SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                   Annual Report Under Section 13 or 15(d) of
                       the Securities Exchange Act of 1934


                   For the Fiscal Year Ended: January 31, 2005
                                              ----------------


                           Commission File No. 0-28759
                                               -------


                          PocketSpec Technologies Inc.
       -----------------------------------------------------------------
       (Exact Name of Small Business Issuer as specified in its charter)


              COLORADO                                84-1461919
     ----------------------------              --------------------------
     (State or other jurisdiction              (IRS Employer File Number)
      of incorporation)


                 3225 East 2nd Ave.
                 Denver, Colorado                                80206
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     (Address of principal executive offices)                 (zip code)


                                 (303) 393-8060
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


     Securities to be Registered Pursuant to Section 12(b) of the Act: None
                                                                       ----

       Securities to be Registered Pursuant to Section 12(g) of the Act:

                   Common Stock, $0.001 per share par value
                   ----------------------------------------

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

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is contained in this form and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB. [ ]

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Registrant's revenues for its most recent fiscal year were $247,372. The
aggregate market value of the voting stock of the Registrant held by
non-affiliates as of January 31, 2005 was approximately $1,004,929. The number
of shares outstanding of the Registrant's common stock, as of the latest
practicable date, May 16, 2005, was 37,265,372.

References in this document to "us," "we," "our" or "the Company" refer to
PocketSpec Technologies Inc.

Forward-Looking Statements

     The following discussion contains forward-looking statements regarding our
Company, its business, prospects and results of operations that are subject to
certain risks and uncertainties posed by many factors and events that could
cause our actual business, prospects and results of operations to differ
materially from those that may be anticipated by such forward-looking
statements. Factors that may affect such forward-looking statements include,
without limitation: our ability to successfully develop new products for new
markets; the impact of competition on our revenues, changes in law or regulatory
requirements that adversely affect or preclude clients from using our products
or certain applications; delays our introduction of new products or services;
and our failure to keep pace with emerging technologies.

     When used in this discussion, words such as "believes", "anticipates",
"expects", "intends" and similar expressions are intended to identify
forward-looking statements, but are not the exclusive means of identifying
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of this
report. Our Company undertakes no obligation to revise any forward-looking
statements in order to reflect events or circumstances that may subsequently
arise. Readers are urged to carefully review and consider the various
disclosures made by us in this report and other reports filed with the
Securities and Exchange Commission that attempt to advise interested parties of
the risks and factors that may affect our business.

                                     PART I

RISK FACTORS

     THE OWNERSHIP AND INVESTMENT IN OUR SECURITIES INVOLVES  SUBSTANTIAL RISKS.
OUR COMMON  SHARES  SHOULD BE  PURCHASED  ONLY BY PERSONS WHO CAN AFFORD TO LOSE
THEIR ENTIRE INVESTMENT.  PROSPECTIVE  INVESTORS SHOULD CAREFULLY CONSIDER THESE
RISKS RELATING TO OUR COMPANY.

     WE HAVE A LACK OF OPERATING HISTORY AND AN ACCUMULATED DEFICIT. OUR
AUDITORS HAVE RAISED AN ISSUE CONCERNING OUR ABILITY TO CONTINUE AS A GOING
CONCERN.
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     Our predecessor was incorporated on January 1, 2000 as FJK Millennium Fund
V, Inc. and subsequently changed its name to FJK Opportunities, Inc. On April 6,
2000,we did a reverse acquisition with Real Estate Opportunities, Inc.
(formerly)Monument Galleries, Inc.), a Colorado corporation, incorporated on May
15, 1998. We have been in three different lines of business since our formation.
Since beginning operations, we have operated at a loss and we have not been

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profitable. However, we have never been profitable in our current line of
business. We have 2 an accumulated deficit of $5,386,424 at January 31, 2005. In
addition, our auditors have raised an issue concerning our ability to continue
as a going concern. We are going into our third year of operation in this
current line of business. Furthermore, we have not engaged in any substantial
business activity over a sustained period of time, and thus cannot be said to
have a successful operating history. Our current product lines do not generate
enough revenue to support us. Therefore, we have limited financial results upon
which you may judge our potential. We expect to continue to incur losses in the
near future. We may not ever become profitable. We have experienced in the past
and may experience in the future under-capitalization, shortages, setbacks and
many of the problems, delays and expenses encountered by any early stage
business, many of which are beyond our control. These include:

     -    substantial  delays and expenses related to testing and development of
          our new products,

     -    production and marketing  problems  encountered in connection with our
          new and existing products and technologies,

     -    competition from larger and more established companies, and

     -    lack of market acceptance of our new products and technologies.

     WE HAVE NO HISTORY OF PROFITABILITY WITH OUR NEW PRODUCTS.
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     Sales of our new products may never generate sufficient revenues to fund
our continuing operations. We may never generate positive cash flow or attain
profitability in the future. Historically, we have incurred losses, particularly
with operations related to our new products. As of January 31, 2005, our
accumulated deficit was $ 5,386,424. For the fiscal year ended January 31, 2005,
we incurred a net loss of $462,425. These losses have resulted primarily from:

     -    continued development of our color-measuring product line,

     -    significant costs associated with the development of our new products,

     -    lack of marketing of those products, and lack of sufficient sales to
          achieve profitability.

     BECAUSE OF OUR LIMITED HISTORY AND THE POTENTIAL FOR COMPETITION, AN
INVESTMENT IN US IS INHERENTLY RISKY.
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     Because we are a company with a limited history, our operations will be
extremely competitive and subject to numerous risks. We expect the color
comparison business to be highly competitive with many companies having access
to the same market. Substantially all of them have greater financial resources
and longer operating histories than we have and can be expected to compete
within the business in which we engage and intend to engage. There can be no
assurance that we will have the necessary resources to be competitive. We are
subject to the risks which are common to start-up companies. Therefore,
investors should consider an investment in us to be an extremely risky venture.

     TO FULLY DEVELOP OUR BUSINESS PLAN, WE WILL NEED FOR ADDITIONAL FINANCING.
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For the foreseeable future, we expect to rely principally upon our cash flow,
although we have raised limited private placement funds during the past fiscal
year and may be required to do so in the future. We cannot guarantee the success
of this plan. We believe that from time to time, we may have to obtain
additional financing in order to conduct our business in a manner consistent
with our proposed operations. There can be no guaranty that additional funds
will be available when, and if, needed. If we are unable to obtain such

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financing, or if the terms thereof are too costly, we may be forced to curtail
proposed expansion of operations until such time as alternative financing may be
arranged, which could have a materially adverse impact on our operations and our
shareholders' investment. At the present time, we have no definitive plans for
additional financing.

