made adequate provision forpotential liabilities, if any, arising from litigation settlements andother claims arising from the above matters. As of December31,  2005, the Company had accrued approximately $2,056,000, withrespect to such matters. However, the costs and other effects ofpending or future litigation, governmental investigations, legal andadministrative cases and proceedings (whether civil or criminal),settlements, judgments and investigations, claims and changes in thosematters (including those matters described above), and developments orassertions by or against the Company relating to contractual rightsrelated to boxers and the promotion of boxing events, intellectualproperty rights and intellectual property licenses, could have amaterial adverse effect on the Company's business, financialcondition and operating results.

|               |                   |
|---------------|-------------------|
| Note17.  | Subsequent Events |

InJanuary   2006, the Company issued 428,539 shares ofcommon stock in connection with the conversion outstanding notes andaccrued interest aggregating approximately $130,000.

F-24

----

Table of Contents

In February  2006, theCompany assigned its exclusive promotional agreement with a boxer for$140,000. As a result of this transaction the Company will record again of approximately $60,000. In addition, if the boxer wins a majorbout during the term of the agreement, the Company is entitled to anadditional payment of $250,000.

On February13,  2006, the Company entered into an employment agreement withits Executive Vice President – Chief Financial Officer. Theagreement provides for a three-year term with automatic renewals,subject to either party's right not to renew. The Company will paya base salary of $175,000 for the first year of the agreement, subjectto annual increases not less than 10% of the prior year'sbase salary, and a discretionary bonus. The Company granted options topurchase 3,000,000 shares of our common stock to the executive, ofwhich 750,000 are, are exercisable at $.10 per share and are fullyvested. The balance of 2,250,000 will be qualified, subject toshareholder approval, have an exercise price of $.20 per share and vestat the rate of 62,500 shares per month over the initial three-yearterm. In the event of a change of control while the executive isemployed, the Company will pay him an amount that, after deductingfederal and state income and payroll withholding taxes, would equalthree (3) times his then-base salary. The Company is also obligated tomaintain in escrow an amount equal to 3 months of theexecutive’s salary until the Company obtains $3  millionof additional equity.

During the period fromJanuary  1 through March 31, 2006, the Company borrowed $720,000under short-term arrangements with various individuals.

In April  2006, the Company entered into 3 agreementswith Cedric Kushner, the Company’s former President whichprovides, among other matters, the following:

|  |              |                                                                                                                                                                                                                                                                                                                                                                                        |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Repayment terms for theCompany’s indebtedness owed to Kushner of $263,000 were modifiedto provide for interest at 5%, quarterly payments of $10,000,plus amounts equivalent to a pro rata portion of amounts paid tocertain other Company’s creditors, plus 50% of netrevenue up to $100,000 from a promotional agreement, with the unpaidbalance due December  31,  2008; |

|  |              |                                                                                                                                                                                                                                  |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | The Company guaranteed Kushnerfor any liability resulting from his service as a director or officer,subject to the limitations of the Delaware corporate statute, and forany Company obligations that he guaranteed personally;. |

|  |              |                                                                                                                                 |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------|
|  | •  | The Company subleased itscurrent headquarters to a entity owned by Kushner, at the same rentpayable by Company to the landlord. |

|  |              |                                                                                                |
|--|--------------|------------------------------------------------------------------------------------------------|
|  | •  | The Company transferred itsrights to its library of boxing videos to Kushner for $250,000; and |

|  |              |                                                                                                                                                                                                                               |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Kushner will consult withCkrush with respect to the promotion of David Tua, a boxer, in exchangefor 50% of the net proceeds earned from the Tua exclusivepromotion agreement, after first repaying $400,000 owed toinvestors. |

The assets which are subject to thisagreement, principally furniture and fixtures and the library rights,were classified as ‘‘Assets held for Sale’’ inthe consolidated financial statements. The Company does not expect torecord a significant gain after the inclusion of applicable transactioncosts, principally legal.

Also in April  2006, theCompany sold 2,937,500 shares of common stock for $376,000 to an entitywhich also purchased a substantial portion of Kushner’s sharesof the Company’s common stock and 1,171,875 shares for $150,000pursuant to a private placement. The Company’s new Presidentalso purchased all of Kushner’s Series D preferred shares afterthe Company’s Board of Directors removed the liquidationpreference contained in the original designation.

TheCompany leased new headquarter space for a three year period beginningApril 1, 2006 for a total minimum obligation of $357,050 for the threeyear period.

F-25

----

Table of Contents

|              |                                                                                     |
|--------------|-------------------------------------------------------------------------------------|
| ITEM8.  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ONACCOUNTING AND FINANCIAL DISCLOSURE |

On September21,  2005, Wolinetz, Lafazan & Company, P.C. was dismissed asour auditors. On September  22,  2005, we engagedRosenberg, Rich, Baker, Berman & Company as our independentcertified public accountants. Our decision to engage the newaccountants was approved by our Board of Directors on September22,  2005.

The reports of the former accountants onour consolidated financial statements for the year endedDecember  31,  2004 did not contain an adverse opinion ordisclaimer of opinion and was not qualified or modified as touncertainty, audit scope or accounting principles, except that theiropinion in their report on our consolidated financial statementsexpressed substantial doubt with respect to our ability to continue asa going concern.

During our year ended December31,  2004 and the subsequent interim period through the date ofresignation, there were no reportable events as the term described inItem 304(a)(1)(iv) of Regulation S-B.

During our yearended December  31,  2004 and the subsequent interim periodthrough the date of resignation, there were no disagreements with theformer accountant on any matters of accounting principles or practices,financial statement disclosure or auditing scope or procedure, which,if not resolved to the satisfaction of the former accountant would havecaused it to make reference to the subject matter of the disagreementsin connection with its reports on these financial statements for theperiod.

We did not consult with the new accountantregarding the application of accounting principles to a specifictransaction, either completed or proposed, or the type of audit opinionthat might be rendered on our financial statements, and no written ororal advice was provided by the new accountant that was a factorconsidered by us in reaching a decision as to the accounting, auditingor financial reporting issues.

We requested that theformer accountant furnish us with a letter addressed to the Securitiesand Exchange Commission stating whether it agrees with the abovestatements. The requested letter was attached as Exhibit 16.1 to theForm 8-K filed with the Securities and Exchange Commission onSeptember  22,  2005.

|               |                         |
|---------------|-------------------------|
| ITEM8A.  | CONTROLS AND PROCEDURES |

As ofDecember  31,  2005, the end of the period covered by thisAnnual Report, the Company carried out an evaluation, under thesupervision and with the participation of our management, including ourChief Executive Officer and Chief Financial Officer, of theeffectiveness of the design and operation of our disclosure controlsand procedures pursuant to Securities and Exchange Act Rule 13a-15 and15d-15. These individuals were not employed by the Company untilFebruary  2006.

A control system, no matter howwell conceived and operated, can provide only reasonable assurance thatthe objectives of the control system are met.  We do not expectthat our disclosure controls and procedures can detect or prevent allmisstatements. Further, the design of a control system must reflectthat there are resource constraints, and the benefits of controls mustbe considered relative to their costs.  Because of the inherentlimitations in all control systems, no evaluation of controls canprovide absolute assurance that all control issues have beendetected.  These inherent limitations include the realities thatjudgments in decision-making can be faulty, and that breakdown canoccur because of simple error or mistake.  The design of anysystem of controls also is based in part upon certain assumptions aboutthe likelihood of future events, and there can be no assurance that anydesign will succeed in achieving its stated goals under all potentialfuture conditions.  Over time, controls may become inadequatebecause of changes in conditions, or the degree of compliance with thepolicies or procedures may deteriorate.  Because of the inherentlimitations in a control system, misstatements may occur and not bedetected.  At this time, management has determined that ourdisclosure controls and procedures may not be sufficient, especiallydue to the limited number of Company employees, i) to ensure that dataerrors, control problems, or acts of fraud are detected and

22

----

Table of Contents

ii) to confirm that appropriate correctiveactions, including process improvements, are undertaken in a timelymanner. As a result, we have concluded that our current system ofdisclosure controls and procedures requires further enhancements toensure that they are effective in recording, processing, summarizing,and reporting, on a timely basis, information required to be disclosedby us in the reports that we file or submit under the Exchange Act.

Our management considered the following deficiencies to bematerial weaknesses in the effectiveness of our disclosure controls. A‘‘material weakness’’ is a reported conditionin which the design or operation of one or more of the specificdisclosure control components has a defect or defects that could have amaterial adverse effect on the our ability to record, process,summarize and report financial data in our financial statements in atimely manner:

|  |              |                                                                                                                                                                                                                                       |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Maintainingsufficient personnel with an appropriate level of accounting knowledge,experience and training in the application of generally acceptedaccounting principles (GAAP) commensurate with our financial reportingrequirements; |

|  |              |                                                              |
|--|--------------|--------------------------------------------------------------|
|  | •  | Maintainingadequate segregation of duties in key functions;. |

|  |              |                                                                        |
|--|--------------|------------------------------------------------------------------------|
|  | •  | Adequately documenting certaintransactions and manual journal entries; |

|  |              |                                              |
|--|--------------|----------------------------------------------|
|  | •  | Adhering to a comprehensiveclosing calendar; |

|  |              |                                                                                                                                                                    |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Failingto have a management committee in place to handle decisions relating tothe Company’s operations, including review of quarterly andannual filings; and |

|  |              |                                                                |
|--|--------------|----------------------------------------------------------------|
|  | •  | Maintaining formal internalaccounting and disclosure controls. |

Management hasinitially responded to the deficiencies in our disclosure controls byperforming additional accounting, financial analysis, and managerialreview procedures in order to ensure that the financial informationcontained in our Annual Report on Form 10-KSB was reliable. Detailedvalidation work was performed by our personnel with respect to all ofour balance sheet account balances in order to verify the financialinformation and to substantiate the disclosures contained in our AnnualReport on Form 10-KSB. Additional analysis was also performed on incomestatement amounts and compared to prior year amounts forreasonableness.

As a result of a settlement with the SEC,we have retained consultants to assist in the assessment of ourinternal accounting and disclosure controls and to make recommendationsfor timely corrective actions and hired the CEO and CFO inFebruary  2006. In addition, a majority of our Board ofDirectors, as reconstituted in March 2006, consists of membersindependent of management. We also instituted an Audit Committee atthat time.

Together with the consultants, management willreview and document our disclosure controls and procedures, includingour internal controls and procedures for financial reporting and willreport its progress and findings to the Audit Committee. We will focuson a number of areas that we will endeavor to improve, including thesegregation of duties in key functions; the creation of formalaccounting controls, policies and procedures; the hiring of additionalmanagement and staff experienced in financial reporting; as well asfinalizing documentation of our accounting and disclosure internalcontrols and procedures. Further, management continues to look formethods to ensure that our systems evolve with our business and toimprove our overall system of control.

|               |                   |
|---------------|-------------------|
| ITEM8B.  | OTHER INFORMATION |

None.

23

----

Table of Contents

PART III

|              |                                                                                                                |
|--------------|----------------------------------------------------------------------------------------------------------------|
| Item9.  | DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS ANDCONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT |

Directors and Executive Officers

Thefollowing table sets forth certain information concerning our directorsand executive officers:

|                   |  |        |    |          |  |                                    |  |  |  |  |
|-------------------|--|--------|----|----------|--|------------------------------------|--|--|--|--|
| Name              |  | Age    |    | Position |
| RoyRoberts        |  |   | 67 |     |  | CEO &Director                  |
| Jeremy Dallow     |  |   | 37 |     |  | President & Director           |
| Jan E. Chason     |  |   | 60 |     |  | CFO & Executive Vice President |
| Richard Ascher    |  |   | 52 |     |  | Director                           |
| Philip Glassman   |  |   | 43 |     |  | Director                           |
| Jerry Gilbert     |  |   | 70 |     |  | Director                           |
| Jonathan Schwartz |  |   | 39 |     |  | Director                           |
|                   |

Mr.  Roberts has beenour CEO and a Director since February  2006. He also serves asthe CEO of Sparkle Industries, a manufacturing company since 1992. From1994 to 2000 Mr. Roberts was the CFO of Worldwide Entertainment &Sports, a publicly traded sports & entertainment company and from1993 to 1994 he was the CFO of Palisades Entertainment, one of thenation's leading independent film distribution companies.