     WE MAY NOT BE ABLE TO CONDUCT SUCCESSFUL OPERATIONS IN THE FUTURE.
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     The results of our operations will depend, among other things, upon our
ability to develop and to market our color comparison products. Further, it is
possible that our proposed operations will not generate income sufficient to
meet operating expenses or will generate income and capital appreciation, if
any, at rates lower than those anticipated or necessary to sustain ourselves.
Our operations may be affected by many factors, some known by us, some unknown,
and some which are beyond our control. Any of these problems, or a combination
thereof, could have a materially adverse effect on our viability as an entity
and might cause the investment of our shareholders to be impaired or lost. Our
technologies and products are in various stages of development. Our products in
development may not be completed in time to allow production or marketing due to
the inherent risks of new product and technology development, limitations on
financing, competition, obsolescence, loss of key personnel and other factors.
Although we may license or market our development technology at its current
stage of development, there can be no assurance that we will be able to do so.
Unanticipated technical obstacles can arise at any time and result in lengthy
and costly delays or in a determination that further development is not
feasible.

     The development of some of our technologies has taken longer than
anticipated and could be additionally delayed. Therefore, there can be no
assurance of timely completion and introduction of our products on a
cost-effective basis, or that such products, if introduced, will achieve market
acceptance such that, in combination with existing products, they will sustain
us or allow us to achieve profitable operations.

     IF WE FAIL TO EXPAND OUR CONTROLS AND INTEGRATE NEW PERSONNEL TO SUPPORT
OUR ANTICIPATED GROWTH, OUR BUSINESS OPERATIONS WILL SUFFER.
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     We are undergoing rapid growth in the scope of our operations. Our business
prospects, results of operations or financial condition could be harmed if we
encounter difficulties in effectively managing the budgeting, forecasting and
other process control issues presented by such a rapid expansion.

     WE HAVE NO EXPERIENCE MARKETING OUR PRODUCTS AT ANY LEVEL, INCLUDING THE
LEVEL WE PLAN TO SELL IN THE FUTURE.
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     We cannot assure you that we will be successful in executing our planned
expansion of our activities to the levels which we are seeking. We have not
previously sold our products in any volume. We do not know whether or when we
will be able to develop or continue efficient, marketing capabilities and
processes that will enable us to meet the standards or volumes required to
successfully market large quantities of our products. Even if we are successful
in developing our capabilities and processes, we do not know whether we will
sustain our production or to continue to satisfy the requirements of our
customers.

     WE ARE DEPENDENT UPON TECHNOLOGY FOR OUR SUCCESS.
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     We are operating in a business which requires extensive and continuing
research efforts. There can be no assurance that new products will not render
our products obsolete or non-competitive at some time in the future.

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         TO BE SUCCESSFUL, WE MUST BE ABLE TO PROTECT OUR TECHNOLOGY BUT CANNOT
GUARANTEE THAT WE CAN DO SO.
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     A successful challenge to our ownership of our technology could materially
damage our business prospects. We rely on a combination of patents, trademarks,
copyrights, trade secret laws, confidentiality procedures and licensing
arrangements to protect our intellectual property rights. We currently have one
(1) U.S. patent acquired from Colorimeter, LLC. Any issued patent may be
challenged and invalidated. Patents may not issue from any of our future
applications. Any claims allowed from existing or future pending patents may not
be of sufficient scope or strength to provide significant protection for our
products. Patents may not be issued in all countries where our products can be
sold so as to provide meaningful protection or any commercial advantage to us.
Our competitors may also be able to design around our patents or the patents
which we license.

     We expect vigorous protection and pursuit of intellectual property rights
or positions to characterize our industry, which could result in significant and
often protracted and expensive litigation. Therefore, our competitors may assert
that our technologies or products infringe on their patents or proprietary
rights. Problems with patents or other rights could increase the cost of our
products or delay or preclude new product development and commercialization by
us. If infringement claims against us are deemed valid, we may not be able to
obtain appropriate licenses on acceptable terms or at all. Litigation could be
costly and time-consuming but may be necessary to protect our future patent
and/or technology license positions or to defend against infringement claims.

     WE ANTICIPATE THAT WE WILL BE SUBJECT TO INTENSE COMPETITION.
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     Technological competition from larger and more established companies is a
significant possibility and can be expected. Most of the companies with which we
expect to compete have far greater capital resources and more significant
research and development staffs, marketing and distribution programs and
facilities, and many of them have substantially greater experience in the
production and marketing of products. Our ability to compete effectively may be
adversely affected by the ability of these competitors to devote greater
resources to the sale and marketing of their products than we can. In addition,
one or more of our competitors may succeed or may already have succeeded in
developing technologies and products that are more effective than any of those
we currently offer or are developing. In addition, there can be no guarantee
that we will be able to protect our technology from being copied or infringed
upon. Therefore, there are no assurances that we will ever be able to obtain and
to maintain a profitable position in the marketplace

     OUR ULTIMATE SUCCESS WILL BE DEPENDENT UPON MANAGEMENT.
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     Our success is dependent upon the decision making of our directors and
executive officers. These individuals intend to commit as much time as necessary
to our business. The loss of any or all of these individuals could have a
materially adverse impact on our operations. We have four employment agreements
with our officers and directors, but have not obtained key man life insurance on
the lives of any of these individuals.

     OUR STOCK PRICE MAY BE VOLATILE, AND YOU MAY NOT BE ABLE TO RESELL YOUR
SHARES AT OR ABOVE YOUR INITIAL SALE PRICE.
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     There has been, and continues to be, a limited public market for our common
stock. Although our common stock trades on the NASD Bulletin Board, an active
trading market for our shares has not, and may never develop or be sustained. If
you purchase shares of common stock, you may not be able to resell those shares
at or above the initial price you paid. The market price of our common stock may
fluctuate significantly in response to numerous factors, some of which are
beyond our control, including the following:

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     actual or anticipated fluctuations in our operating results;

     changes in financial estimates by  securities analysts or our failure to
     perform in line with such estimates;

     changes in market valuations of other mortgage brokerage companies,
     particularly those that sell products similar to as ours; announcements by
     us or our competitors of significant innovations, acquisitions, strategic
     partnerships, joint ventures or capital commitments;

     introduction of technologies or product  enhancements  that reduce the need
     for our products; and

     departures of key personnel.

     Most of our common stock is currently restricted. As restrictions on resale
end, the market price of our stock could drop significantly if the holders of
restricted shares sell them or are perceived by the market as intending to sell
them. This could cause the market price of our common stock to drop
significantly, even if our business is doing well.

     OUR COMMON STOCK HAS A LIMITED PUBLIC TRADING MARKET.
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     While our common stock currently trades in the Over-the-Counter Bulletin
Board market, our market is limited and sporadic. We cannot assure that such a
market will improve in the future, even if our securities ever are listed on the
Nasdaq SmallCap Market or the American Stock Exchange. We cannot assure that an
investor will be able to liquidate his investment without considerable delay, if
at all. If a more active market does develop, the price may be highly volatile.
The factors which we have discussed in this document may have a significant
impact on the market price of the common stock. It is also possible that the
relatively low price of our common stock may keep many brokerage firms from
engaging in transactions in our common stock.

     THE OVER-THE-COUNTER MARKET FOR STOCK SUCH AS OURS HAS HAD EXTREME PRICE
AND VOLUME FLUCTUATIONS.
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     The securities of companies such as ours have historically experienced
extreme price and volume fluctuations during certain periods. These broad market
fluctuations and other factors, such as new product developments and trends in
the our industry and in the investment markets generally, as well as economic
conditions and annual variations in our operational results, may have a negative
effect on the market price of our common stock.

     (a) GENERAL DEVELOPMENT OF BUSINESS

     We are a Colorado corporation. Our principal business address is 3225 East
2nd Ave., Denver, Colorado 80206. We are a technology company which is in the
business of developing and marketing color comparison devices. Previously, we
were in the real estate development business. Originally we were in the retail
arts and crafts industry.

     Our predecessor was incorporated on January 1, 2000 as FJK Millennium Fund
V, Inc. and subsequently changed its name to FJK Opportunities, Inc. On April 6,
2000, we did a reverse acquisition with Real Estate Opportunities, Inc.
                                        6
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(formerly Monument Galleries, Inc.), a Colorado corporation, incorporated on May
15, 1998.

     In October, 2001, our main focus became the business of developing and
marketing color comparison devices, ultra-violet measurement devices and related
software products.

     On December 4, 2001 we amended our Articles of Incorporation to change our
name from Real Estate Opportunities, Inc. to PocketSpec Technologies Inc. and
increased our authorized common shares from 10,000,000 to 50,000,000 shares.

     In May 2002, we acquired Color-Spec Technologies, Inc. in a tax-free,
stock-for-stock transaction. We exchanged a total of 8,316,353 shares of our
common stock in exchange for 100% of the common stock of Color-Spec
Technologies, Inc., which became a wholly owned subsidiary of us.

     In December, 2002, we refined the focus of our business to the development
and marketing of two products: our PocketSpec(TM) ColorQA; and our PocketSpec
BronzCheck(TM). In addition, we began to concentrate on the creation of a set of
software products to be used in the indoor tanning salon industry. We entered
into independent contractor agreements and obtained a license agreement for
software development. We plan to concentrate on developing software for use with
our PocketSpec BronzCheck(TM) device, which is our principal color comparison
product for the tanning industry. Our plan is to integrate the data which is
received from our PocketSpec BronzCheck(TM) device with a new software system
which we currently have under development.

         On August 17, 2004, we entered into a Purchase and Sale Agreement.
The purpose of this Agreement was to restructure our financial obligations,
including settlement of long-term employment obligations, and to transfer our
color technology business, together with associated assets and obligations, to
our wholly-owned subsidiary, Color-Spec Technologies, Inc.

     We have not been subject to any bankruptcy, receivership or similar
proceeding.

     (b) NARRATIVE DESCRIPTION OF THE BUSINESS

     Since we incorporated in 1998, we have conducted three businesses.
Originally we were in the retail arts and crafts industry. We then transitioned
into the real estate development business, where we acquired and developed real
estate properties for our own account, primarily in Colorado. Finally, we have
become a technology company. At the present time, our main focus is in the
business of developing and marketing color comparison devices, ultra-violet
measurement devices and related software products.

     c) OPERATIONS

General

     In 2001, we changed our business plan from real estate development to the
color comparing business. Our focus has completely shifted away from real estate
as a business enterprise, except to note that we may acquire company owned real
estate in the future for our own use, such as offices, retail facilities and
development facilities.

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     We changed our name to PocketSpec Technologies Inc. to better identify and
describe the directions we intend to pursue. On October 3, 2001, we acquired an
exclusive, worldwide license under a technology license agreement for the
manufacturing and marketing rights to a hand-held device for comparing the color
of objects and light emission. In addition, the agreement assigned rights to a
pending utility patent covering the color technology and applications for
trademarks and patent protection for the ColorQA and the BronzCheck devices and
related technologies. In January, 2003, we entered into a technology transfer
agreement to acquire an exclusive license to technologies used in the
measurement of ultra-violet emissions from tanning beds used in tanning salons.
We may license and/or acquire rights to other intellectual properties and
trademarks as it may be found to enhance or align to our own intellectual
property and technology.

     All electronic components used within our products are readily available.
All optical, mechanical and packaging components are unique to us but use
standard injection mold practices for manufacturing of these components. We
attempt to incorporate previously used programming codes and electronics in
planning for future products. At the present time, we do not plan to produce or
assemble products outside of our direct control.

Our Current Products

     We have two current products which we are marketing. The first is our
Pocket-Spec(TM) ColorQA. The other is our PocketSpec BronzCheck(TM). At the
present time, we are producing both the ColorQA units and BronzCheck units.

     The PocketSpec(TM) ColorQA is a color comparison device with a built-in
display which has been developed to compare millions of colors. The device is
designed to measure a specified target color in a format of red, green, and
blue, each on a scale of 0 to 255. The measurement of the target color is stored
for comparison to other colors in the same format. The user can then take
multiple comparative readings of other colors and determine if the colors match,
or alternatively determine the closest match. The two series of numbers are
compared and the device gives a percentage difference in the same display for
easy color comparison. The device has circuit board space to add additional
memory if needed for more advanced functions. During the second quarter of
fiscal year 2003-2004, we developed and fitted the PocketSpec(TM) ColorQA device
with a USB connection and negotiated software development for use with the
ColorQA.

     The PocketSpec BronzCheck(TM) is a color comparison device that uses
essentially the same technology as the PocketSpec(TM) ColorQA but has a specific
application to the indoor tanning industry and medical industry. This is a
device with a built-in display, used for the comparison of a person's skin
color, with absolute white being 0 and absolute black being 1,000. The tanning
salon operator can take a measurement of a person's skin with the device and
record the number manually to verify to its clientele that they are increasing
or maintaining their individual tanning goals. This device only differs from the
PocketSpec(TM) ColorQA in the programming and printing of the brand name on the
outside of the housing and to sell related software which transmits through an
optional USB port for use in the BronzCheck product, and possible advances to
the ColorQA. The medical application measures discoloration of skin for
determination of potential skin ulcers.

Products in Development:
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     We have the developed the following products:

     BronzCheck(TM) with USB port, which has enhanced our present PocketSpec

BronzCheck(TM) product. We have been selling this device for approximately $899
each. We also incorporated the device for use with associated software, our
TanTone(TM) Salon System.

     TanTone(TM) Salon System, which is a point-of-sale software system, which
produced a seamless integration to the TanTone(TM) Salon Management software and
other known computer software products, such as Microsoft Access, as well as the
BronzCheck(TM).

     The medical device which uses similar technology as the BronzCheck (TM)
without the USB port.