Jeremy Dallow has been our President and a member of itsBoard of Directors since February 2006. He co-founded Bulldog BoxingManagement and Bulldog Entertainment in 1998, providers of managementand consulting services to athletes and entertainers. While withBulldog, he served as executive producer of several motion pictures,including our upcoming film releases, ‘‘BeerLeague,’’ ‘‘TV The Movie,’’ and theour co-production, National Lampoon's ‘‘PledgeThis.’’

Jan E. Chason, 60, has served as ourChief Financial Officer since February  13,  2006. Prior tojoining us, Mr.  Chason was the Chief Accounting Officer ofMajesco Entertainment Company from July  10,  2005 thourghFebruary  10,  2006 and Chief Financial Officer of Majescofrom January  2,  2003 though July  9,  2006.Mr.  Chson provided Interim Chief Financial Officer servicesthrough JEC Consulting Associates from June  2001 throughDecember  2002. From June  1996 through June  2001,he served on the executive team of SFX Broadcasting and SFXEntertainment as the Chief Financial Officer of Triathlon BroadcastingCompany, The Marquee Group, Inc. and Artist Group International LLC. Helater served as Corporate Vice President — Finance of SFXEntertainment. After the acquisition of SFX Entertainment by ClearChannel Communications Inc., he served as the Chief Financial Officerof Clear Channel Entertainment's Marketing and Media Divisions.Mr.  Chason was a partner at Ernst & Young LLP fromOctober  1982 through September  1994. Mr.  Chason isa Certified Public Accountant and has a Bachelor of BusinessAdministration from City College of New York

RichardAscher, 52, has served as a Director since February 16, 2006 andchairman of the Audit Committee since March 20, 2006. Mr. Ascher hasbeen President of NJT since 1995 and is Managing Director of WealthManagement Advisors, LLC, a Registered Investment Advisor since 2003.Mr.  Ascher was a client service partner with M R Weiser LLC alarge New York City CPA firm focusing primarily on privately heldmiddle market clients. He holds an MBA, and is a Certified PublicAccountant and a licensed investment advisory representative andinsurance broker.

Jerry Gilbert, 70, has served as aDirector since February  16,  2006 and a member of theAudit Committee since March  20,  2006. He is the founderand has been President of Cornell Computer Corp., an IT consulting firmssince 1994.

Philip Glassman, 43, has served as aDirector since February  16,  2006. Mr.  Glassman hasbeen the Owner/President of Metro Tag and Label, a New Jersey-basedprinting company, since 1994.

Jonathan Schwartz, 39, hasserved as a Director since February  16,  2006 and a memberof the Audit Committee since March  20,  2006, Mr.Schwartz is President of the Wilson Group, an information technologyrecruiting firm, since 2003 and prior to that he was the Senior VicePresident of Pathfinder Personnel for 12 years.

24

----

Table of Contents

Our directors are to be elected atour annual meeting of stockholders and each director holds office untila successor is elected and qualified. Our officers are elected by theboard of directors until an officer's successor has been dulyappointed and qualified, unless an officer sooner dies, resigns or isremoved by the board of directors. There are no family relationshipsamong any of the Company's directors and executive officers. Theabove listed members of the board of directors will serve until thenext annual meeting of shareholders, at which time theboard ofdirectors will be restructured to provide for three-year staggeredterms, subject to shareholder approval of the concept of staggeredterms by the shareholders. Messrs. Ascher, Gilbert and Schwartz aremembers of the audit committee of the Board, with Mr.  Ascherserving as chairman.

Committees of the Board of Directors

The Company has recently formed an audit committee. Messrs.Ascher, Gilbert and Schwartz are members of the audit committee of theBoard, with Mr.  Ascher serving as chairman and its financialexpert; as such term is defined in Item 401 of Regulation S-B.

Code of Ethics

We have adopted a Code of Ethics andBusiness Conduct for Officers, Directors and Employees that applies toall of the officers, directors and employees of the Company. The Codeof Ethics was filed as an exhibit to our Form 10-KSB on June25,  2004. Upon request, we will provide to any person withoutcharge a copy of the Code of Ethics. Any such request should bedirected to: Attn: Jeremy Dallow, Ckrush, Inc., 1414 Avenue ofAmericas, Suite 406, New York, New York 10019.

Section 16(a)Beneficial Ownership Reporting Compliance

Based on theCompany's review of copies of all disclosure reports filed bydirectors, executive officers or beneficial owners of more than10% of any class of equity securities of the Company pursuant toSection 16(a) of the Securities Exchange Act of 1934, as amended, thefollowing directors and executive officers of the Company failed totimely file reports based solely upon a review of Form 3, Form 4 andForm 5 filings during the year ended December  31,  2005,certain written representations and shareholders who, to the best ofthe Company's knowledge, hold 10% or more of theCompany's shares:

Cedric Kushner, the Company'sPresident and Director, and James DiLorenzo, the Company's VicePresident and Director, failed to timely file Form 4's on oneoccasion.

|                |                       |
|----------------|-----------------------|
| Item 10.  | EXECUTIVECOMPENSATION |

The following table sets forth certaininformation regarding compensation during each of the last three fiscalyears to our Chief Executive Officer for each of those years and anyofficer who earned in excess of $100,000 in any of the last threefiscal years.