     ColorQA(TM) with USB port, which has enhanced the readability and
repeatability of color-measurement. Software developed for us with ColorQA uses
the red, green, and blue scales to indicate color comparison accuracy. We plan
to retail the device at approximately $589 each.

Our Future Products

     We are in the preliminary stages of development of the Dental Color System,
a device which will be designed to use both the reflective manner of color
measurement, present in the BronzCheck(TM), for measuring brightness of teeth by
dental hygienists.

Suspended Development Plans

     We have suspended development plans of a previously planned product,
principally planned for remotely displaying readings of color measurements
generated digitally by the "PocketSpec Color Probe". We have found that in
marketing our ColorQA device we had some interest in remotely displaying and
recording color measurements, but decided that a separate device is not
necessary. We have incorporated the USB device into the BronzCheck and related
software to a PC program, using Interactive Design, Inc. salon management
software that remotely displays and records measurements from the BronzCheck.
The ColorQA also uses the USB application and three software products have been
developed and are available now for the ColorQA with the USB application. One of
the software applications provides readings from the ColorQA in RGB, XYZ/Yxy,
L*a*b, L*C(H), (y*C(H), and (Y)xy. The software provides results in relative
L*a*b and absolute L*a*b. These products enable our devices to be operated as a
bench top laboratory or factory device, by plugging in the USB connection. The
ColorQA can also be operated as a portable device under battery power.

Other

     We believe that there are numerous future potential applications for our
products and those in development and planned for development in the future. We
believe that we can deliver a more marketable range of color comparison devices
to our customers by integrating our present and future product line with a
series of software applications. We originally focused on the indoor tanning
industry. However, we have achieved acceptance of our integrated devices and
associated software products. We plan to expand their applications to other
industries.
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     (d) MARKETS

General

     We sell our products directly to end user markets through direct mailings,
including email and physical mailings through the US Postal Service and through
internet websites. We discontinued marketing our products through trade shows
due to cost/benefit analysis. We have two web sites for sales.

     We added on-line purchasing in May 2002. The web sites are
www.pocketspec.com for the ColorQA product and www.bronzcheck.com, with
www.tantone.net linked for our BronzCheck product. We accept most major credit
cards.

Current Marketing Plans

     During the last fiscal year, we completely revamped and redesigned our
marketing program for our products. For the present, we have abandoned attempts
to enter corporate sales to larger companies and government agencies. We
previously expended significant resources to pursue these markets and were
unsuccessful.

     We believe that the use of direct mailings can give us the flexibility to
improve our effectiveness as well as conserve our resources. We use in-house
printing for our promotional materials. This gives us the ability to print as we
need and in full color using all the modern software design systems used in the
magazine industry.

     We use a database of trade industry contacts. We have acquired
approximately 100,000 names of painting contractors, decorators, tanning salons
and other target markets. We plan to utilize these in our direct mailing
programs from time to time.

     We operate two web sites for sales and support. For products such as the
ColorQA and other technical products, we use www.pocketspec.com. On this site we
have limited company information, SEC filings, press releases, distributor
information, and on-line ordering. For the Indoor Tanning Industry, we use
bronzcheck.com and www.tantone.net, both linked to one site at the present time.
On this site we have information on the BronzCheck product and the software
products, distributors, if any, and on-line ordering. We continue to update our
current websites and have launched features that include on-line demonstration
of our products. We also plan to include technical support functionality in on
BronzCheck(TM) and TanTone(TM) Salon System product sites. We are also
considering.

Other Markets

     We also currently sell the ColorQA product to professional painters and
interior decorators, plastic injection mold manufacturers, leather dye business
and auto trim parts and panels companies. The present version of ColorQA
provides assistance in matching colors of paint, stucco, fabrics and virtually
any solid color that professional painters, interior decorators, and general
contractors need to match. The device has the capability of being programmed
with a color code look-up table of paint colors, which would be an enhanced
product, we may offer in the future.

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     We are also looking at the auto body and paint industry and the silk
screening and printing industry as potential markets in the future, although we
have had no substantial sales in these markets at the present time.

     We believe that there are numerous markets that may require some form of
color comparison which we have not yet explored, such as color copy machines,
the home hobbyist, model makers, rapid prototyping companies, textile industry,
and biologists. We will continue to examine new uses for our product. Our
primary goal for these products will be to provide a low cost means to measure
and compare color.

     (e) RAW MATERIALS

     The use of raw materials is not a material factor in our operations and is
not expected to be a material factor in the future.

     (f) CUSTOMERS AND COMPETITION

     There are a number of established companies in the color comparison
business. Among the largest, are Xrite, Munsell and Minolta, which make a
product similar to ours, but generally more expensive. We plan to differentiate
our products by focusing on low price, hand-held devices, which use color charts
from multiple color suppliers. Furthermore, we believe that the market is
fragmented, with no one company dominating this business.

     Our decision to add a software sales component to our lines of business
puts us in potential competition with additional competitors. However, we
believe that if we can begin by delivering competitive software products to
multiple industries and add servicing and support for our customers, we will
have a reasonable competitive edge.

     In any case, we believe that competition will be intense. We cannot
guarantee that we will be able to successfully compete.

     (g) BACKLOG

     At January 31, 2005, we had no backlogs.

     (h) EMPLOYEES AND CONSULTANTS

     At as of the date hereof, we have three full-time employees, which include
three administrative employees. We do not have any part-time employees. We also
utilize the services of independent contractors. The contractors are involved
with the engineering, design, and programming of our products. We plan to hire,
from time to time, additional independent contractors for prototype design and
production work and employees as our needs may demand.

     In the past, we have customarily used in-house technical support to develop
our color comparing technology. However, with the exception of Mr. Gregg Wagner,
one of our directors, who is a product designer and optics expert, we have
terminated the original technical development team and have replaced it with one
contract engineer and programmer. In addition, we will attempt, wherever
possible, to out-source materials, supplies and component assignments, such as
circuit boards and injected housings.

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     We have also terminated most arrangements, which we previously used to
develop markets for our products. At the present time we have some immaterial
distribution relationships. Apart from these distribution relationships and
co-development ventures we may enter into from time to time, we plan to do our
sales and marketing exclusively through our own independent contractors. We
believe that this will provide better customer development and support for our
product line.

     (i) PROPRIETARY RIGHTS

     On October 3, 2001, we entered into an exclusive technology license
agreement with Color-Spec Technologies, Inc., which granted us exclusive rights
to all of the Color-Spec Technologies' intellectual property and technology
rights for a period of ten years, subject to our payment of a royalty of $75 per
unit sold by us based upon the rights. In May 2002, we acquired Color-Spec
Technologies, Inc. in a tax-free, stock-for-stock transaction. Color-Spec
Technologies, Inc. became a wholly owned subsidiary of us.

     Also in October, 2001, we entered into a trademark license agreement with
Color-Spec Technologies, Inc. and received an exclusive license to use the
trademarks "PocketSpec" and "PocketSpec Technologies, Inc." for a term of ten
years. We use these trademarks in our business.

     We have also applied for several trademark and service mark applications,
which are pending. We have applications relating to Colorspec, Pocket Colorspec,
BronzeCheck, and Tantone.

     We own three patents. One is Patent No. 6,157,454, entitled Miniature
Colorimeter. During the third quarter ended October 31, 2004, the Company was
granted U.S. Paten No. 6,798,517 for the color-measuring device. We have also
applied for two patents regarding the dental application of the Miniature
Colorimeter, one of which has been granted. We now have Patent No. 6,525,819,
entitled Colorimeter for Dental Applications, which was issued on February 28,
2003.

     (j) GOVERNMENT REGULATION

     We are not subject to any material governmental regulation or approvals.

     (k) RESEARCH AND DEVELOPMENT

     We believe that strong product development capabilities are essential to
our strategy of enhancing our core technology, developing additional
capabilities incorporating that technology and maintaining a strategic position
with our products. We currently use and independent contractor to further
develop our color-measuring products and associated software products.

     In December 2002, we entered into a software development agreement with an
independent, third party contractor to develop the USB port capabilities of our
products. We pay for these services on an hourly basis.

     We plan to continue to invest significant time and resources in our product
development. In addition, we have recruited and plan to continue to recruit
electronic and software engineers, as needed, with experience in illumination
and detection systems.

     (l) ENVIRONMENTAL COMPLIANCE
                                       12
<PAGE>


     We are not subject to any costs for compliance with any environmental laws.

     (m) LEASES

     On March 5, 2002 the Company entered into an office lease agreement with
CCC. The agreement requires $4,000 per month rental of office space commencing
April 1, 2002 and continuing through April 1, 2007. The agreement also requires
payment of the yearly property tax. During the year ended January 31, 2005 the
Company paid rent to CCC totaling $54,600. The Company had accrued rent payable
to CCC in the amount of $28,497. The Company agreed to change the office space
lease from a triple net lease to monthly and pay $5,100 per month starting
August 1, 2004

     On March 4, 2003 we signed an operating lease for office copying equipment.
The agreement is effective through November 4, 2007. Monthly lease payments
total $1,318 and is subject to sales tax.

     (n) SUBSEQUENT EVENT AND CERTAIN TRANSACTIONS

     On February 23, 2005 we filed a Statement of Information for PocketSpec
Technologies Inc. The filing gave notice for a shareholder meeting to be held on
March 29, 2005 in order to increase the number of authorized common stock shares
from 50,000,000 to 900,000,000. The meeting was held and the shareholders
authorized the increase by a 52% vote.

        Subsequent to March 31, 2004 our Chief Financial Officer, Cynthia Kettl,
loaned $20,000 to the Company and a director, Gregg Wagner, loaned the $15,000
to the Company. The Company issued notes for the cash.

     On March 7, 2003 certain affiliates and individuals entered into agreements
with us to extinguish debt in exchange for stock. One affiliate provided us with
$10,000 in the form of a payment to another affiliate along with extinguishments
of $275,000 debt principal and interest in the amount of $17,517 for a total
amount of $302,517 for 4,321,673 shares of common stock. The stock was valued at
$.07 per share.

     Ms. Janet Brophy, an officer and director, as custodian of James Andrew
Krupka, provided $8,400 cash to acquire 120,000 shares of common stock valued at
$.07 per share.

     An unaffiliated individual provided us with $7,000 cash and extinguished
debt principal in the amount of $15,000 and interest in the amount of $399 for a
total amount of $22,399 in exchange for 319,992 shares of common stock valued at
$.07 per share.

     An unaffiliated individual provided us with $10,500 cash and extinguished
debt principal in the amount of $316,164 and interest in the amount of $1,988
for a total amount of $328,652 in exchange for 4,695,022 shares of common stock
valued at $.07 per share.

     An unaffiliated individual provided extinguished debt principal in the
amount of $50,509 and interest in the amount of $1,085 for a total amount of
$51,594 in exchange for 737,064 shares of common stock valued at $.07 per share.

     Our chief financial officer, Cynthia Kettl, provided us with cash totaling
13 $1,998 and extinguished an account payable in the amount of $3,000 for a
total amount of $4,998 in exchange for 71,400 shares of common stock valued at
$.07 per share.

     ITEM 2. DESCRIPTION OF PROPERTIES.

     Our business office is located at 3225 East 2nd Ave., Denver, Colorado
80206. On March 5, 2002, we signed a lease, effective from April 1, 2002 to
April 1, 2007, with an organization affiliated with one of our employees, F.
Jeffrey Krupka. We pay this organization $4,000 per month on a triple net lease,
along with real estate taxes, property insurance, maintenance and repairs,
telephone expenses, and other normal expenses of the property. We have granted
Mr. Krupka the non-exclusive use of the leased property for himself and as an
office location for his other business interests. The Company agreed to change
the office space lease from a triple net lease to monthly and pay $5,100 per
month starting Auqust 1, 2004.

     We own an exclusive technology license agreement with Color-Spec
Technologies, Inc., which granted us exclusive rights to all of the Color-Spec
Technologies' intellectual property and technology rights for a period of ten
years, subject to our payment of a royalty of $75 per unit sold by us based upon
the rights. We also own a trademark license agreement with Color-Spec
Technologies, Inc. and received an exclusive license to use the trademarks
"PocketSpec", "BronzCheck", "TanTone" and "PocketSpec Technologies Inc." for a
term of ten years. We use these trademarks in our business. Color-Spec
Technologies, Inc. is now our wholly owned subsidiary. The royalty of $75 per
unit was suspended when we acquired Color-Spec Technologies, Inc.

     We own three patents. One is Patent No. 6,157,454, entitled Miniature
Colorimeter. During the third quarter ended October 31, 2004, the Company was
granted U.S. Patent No. 6,798,517 for the color-measuring device. We have also
applied for two patents regarding the dental application of the Miniature
Colorimeter, one of which has been granted. We now have Patent No. 6,525,819,
entitled Colorimeter for Dental Applications, which was issued on February 28,
2003.

ITEM 3. LEGAL PROCEEDINGS.

     No material legal proceedings of a material nature to which we are a party
were pending during the reporting period. We know of no legal proceedings of a
material nature pending or threatened or judgments entered against any of our
directors or officers in their capacity as such.

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

     We held no shareholders meeting in the fourth quarter of our fiscal year.


                                     PART II

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

(a) PRINCIPAL MARKET OR MARKETS

     Since  May 2001,  our  securities  have  been  listed  for  trading  in the

                                       14
<PAGE>


Over-the-Counter  market on the NASD's "Electronic Bulletin Board." We currently
trade under the symbol PKSP.OBB. The following table sets forth the high and low
bid quotation for our common stock for each fiscal quarterly period of 2005 and
the three trading quarters of 2004.