|                                 |  |        |      |                    |  |                        |         |                          |  |                        |         |                                   |  |             |         |                        |  |        |         |        |  |        |         |        |  |        |         |        |  |        |         |        |  |  |
|---------------------------------|--|--------|------|--------------------|--|------------------------|---------|--------------------------|--|------------------------|---------|-----------------------------------|--|-------------|---------|------------------------|--|--------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--|
|                            |  |   |      | AnnualCompensation |  | Long-Term Compensation |
|                            |  |   |      |               |  |                   |         |                     |  | Awards                 |         | Payouts                           |
| Nameand Principal Position |  | Year   |      | Salary             |  | Bonus                  |         | Other AnnualCompensation |  | Restricted StockAwards |         | SecuritiesUnderlyingOptions/SAR's |  | LTIPPayouts |         | All OthersCompensation |
| Cedric Kushner                  |  |   | 2005 |               |  | $                      | 52,000  |                     |  |                   | — |                              |  |        | — |                   |  |   | — |   |  |   | — |   |  |   | — |   |  |   | — |   |
| Chairman of theBoard            |  |   | 2004 |               |  | $                      | 0       |                     |  |                   | — |                              |  |        | — |                   |  |   | — |   |  |   | — |   |  |   | — |   |  |   | — |   |
| & President            |  |   | 2003 |               |  | $                      | 0       |                     |  |                   | — |                              |  |        | — |                   |  |   | — |   |  |   | — |   |  |   | — |   |  |   | — |   |
| JimDiLorenzo               |  |   | 2005 |               |  | $                      | 104,000 |                     |  |                   | — |                              |  |        | — |                   |  |   | — |   |  |   | — |   |  |   | — |   |  |   | — |   |
| Secretary, Treasurer            |  |   | 2004 |               |  | $                      | 104,000 |                     |  |                   | — |                              |  |        | — |                   |  |   | — |   |  |   | — |   |  |   | — |   |  |   | — |   |
| & Executive VicePresident   |  |   | 2003 |               |  | $                      | 104,000 |                     |  |                   | — |                              |  |        | — |                   |  |   | — |   |  |   | — |   |  |   | — |   |  |   | — |   |
|                                 |

Compensation of Directors

The Company's directors are reimbursed for anyout-of-pocket expenses incurred by them for attendance at meetings ofthe Board of Directors or committees thereof.

25

----

Table of Contents

Stock Option Grants and Exercises

There were no Stock Option Grants or Exercises in 2005.

Option/SAR Grants in Last Fiscal Year

During thelast completed fiscal year, ended December  31,  2005, theCompany did not grant any stock options to any of the officers named inthe Summary Compensation Table (Item. 10). The Company also did notgrant any stock appreciation rights (as defined in Item 402(a)(6)(i) ofRegulation S-B under the Securities Act) during the last completedfiscal year, and has no stock appreciation rights outstanding.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-EndOption Value

During the last completed fiscal year, noneof our executive officers exercised any options to acquire capitalstock of the Company or any of its subsidiaries.

Long-TermIncentive Plans – Awards in Last Fiscal Year

Neither the Company nor any of its subsidiaries maintains anylong-term incentive plans, as defined in Item 402(a)(6)(iii) ofRegulation S-B under the Securities Act.

|               |                                                               |
|---------------|---------------------------------------------------------------|
| Item11.  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERSAND MANAGEMENT |

Security Ownership of Certain Beneficial Ownersand Management

The following table sets forth certaininformation with respect to the beneficial ownership of theCompany's capital stock, by:

|        |                                                                                                        |
|--------|--------------------------------------------------------------------------------------------------------|
|   | each person known to beneficiallyown more than five percent of any class of the Company's votingstock; |

|        |                                                        |
|--------|--------------------------------------------------------|
|   | each director andexecutive officer of the Company; and |

|        |                                                 |
|--------|-------------------------------------------------|
|   | all directors and executiveofficers as a group. |

|                                                              |  |                                       |            |                                  |  |        |        |         |  |  |
|--------------------------------------------------------------|--|---------------------------------------|------------|----------------------------------|--|--------|--------|---------|--|--|
| Name andAddress of Beneficial Owner, as of December 31, 2005 |  | AmountandNatureBeneficialOwnership(1) |            | BeneficialOwnershipPercentage(1) |
| Directors andOfficers                                        |  |                                  |       |                             |  |   |   |    |
| Cedric Kushner                                               |  |                                  | 20,300,537 | (2)                         |  |   | 28.5   | %  |
| Ckrush,Inc                                                   |  |                                  |       |                             |  |   |   |    |
| 1414 Avenue ofAmericas, Suite 406                            |  |                                  |       |                             |  |   |   |    |
| NewYork, New York 10019                                      |  |                                  |       |                             |  |   |   |    |
| James DiLorenzo                                              |  |                                  | 3,616,540  | (3)                         |  |   | 5.1    | %  |
| Ckrush,Inc                                                   |  |                                  |       |                             |  |   |   |    |
| 1414 Avenue ofAmericas, Suite 406                            |  |                                  |       |                             |  |   |   |    |
| NewYork, New York10019                                       |  |                                  |       |                             |  |   |   |    |
| AllDirectors and officers as a Group (2 persons)             |  |                                  | 23,917,077 |                             |  |   | 33.5   | %  |
| OtherShareholders                                            |  |                                  |       |                             |  |   |   |    |
| Livingston Investments,LLC                                   |  |                                  | 11,033,768 | (4)                         |  |   | 14.0   | %  |
| c/o Mark Brown, Esq., Kaye Scholer LLP, 777 SouthFlagler     |  |                                  |       |                             |  |   |   |    |
| Drive, Suite 900, WestPalm Beach, Florida 33401              |  |                                  |       |                             |  |   |   |    |
|                                                              |

Exceptas otherwise noted, the Company believes that the persons listed belowhave sole investment and voting power with respect to the capital stockowned by them.