                              Bid Price
                  -----------------------------------

                                   High              Low
                                   ----              ----

                  2005
                  ----
         First Quarter             $0.11             $0.04
         Second Quarter            $0.14             $0.05
         Third Quarter             $0.09             $0.04
         Fourth Quarter            $0.07             $0.03

                                   High              Low
                                   ----              ----
                  2004
                  ----
         First Quarter             $0.29            $0.05
         Second Quarter            $0.29            $0.04
         Third Quarter             $0.30            $0.05
         Fourth Quarter            $0.08            $0.03

     (b) APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK

     As of January 31, 2005, we had a total of 37,265,372 shares of our common
shares outstanding. The number of holders of record of our common stock at that
date was approximately 158.

     (c) DIVIDENDS

     Holders of common stock are entitled to receive such dividends as may be
declared by our Board of Directors. We paid no dividends on the common stock
during the periods reported herein nor do we anticipate paying dividends in the
foreseeable future.

     (d) THE SECURITIES ENFORCEMENT AND PENNY STOCK REFORM ACT OF 1990

     The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure and documentation related to the market for penny stock
and for trades in any stock defined as a penny stock. Unless we can acquire
substantial assets and trade at over $5.00 per share on the bid, it is more
likely than not that our securities, for some period of time, would be defined
under that Act as a "penny stock." As a result, those who trade in our
securities may be required to provide additional information related to their
fitness to trade our shares. Also, there is the requirement of a broker- dealer,
prior to a transaction in a penny stock, to deliver a standardized risk
disclosure document that provides information about penny stocks and the risks
in the penny stock market. Further, a broker-dealer must provide the customer
with current bid and offer quotations for the penny stock, the compensation of
the broker-dealer and its salesperson in the transaction, and monthly account
statements showing the market value of each penny stock held in the customer's

                                       15
<PAGE>


account. These requirements present a substantial burden on any person or
brokerage firm who plans to trade our securities and would thereby make it
unlikely that any liquid trading market would ever result in our securities
while the provisions of this Act might be applicable to those securities.

     (e) BLUE SKY COMPLIANCE

     The trading of penny stock companies may be restricted by the securities
laws ("Blue Sky" laws) of several states. Management is aware that a number of
states currently prohibit the unrestricted trading of penny stock companies
absent the availability of exemptions, which are in the discretion of the
states' securities administrators. The effect of these states' laws would be to
limit the trading market, if any, for our shares and to make resale of shares
acquired by investors more difficult.

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

Forward-Looking Statements

     The following discussion contains forward-looking statements regarding our
Company, its business, prospects and results of operations that are subject to
certain risks and uncertainties posed by many factors and events that could
cause our actual business, prospects and results of operations to differ
materially from those that may be anticipated by such forward-looking
statements. Factors that may affect such forward-looking statements include,
without limitation: our ability to successfully develop new products for new
markets; the impact of competition on our revenues, changes in law or regulatory
requirements that adversely affect or preclude clients from using our products
or certain applications; delays our introduction of new products or services;
and our failure to keep pace with emerging technologies.

     When used in this discussion, words such as "believes", "anticipates",
"expects", "intends" and similar expressions are intended to identify
forward-looking statements, but are not the exclusive means of identifying
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of this
report. Our Company undertakes no obligation to revise any forward-looking
statements in order to reflect events or circumstances that may subsequently
arise. Readers are urged to carefully review and consider the various
disclosures made by us in this report and other reports filed with the
Securities and Exchange Commission that attempt to advise interested parties of
the risks and factors that may affect our business.

Overview

     We concluded our real estate business during January 2002, when we sold our
remaining parcel of real estate located in Elbert County, Colorado. We do not
anticipate any further real estate investments. We have sold all of our notes
receivable for cash or exchange of debt principal that we maintained in
conjunction with the real estate transactions. We believe that the end of our
real estate business will enable us to focus on our direction of technology and
the development of our new color-measuring technology.

     On December 4, 2001 we changed our name to PocketSpec Technologies Inc. to
identify and better describe us. We acquired from Color-Spec Technologies, Inc.,
which is an affiliate of ours, an exclusive worldwide license for the

                                       16
<PAGE>


manufacturing and marketing rights for a hand-held device for measuring and
comparing color of objects and light emission. We acquired these rights pursuant
to a technology license agreement on October 3, 2001. In addition, the agreement
assigned rights to a pending utility patent covering the color technology and
application, as well as three additional provisional patents that use the
technology in other applications including geology. A major thrust for us will
be to develop color-comparing technology. We have the right to use the trademark
"PocketSpec" we believe that this will allow us to market a family of products
under the same "PocketSpec" name.

     Our acquisition of intellectual property from Color-Spec Technologies, Inc.
will be a long-term development. We have what we believe to be an excellent team
to develop the technology. The combination of personnel, capital, and technology
should accelerate our development and the opportunities for our shareholders. We
believe that we are set to expand.

Our Operations

     We are currently marketing two products. The first is our PocketSpec
ColorQA(TM). The other is our PocketSpec BronzCheck(TM). At the present time, we
are producing both the ColorQA units and BronzCheck units.

     We sell our products directly to end user markets through direct mailings,
including email and physical mailings through the US Postal Service and through
web-sites. We have two web sites for sales. We added on-line purchasing in May
2002. The web sites are www.pocketspec.com for the ColorQA product and
www.bronzcheck.com, with www.tantone.net linked for our BronzCheck product. We
accept credit cards.

     During the last fiscal year, we completely revamped and redesigned our
marketing program for our products. For the present, we have abandoned attempts
to enter corporate sales to larger companies and government agencies. We
previously expended significant resources to pursue these markets and were
unsuccessful. We believe that the use of direct mailings can give us the
flexibility to improve our effectiveness as well as conserve our resources. We
use in-house printing for our promotional materials.

Results of Operations

     We generated operating revenues in our color comparison business during
this fiscal year. We incurred a loss for the year ended January 31, 2005
totaling $ 462,425 compared to a loss of $2,720,192 for the year ended January
31, 2004. Although our sales increased and we decreased operating costs, we did
not generate enough revenue to cover our continuing cost of operations. Our loss
for the year ended January 31, 2004 was primarily due to a one time write off of
intangible assets totaling $1,552,363. Our loss per share, on a fully diluted
basis, was $0.013 per share for the year ended January 31, 2005, compared to a
loss of $.082 per share for the year ended January 31, 2004.

     We had total revenues of $247,372 for the year ended January 31, 2005.
Total cost of sales, which in the fiscal year ended January 31, 2005 consisted
of costs of manufacturing, was $111,521. We had total revenues of $161,813 for
the year ended January 31, 2004. Total cost of sales, which in the fiscal year
ended January 31, 2004 consisted of costs of manufacturing, was $127,859.