|  |
|--|
|  |  |
|  |

26

----

Table of Contents

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | Forpurposes of this table, ‘‘beneficialownership’’ is determined in accordance with theInstructions to Item 403 of Regulation S-B under the Securities Act of1933, as amended (the ‘‘Securities Act’’),pursuant to which a person or group of persons is deemed to have‘‘beneficial ownership’’ of any shares ofcommon stock that such person has the right to acquire within 60 days.For purposes of computing the percentage of outstanding shares ofcommon stock held by each person or group of persons named above, anyshares which such person or persons have the right to acquire within 60days are deemed to be outstanding and beneficially owned by such personor persons but are not deemed to be outstanding for the purpose ofcomputing the percentage ownership of any other person. Due to thismethod of computation and the fact that the number of shares of commonstock issuable upon the exercise of outstanding options, warrants andpreferred stock is large relative to the number of shares of commonstock currently outstanding, the sum of these percentages exceeds100%. |

|     |                                                                                                                                                                                                                 |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Consists of 339,789shares of Series D Preferred, which does contain any conversion rights,but has the voting equivalent of 50 shares of common stock per share ofSeries D for an aggregate of 37,289,987 votes. |

|     |                                                                                                                                                                                                               |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (3) | Consists of 59,963shares of Series D Preferred, which does contain any conversion rights,but has the voting equivalent of 50 shares of common stock per share ofSeries D for an aggregate of 6,614,690 votes. |

|     |                                                                                                                       |
|-----|-----------------------------------------------------------------------------------------------------------------------|
| (4) | Consists of 3.033,768shares of common stock and warrants to purchase an aggregate of8,000,000 shares of common stock. |

|               |                                               |
|---------------|-----------------------------------------------|
| ITEM12.  | CERTAIN RELATIONSHIPS AND RELATEDTRANSACTIONS |

At December  31,  2005 we hadobligations for advances made by our then President and Executive VicePresident on our behalf of $263,000 and $2,000, respectively. Theadvances are unsecured, have no specific terms, conditions ormaturities. Subsequent to December  31,  2005, theseindividuals resigned their positions. In addition, Jeremy Dallow, ashareholder who became our President in 2006 is due $78,000 includingaccrued interest.

We entered into a consulting agreementwith an entity controlled by Jeremy Dallow for certain general businessand boxing promotion related consulting services which commenced onJanuary  1,  2003 and continues through April30,  2008. As compensation we issued 700,000 shares of its commonstock valued at $560,000 which was recorded as deferred compensation in2003. Amortization expense related to this agreement of $112,000 wascharged to operations in each of 2005 and 2004. The entity alsoadvanced $550,000 for payments during 2005 to trade and other vendorsall of which was repaid prior to December  31,  2005. Theentity was also compensated $270,000 in 2005 for assistance inconnection with certain financing transactions,

InFebruary  2004, we and Cedric Kushner, who was then ourPresident, agreed to convert our outstanding debt to him into equity.Pursuant to the agreement, the aggregate amount outstanding of$1.6  million relating to various personal loans made by Kushnerto us was converted into 65,156 shares of Series B preferred stockwhich was subsequently converted into 3,257,800 shares of common stock.Accordingly, we recognized financing costs of approximately $1.8million based upon the fair value of the common stock at the time ofthe agreement.

In April  2006, we entered intothree agreements with Cedric Kushner, our former President, whichprovide, among other matters, the following:

|  |              |                                                                                                                                                                                                                                                                                                                                                              |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Repayment terms for ourindebtedness owed to Kushner of $263,000 were modified to provide forinterest at 5%, quarterly payments of $10,000, plus amountsequivalent to a pro rata portion of amounts paid to certain other ofour creditors, plus 50% of net revenue up to $100,000 from apromotional agreement, with the unpaid balance due December31,  2008; |

|  |              |                                                                                                                                                                                                                      |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Weguaranteed Kushner for any liability resulting from his service as adirector or officer, subject to the limitations of the Delawarecorporate statute, and for any of our obligations that he guaranteedpersonally; |

|  |              |                                                                                                                    |
|--|--------------|--------------------------------------------------------------------------------------------------------------------|
|  | •  | We subleasedour current headquarters to an entity owned by Kushner, at the samerent payable by us to the landlord. |

|  |              |                                                                                       |
|--|--------------|---------------------------------------------------------------------------------------|
|  | •  | We transferred our rights toour library of boxing videos to Kushner for $250,000; and |

|  |              |                                                                                                                                                                                                                            |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | Kushner will consult with uswith respect to the promotion of David Tua, a boxer, in exchange for50% of the net proceeds earned from the Tua exclusive promotionagreement, after first repaying $400,000 owed to investors. |

Also in April  2006, we sold 2,937,500 shares of commonstock for $376,000 to an entity which also purchased a substantialportion of Kushner’s shares of our common stock and 1,171,875shares for 

27

----

Table of Contents

$150,000 pursuant to a private placement. Ournew President also purchased all of Kushner’s Series D preferredshares after our Board of Directors removed the liquidation preferencecontained in the original designation.