     Total operating expenses, which consisted of general and administrative 17
expenses, were $522,384 for the year ended January 31, 2005, compared to
$2,758,763 for the year ended January 31, 2004. The major components of general
and administrative expenses are research and development, legal, accounting,
commissions, wages, rent, and stock based compensation, and a one time
impairment expense totaling $1,388,512 for intangibles.

     We recorded stock-based compensation in the amount of $31,462 during the
year ended January 31, 2005 which represented common stock that was issued for
services provided to us for product and software development. The common stock
was valued at the closing price of the stock on the date of issue.

     We recorded stock-based compensation in the amount of $212,822 during the
year ended January 31, 2004, which represented common stock that was issued for
services provided to us along with common stock issued for promotion through
public relations organizations and web-site development and maintenance. The
common stock was valued at the closing price of the stock on the date of issue.

     We have not been profitable since we entered the color comparison business.
We believe that we have begun to generate enough sales to potentially reach a
break-even during the next fiscal year. For the coming fiscal year, we plan to
vigorously market our technology and develop our operations. If we are
unsuccessful in achieving positive results from operations, we may be required
to curtail operations, liquidate assets, or enter into capital or financing
arrangements on terms, which may have an adverse effect on future operations.

Liquidity and Capital Resources

     Our net cash and cash equivalents were $7,553 as of January 31, 2005,
compared to $9,780 as of January 31, 2004. Net cash used from investing
activities totaled $3,500 as of January 31, 2005 and net cash used from
investing activities was $26,841 for January 31, 2004. Cash from investing
activities was used for property additions.

     Our net cash received from financing activities was $89,773 for the year
ended January 31, 2005, compared to having received $573,548 for the year ended
January 31, 2004. Cash from financing activities totaled $115,103 came from
loans from affiliates and third parties, while $22,794 cash came from the
exercise of stock options for the year ended January 31, 2005. Cash totaling
$48,124 was used from financing activities to repay short term loans and debt
principal for the year ended January 31, 2005. For the year ended January 31,
2004 cash from financing activities totaled $601,350 came as loans from
affiliates and third parties. Cash used from financing activities was $55,700 to
repay debt for the fiscal year ended January 31, 2004. $27,898 cash came from
the issuance of stock for the year ended January 31, 2004.

     We have prepaid expenses of $2,473 at January 31, 2005. The prepaid
expenses consist of points paid for financing and other.

     During the year ended January 31, 2005 all outstanding stock options were
exercised, resulting in cash totaling $22,794.

     While we have been profitable in the past, we have not been profitable over
the short term, while we attempt to develop operations in our color comparing
technology business.

                                       18
<PAGE>


     During the next twelve months, we plan to use our internal cash flow and
perhaps private placement funds as the principal method to finance the
commercialization of our technologies. We do not intend to pay dividends in the
foreseeable future.

     New Accounting Pronouncements

     In December 2002, the FASB issued Statements of Financial Accounting
Standards No.148, "Accounting for Stock-Based compensation - Transition and
Disclosure - an amendment of FASB Statement 123" (SFAS 123). For entities that
change their accounting for stock-based compensation from the intrinsic method
to the fair value method under SFAS 123, the fair value method is to be applied
prospectively to those awards granted after the beginning of the period of
adoption (the prospective method). The amendment permits two additional
transition methods for adoption of the fair value method. In addition to the
prospective method, the entity can choose to either (i) restate all periods
presented (retroactive restatement method) or (ii) recognize compensation cost
from the beginning of the fiscal year of adoption as if the fair value method
had been used to account for awards (modified prospective method). For fiscal
years beginning December 15, 2003, the prospective method will no longer be
allowed. The Company currently accounts for its stock-based compensation using
the intrinsic value method as proscribed by Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" and plans on continuing using
this method to account for stock options, therefore, it does not intend to adopt
the transition requirements as specified in SFAS 148. As of January 31, 2004,
the Company does not have a stock option plan in existence, however; if the
Company chooses to in the future they will be subject to these guidelines.

Significant Accounting Policies and Estimates

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

Our consolidated financial statements have been prepared in accordance with
generally accepted accounting principles, which require us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses and the related disclosures. A summary of these significant accounting
policies can be found in PocketSpec Technologies Inc.'s (PST's) Notes to
Consolidated Financial Statements include in this Form 10-KSB. The estimates
used by management are based upon PST's historical experiences combined with
managements' understanding of current facts and circumstances. Certain of our
accounting policies are considered critical as they are both important to the
portrayal of our financial condition and the results of our operations and
require significant or complex judgments on our part. We believe that the
following represent the critical accounting policies of PST as described in
Financial Reporting Release No. 60, Cautionary Advice Regarding Disclosure About
Critical Accounting Policies, which was issued by the Securities and Exchange
Commission, inventories, deferred income taxes, allowance for doubtful accounts,
and allowance for sales returns.

The valuation of inventories involves complex judgments on our part. Excess
finished goods inventories are a natural component of market demand of our

                                       19
<PAGE>


products. We continually evaluate and balance the levels of inventories based on
sales projections and historical product demand. While certain finished goods
items will sell out quantities of other finished goods items will remain. These
finished goods are reserved as excess inventory. We believe we have adequate
control with respect to the amount of finished goods inventories that are
anticipated to become excess, while we believe this process produces a fair
valuation of inventories, changes in general economic conditions of our products
could materially effect valuation of our inventories.

We do not record an allowance that directly relates to the warranty of our
products, which would otherwise reduce our gross sales. We believe an allowance
is not required at this time, since historical data has indicated that returns
of our products for repair or replacement have been insignificant.

Our policy regarding long-lived assets is to evaluate the recoverability or
usefulness of these assets when the facts and circumstances suggest that these
assets may be impaired. This analysis relies on a number of factors, including
changes in strategic direction, business plans, regulatory developments,
economic and budget projections, technological improvements, and operating
results. The test of recoverability or usefulness is a comparison of the asset
value to the undiscounted cash flow of its expected cumulative net operating
cash flow over the asset's remaining useful life. Any write-downs would be
treated as permanent reductions in the carrying amount of the asset and an
operating loss would be recognized. To date, we have had recurring operating
losses and the recoverability of our long-lived assets is contingent upon
executing our business plan that includes monitoring our manufacturing costs and
significantly increasing sales. If we are unable to execute our business plan,
we may be required to write down the value of our long-lived assets in future
periods.


ITEM 7. Financial Statements.