|               |          |
|---------------|----------|
| ITEM13.  | EXHIBITS |

|               |  |                                                                                                                                                                                                                                                     |  |  |  |  |
|---------------|--|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Description                                                                                                                                                                                                                                         |
| 2.1*          |  | Agreement and Plan ofMerger, dated as of August  2,  2001, by andamong the Company, Zenascent Newco, Inc., Cedric Kushner Boxing,Inc., Cedric Kushner and JamesDiLorenzo.(2)                                                              |
| 2.2*          |  | Amended andRestated Agreement and Plan of Merger, dated as of September 17,2001, by and among the Company, Zenascent Newco, Inc., CedricKushner Boxing, Inc., Cedric Kushner Promotions, Ltd.,Cedric Kushner and James DiLorenzo.(2) |
| 2.3*          |  | Amended and Restated Agreement and Plan ofMerger, dated as of February 21, 2002, by and among the Company,Zenascent Newco, Inc., Cedric Kushner Boxing, Inc., CedricKushner Promotions, Ltd., Cedric Kushner and JamesDiLorenzo.(2)  |
| 2.4*          |  | Certificateof Ownership and Merger of Cedric Kushner Promotions,Inc.(18)                                                                                                                                                                            |
| 3.1*          |  | Articles ofIncorporation of the Registrant(1)                                                                                                                                                                                                       |
| 3.2*          |  | Certificate of Amendment of Certificate ofDesignation, Preferences and Rights of Series B ConvertibleStock of Cedric Kushner Promotions, Inc., dated February19,  2004.(4)                                                                |
| 3.3*          |  | By-laws of Registrant(1)                                                                                                                                                                                                                            |
| 3.4*          |  | Certificate of Designation, Preferences and Rights of SeriesE Convertible Preferred Stock of Cedric Kushner Promotions,Inc., dated October 25, 2004.(6)                                                                                   |
| 3.5*          |  | Amendment to the By-Laws of Cedric KushnerPromotions, Inc.(9)                                                                                                                                                                                       |
| 3.6*          |  | Amendments to the Certificate of Incorporation of Cedric KushnerPromotions, Inc.(9)                                                                                                                                                                 |
| 4.1*          |  | Specimen common stock Certificate(1)                                                                                                                                                                                                                |
| 10.1*         |  | 1996 Incentive and Non-qualified Stock OptionPlan(1)                                                                                                                                                                                                |
| 10.2*         |  | Form of IncentiveStock Option Agreement under 1996 Incentive and Non-qualifiedStock Option Plan(1)                                                                                                                                             |
| 10.3*         |  | Formof Non-qualified Stock Option Agreement under 1996 Incentiveand Non-qualified Stock Option Plan(1)                                                                                                                                         |
| 10.4*         |  | 1998 Incentive and Non-qualified Stock OptionPlan(1)                                                                                                                                                                                                |
| 10.5*         |  | Form of IncentiveStock Option Agreement under 1998 Incentive and Non-qualifiedStock Option Plan(1)                                                                                                                                             |
| 10.6*         |  | Formof Non-qualified Stock Option Agreement under 1998 Incentiveand Non-qualified Stock Option Plan(1)                                                                                                                                         |
| 10.7*         |  | Form of Non-qualified Stock Option Agreementfor Outside Directors under 1998 Incentive and Non-qualifiedStock Option Plan(1)                                                                                                                   |
| 10.8*         |  | Consulting Agreement, effective August  1,  2001,between the Company and Investor Relations Services,Inc.(2)                                                                                                                                   |
|               |

28

----

Table of Contents

|               |  |                                                                                                                                                                                                                                                                                       |  |  |  |  |
|---------------|--|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Description                                                                                                                                                                                                                                                                           |
| 10.9*         |  | Payment Agreement,effective August  1,  2001, between the Companyand Summit Trading Limited.(2)                                                                                                                                                                                  |
| 10.10*        |  | Form of Promissory Note, executedJanuary  30,  2003, between the Company and alender.(3)                                                                                                                                                                                         |
| 10.11*        |  | Form ofPromissory Note, executed March  24,  2003, between theCompany and a lender.(3)                                                                                                                                                                                           |
| 10.12*        |  | Form of Promissory Note, executed March27,  2003, between the Company and alender.(3)                                                                                                                                                                                            |
| 10.13*        |  | Supplement tothe Note and Warrant Purchase Agreement, executed December 2003,between the Company and various purchasers in aprivate placement.(3)                                                                                                                           |
| 10.14*        |  | Consulting Agreement, effective January  1,  2004,between the Company and Bulldog Management,LLC.(3)                                                                                                                                                                             |
| 10.15*        |  | ConsultingAgreement, effective March  24,  2004, between theCompany and Buster Mathis, Jr.(3)(7)                                                                                                                                                                                 |
| 10.16*        |  | Promissory Note, dated September1,  2003, between the Company and DewayneLayfield.(3)                                                                                                                                                                                            |
| 10.17*        |  | ConsultingAgreement, effective June  1,  2004, between the Companyand Roy Roberts.(4)(7)                                                                                                                                                                                         |
| 10.18*        |  | Form of Note and Warrant Purchase Agreement,executed between July 2004 and August  2004, between theCompany and various purchasers in a privateplacement.(4)                                                                                                                |
| 10.19*        |  | Form ofConvertible Promissory Note, executed between July  2004and August 2004, between the Company and various purchasers in aprivate placement.(4)                                                                                                                        |
| 10.20*        |  | 2002 Incentive and Non-qualified Stock OptionPlan(5)                                                                                                                                                                                                                                  |
| 10.21*        |  | ConsultingAgreement, effective January  10,  2005, between theCompany and Philabelle Consulting, LLC.(7)                                                                                                                                                                         |
| 10.22*        |  | Amendment to Consulting Agreement, datedOctober  31,  2004, between the Company and RoyRoberts.(7)                                                                                                                                                                                    |
| 10.23*        |  | Amendment toConsulting Agreement, dated October  31,  2004, between theCompany and Roy Roberts.(7)                                                                                                                                                                                    |
| 10.24*        |  | Term Sheet for Modification of Loan and Consulting Arrangementsdated as of February 10, 2005, by and among LivingstonInvestments, LLC, Mackin Charitable Remainder Trust, CedricKushner Promotions, Inc., Cedric Kushner Promotions, Ltd. and CedricKushner Boxing, Inc.(8) |
| 10.25*        |  | Conversion Agreement, dated February  15,  2005,between the Company and a NoteHolder(9)                                                                                                                                                                                               |
| 10.26*        |  | Debt Settlement Agreement, datedJanuary  23,  2005, between the Company and Yeend &Castaneda, LLP.(9)                                                                                                                                                                             |
| 10.27*        |  | Form ofConversion Agreement dated as of June 15, 2005.(10)                                                                                                                                                                                                                            |
| 10.28*        |  | Subscription Agreement dated asof June 28, 2005 by and between Ckrush Entertainment, Inc. and theinvestors named on the signature pages thereto.(11)                                                                                                                                  |
| 10.29*        |  | Guaranty Agreement dated as ofJune 28, 2005 by and between Ckrush Entertainment, Inc., Cedric KushnerPromotions, Inc. and Cornell Capital Partners, L.P.(11)                                                                                                                          |
|               |

29

----

Table of Contents

|               |  |                                                                                                                                                                                                                                                         |  |  |  |  |
|---------------|--|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNumber |  | Description                                                                                                                                                                                                                                             |
| 10.30*        |  | Security Agreementdated as of June 28, 2005 by and between Ckrush Entertainment, Inc.,and Cornell Capital Partners, L.P.(11)                                                                                                                            |
| 10.31*        |  | Pledge and Escrow Agreementdated as of June 28, 2005 by and between Cedric Kushner Promotions,Inc., Cornell Capital Partners, L.P. and David Gonzalez, Esq.(11)                                                                                         |
| 10.32*        |  | Operating Agreement of IdentityFilms & Company, LLC dated as of June 27, 2005 by and betweenCkrush Entertainment, Inc. and Identity Films, LLC.(12)                                                                                                 |
| 10.33*        |  | Amendment No. 1 to the Guarantyand Pledge Agreement dated as of June 30, 2005 by and between CedricKushner Promotions, Inc. and the investors named on the signature pagethereto. (13)                                                                  |
| 10.34*        |  | Contribution andIndemnification Agreement dated as of June 30, 2005 by and betweenCedric Kushner Promotions, Inc. and World Wide South Beach, LLC.(13)                                                                                                  |
| 10.35*        |  | Amendment No. 1 to the Class ACommon Stock and Installment Payment Agreement dated as of June 30,2005 by and between Cedric Kushner Promotions, Inc. and the investorsnamed on the signature page thereto.(13)                                          |
| 10.36*        |  | Letter from Former Accountantdated as of September 22, 2005. (14)                                                                                                                                                                                       |
| 10.37*        |  | Consulting Agreement dated September 24, 2005by and between Ckrush Sports, Inc. and Dino Duva.(15)                                                                                                                                                      |
| 10.38*        |  | License Agreement dated November1, 2005 by and between Big Content, Inc. and English Distribution, LLC.(16)                                                                                                                                             |
| 10.39*        |  | Termination of Loan and RelatedAgreements dated as of November 1, 2005, by and among LivingstonInvestments, LLC, Mackin Charitable Remainder Trust, Cedric KushnerPromotions, Inc., Cedric Kushner Promotions, Ltd. and Cedric KushnerBoxing, Inc. (16) |
| 10.40*        |  | Termination ofGuarantee dated November 1, 2005 by and between Livingston Investments,LLC, Cedric Kushner Promotions, Inc. and James DiLorenzo.(16)                                                                                                      |
| 10.44*        |  | Executive Employment Agreementdated February 13, 2006 with Jan Chason.                                                                                                                                                                                  |
| 10.45*        |  | Form of Warrant to Purchase Common Stock, executed between July2004 and August  2004, between the Company and variouspurchasers in a private placement.(4)                                                                                    |
| 14.1*         |  | Code of Ethics.                                                                                                                                                                                                                                    |
| 21            |  | Ckrush, Inc. subsidiaries                                                                                                                                                                                                                               |
| 31.1          |  | Certification by Chief Executive Officerpursuant to Sarbanes-Oxley Section 302.                                                                                                                                                                    |
| 31.2          |  | Certification by Chief Financial Officerpursuant to Sarbanes-Oxley Section 302.                                                                                                                                                                    |
| 32.1          |  | Certification by Chief Executive Officerpursuant to 18 U.S.C. Section 1350                                                                                                                                                                         |
| 32.2          |  | Certification by Chief Financial Officer pursuant to 18U.S.C. Section 1350                                                                                                                                                                         |
| 99.1          |  | FinalJudgment dated November 30, 2005 as to Defendant Cedric Kushner.(17)                                                                                                                                                                               |
| 99.2          |  | Final Judgment dated December 1,2005 as to Defendant Cedric Kushner Promotions, Inc.(17)                                                                                                                                                                |
|               |

|  |
|--|
|  |  |
|  |

|   |                  |
|---|------------------|
| * | Previouslyfiled. |

30

----

Table of Contents

|     |                                                                                                                                   |
|-----|-----------------------------------------------------------------------------------------------------------------------------------|
| (1) | Incorporatedby reference to our Current Report on Form SB-2 filed with theSecurities and Exchange Commission on Form July  7,1998 |

|     |                                                                                                                                  |
|-----|----------------------------------------------------------------------------------------------------------------------------------|
| (2) | Incorporatedby reference to our Current Report on Form 8-K filed with theSecurities and Exchange Commission on Form May  15,2002 |

|     |                                                                                                                                      |
|-----|--------------------------------------------------------------------------------------------------------------------------------------|
| (3) | Incorporatedby reference to our Current Report on Form 10-KSB filed with theSecurities and Exchange Commission on Form June  25,2004 |

|     |                                                                                                                                        |
|-----|----------------------------------------------------------------------------------------------------------------------------------------|
| (4) | Incorporatedby reference to our Current Report on Form 10-QSB filed with theSecurities and Exchange Commission on Form August  13,2004 |

|     |                                                                                                                                                    |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------|
| (5) | Incorporatedby reference to our Information Statement on Schedule 14A-6 filed withthe Securities and Exchange Commission on Form November12,  2004 |

|     |                                                                                                                                              |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------|
| (6) | Incorporated by reference toour Current Report on Form 10-QSB/A filed with the Securities andExchange Commission on Form November  18,  2004 |

|     |                                                                                                                                                |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------|
| (7) | Incorporated by reference toour Registration Statement on Form S-8 filed with the Securities andExchange Commission on Form January  18,  2005 |

|     |                                                                                                                                         |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------|
| (8) | Incorporated by reference toour Current Report on Form 8-K filed with the Securities and ExchangeCommission on Form February  15,  2005 |

|     |                                                                                                                                     |
|-----|-------------------------------------------------------------------------------------------------------------------------------------|
| (9) | Incorporated by reference toour Current Report on Form 10-KSB filed with the Securities andExchange Commission on Form May 13,2005. |

|      |                                                                                                                                   |
|------|-----------------------------------------------------------------------------------------------------------------------------------|
| (10) | Incorporatedby reference to our Current Report on Form 8-K filed with theSecurities and Exchange Commission on Form June 21,2005. |

|      |                                                                                                                                  |
|------|----------------------------------------------------------------------------------------------------------------------------------|
| (11) | Incorporatedby reference to our Current Report on Form 8-K filed with theSecurities and Exchange Commission on Form July 5,2005. |

|      |                                                                                                                                  |
|------|----------------------------------------------------------------------------------------------------------------------------------|
| (12) | Incorporatedby reference to our Current Report on Form 8-K filed with theSecurities and Exchange Commission on Form July 8,2005. |

|      |                                                                                                                                   |
|------|-----------------------------------------------------------------------------------------------------------------------------------|
| (13) | Incorporatedby reference to our Current Report on Form 8-K filed with theSecurities and Exchange Commission on Form July 14,2005. |

|      |                                                                                                                                        |
|------|----------------------------------------------------------------------------------------------------------------------------------------|
| (14) | Incorporatedby reference to our Current Report on Form 8-K filed with theSecurities and Exchange Commission on Form September 22,2005. |

|      |                                                                                                                                        |
|------|----------------------------------------------------------------------------------------------------------------------------------------|
| (15) | Incorporatedby reference to our Current Report on Form 10-QSB filed with theSecurities and Exchange Commission on Form October 6,2005. |

|      |                                                                                                                                          |
|------|------------------------------------------------------------------------------------------------------------------------------------------|
| (16) | Incorporatedby reference to our Current Report on Form 10-QSB filed with theSecurities and Exchange Commission on Form November 21,2005. |

|      |                                                                                                                                      |
|------|--------------------------------------------------------------------------------------------------------------------------------------|
| (17) | Incorporatedby reference to our Current Report on Form 8-K filed with theSecurities and Exchange Commission on Form December 5,2005. |

|      |                                                                                                                                       |
|------|---------------------------------------------------------------------------------------------------------------------------------------|
| (18) | Incorporatedby reference to our Current Report on Form 8-K filed with theSecurities and Exchange Commission on Form December 23,2005. |

|      |                                                                                                                                       |
|------|---------------------------------------------------------------------------------------------------------------------------------------|
| (19) | Incorporatedby reference to our Current Report on Form 8-K filed with theSecurities and Exchange Commission on Form February 17,2006. |

|      |                                                                                                                                       |
|------|---------------------------------------------------------------------------------------------------------------------------------------|
| (20) | Incorporatedby reference to our Current Report on Form 8-K filed with theSecurities and Exchange Commission on Form February 24,2006. |

|      |                                                                                                                                    |
|------|------------------------------------------------------------------------------------------------------------------------------------|
| (21) | Incorporatedby reference to our Current Report on Form 8-K filed with theSecurities and Exchange Commission on Form March 14,2006. |

31

----

Table of Contents

|                |                                       |
|----------------|---------------------------------------|
| ITEM 14.  | PRINCIPALACCOUNTANT FEES AND SERVICES |

The following sets forththe fees billed by our independent accountants for each of our last twofiscal years for the categories of services indicated.

AUDITFEES

The aggregate fees billed in 2005 and 2004 forprofessional services rendered by the principal accountant for theaudit of our annual financial statements and review of the financialstatements included in our Form 10-KSB or services that are normallyprovided by the accountant in connection with statutory and regulatoryfilings or engagements for each of the fiscal years endedDecember  31,  2005 and 2004 were:

$45,000billed by Rosenberg, Rich, Baker & Berman, P.C. for the audit ofour annual financial statements for 2005 and the review of our interimquarterly financial statements for the periods ended June  30 andSeptember  30,  2005

$130,000 billed byWolinetz, Lafazan & Company, P.C. for the audit of our annualfinancial statements for 2004 and the review of.our interm quarterlyfinancial statements for the period ended March  31,2005.

AUDIT-RELATED FEES

The Company did notincur any fees for services reasonably related to the performance ofthe audit or review of the financial statements outside of those feesdisclosed above under ‘‘Audit Fees’’ for fiscalyears 2005 and 2004.

TAX FEES

Our principalaccountants did not render any services for tax compliance, tax advice,and tax planning work for the fiscal years ended December31,  2005 and December  31,  2004.

ALL OTHERFEES

Our principal accountants did not render any otherservices for the fiscal years ended December  31,  2005 andDecember  31,  2004.

32

----

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Actof 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned thereunto duly authorized.

CKRUSH,INC. & SUBSIDIARIES

|                      |  |                                                                            |  |  |  |  |
|----------------------|--|----------------------------------------------------------------------------|--|--|--|--|
| Date: April 12, 2006 |  | /s/Roy Roberts                                                             |
|                 |  | RoyRoberts                                                                 |
|                 |  | Chief ExecutiveOfficer(Principal Executive Officer)                        |
| Date: April 12, 2006 |  | /s/ Jan E. Chason                                                          |
|                 |  | Jan E.Chason                                                               |
|                 |  | Executive Vice President andCFO(Principal Financial and AccountingOfficer) |
| Date: April12, 2006  |  | /s/ Jeremy Dallow                                                          |
|                 |  | JeremyDallow                                                               |
|                 |  | President andDirector                                                      |
| Date: April12, 2006  |  | /s/ RichardAscher                                                          |
|                 |  | RichardAscher                                                              |
|                 |  | Director                                                                   |
| Date:April 12, 2006  |  | /s/ PhilipGlassman                                                         |
|                 |  | PhilipGlassman                                                             |
|                 |  | Director                                                                   |
| Date:April 12, 2006  |  | /s/ JerryGilbert                                                           |
|                 |  | JerryGilbert                                                               |
|                 |  | Director                                                                   |
| Date:April 12, 2006  |  | /s/ JonathanSchwartz                                                       |
|                 |  | JonathanSchwartz                                                           |
|                 |  | Director                                                                   |
|                      |

33

----