                                      INDEX


                                                                            Page
                                                                           ----

Report of Independent Registered Public Accounting Firm                     F-2

Report of Independent Certified Public Accountant                           F-3

Consolidated Balance Sheet, January 31, 2005                                F-4

Consolidated Statements of Operations for the years ended
   January 31, 2005 and 2004                                                F-5

Consolidated Statement of Shareholders' Equity (Deficit),
   February 1, 2002 through January 31, 2005                                F-6

Consolidated Statements of Cash Flows, for the years ended
   January 31, 2005 and 2004                                                F-7

Notes to Consolidated Financial Statements                                  F-8


<PAGE>


             Report of Independent Registered Public Accounting Firm




Board of Directors
PocketSpec Technologies, Inc.
Denver, Colorado


We have audited the accompanying consolidated balance sheet of PocketSpec
Technologies, Inc. and Subsidiaries as of January 31, 2005, and the related
consolidated statements of operations, shareholders' deficit, and cash flows for
the year ended January 31, 2005. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
PocketSpec Technologies, Inc. and Subsidiaries as of January 31, 2005 and the
results of operations and cash flows for the year ended January 31, 2005, in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has a working capital deficit as well as an accumulated
deficit as of January 31, 2005. The Company has also suffered recurring losses
from operations. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans with respect to these
matters are also described in Note 2. These financial statements do not include
any adjustments relating to the recoverability and classification of reported
asset amounts or the amounts and classifications of liabilities that might
result from the outcome of this uncertainty.



By:  /s/ Cordovano and Honeck LLP
     --------------------------
     Cordovano and Honeck LLP

May 13, 2005
Denver, Colorado

                                       F-2
<PAGE>

                Report of Independent Certified Public Accountant


Board of Directors
PocketSpec Technologies, Inc.
Denver, Colorado


We have audited the consolidated balance sheet of PocketSpec Technologies, Inc.
and subsidiary as of January 31, 2004, (not separately included herein) and the
related consolidated statement of operations, shareholders' deficit, and cash
flows for the year ended January 31, 2004. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of PocketSpec
Technologies, Inc. as of January 31, 2004 and the results of their operations
and cash flows for the year ended January 31, 2004, in conformity with
accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has a working capital deficit as of January 31, 2004.
The Company has also suffered recurring losses from operations. These factors
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans with respect to these matters are also described in
Note 2. These financial statements do not include any adjustments relating to
the recoverability and classification of reported asset amounts or the amounts
and classifications of liabilities that might result from the outcome of this
uncertainty.



By:  /s/ Hein & Associates LLP
     --------------------------
     Hein & Associates LLP

May 16, 2005
Denver, Colorado


                                       F-3
<PAGE>

                          POCKETSPEC TECHNOLOGIES INC.
                           Consolidated Balance Sheets

                                                                 January 31,
                                                                    2005
                                                                 -----------
                                     Assets
Current assets:
      Cash and cash equivalents                                  $     7,553
      Trade receivables                                               18,191
      Inventory at cost, net of reserve of $16,861                   185,688
      Prepaid, and other, net                                          2,473
                                                                 -----------
          Total current assets                                       213,905

Fixed assets:
      Furniture and fixtures, net of accumulated
        depreciation of $21,634                                       28,268
      Office equipment, net of accumulated
        depreciation of $21,577                                       16,027
      Molds, net of accumulated
        depreciation of $118,079                                      20,770
                                                                 -----------
          Total fixed assets                                          65,065

                                                                 -----------
          Total assets                                           $   278,970
                                                                 ===========

            Liabilities and Shareholders' Equity (Deficit)
Liabilities:
      Accounts payable                                           $    39,623
      Accounts payable, related party (Note 6)                        11,253
      Accrued liabilities                                              6,496
      Accrued liabilities, related party (Note 6)                     28,497
      Accrued interest                                                 1,832
      Accrued interest, related parties (Note 6)                      31,043
      Accrued wages net of advances of $52,126                        27,997
      Short term loan, related party (Note 6)                         35,303
      Notes payable                                                   67,482
      Notes payable, related parties (Note 6)                      1,145,046
                                                                 -----------
          Total current liabilities                                1,394,572

Commitment and Contingencies                                            --

Shareholders' equity (deficit):
      Common stock, $0.001 par value, 50,000,000
          shares authorized, 37,265,372 shares
          issued and outstanding                                      37,266
      Additional paid-in capital                                   4,247,342
      Stock Options Outstanding                                         --
      Accumulated deficit                                         (5,400,210)
                                                                 -----------
          Total shareholders' equity (deficit)                    (1,115,602)
                                                                 -----------
          Total liabilities and shareholders' equity (deficit)   $   278,970
                                                                 ===========

                 See accompanying notes to financial statements

                                      F-4
<PAGE>

<TABLE>
                          POCKETSPEC TECHNOLOGIES INC.
                      Consolidated Statements of Operations
<CAPTION>

                                                           For the Years Ended
                                                               January 31,
                                                       ----------------------------
                                                           2005            2004
                                                       ------------    ------------
<S>                                                    <C>             <C>
Revenues
      Product sales                                    $    247,372    $    161,813

Cost of sales:
      Cost of sales                                         125,308         127,859
                                                       ------------    ------------
           Gross margin                                     122,064          33,954

Operating expenses:
      General and administrative expenses:
        Impairment of intangibles                              --         1,388,512
        General and administrative                          375,217         834,935
        Stock based compensation                             31,462         212,822
        Rent expense to related party (Note 6)               54,600          48,000
        Research and development costs                          224          52,460
      Depreciation                                           60,881          58,183
      Amortization                                             --           163,851
                                                       ------------    ------------
           Total general and administrative expenses        522,384       2,758,763

           Operating (loss)                                (400,320)     (2,724,809)

Other income (expense):
      Other income                                             --             4,616
      Interest income (expense) (Notes 6 and 7)             (75,892)              1
                                                       ------------    ------------
           Total other income (expense)                     (75,892)          4,617

           (Loss) before provision
             for income taxes                              (476,212)     (2,720,192)

Provision for income taxes - benefit                           --              --
                                                       ============    ============
           Net (loss)                                  $   (476,212)   $ (2,720,192)
                                                       ============    ============

Net loss per share:
      Net (loss)                                       $     (0.013)   $     (0.082)
                                                       ============    ============
      Basic and diluted shares used for computation      36,601,109      33,240,563
                                                       ============    ============
</TABLE>

                 See accompanying notes to financial statements

                                       F-5
<PAGE>

<TABLE>

                          POCKETSPEC TECHNOLOGIES INC.
            Consolidated Statement of Shareholders' Equity (Deficit)
                    February 1, 2002 Through January 31, 2004

<CAPTION>
                            SPLIT TABLE -- SEE BELOW
                                                                    Common         Treasury                      Additional
                                                                     Stock           Stock                        Paid In
                                                                    Shares          Shares          Amount        Capital
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>            <C>            <C>            <C>
Balance January 31, 2003                                            23,028,630        (30,000)   $    22,999    $ 3,240,874

February 2003, shares issued for stock based comp, related party         9,155           --                9            906
February 2003, shares issued for stock based comp                       28,875           --               29          2,859
March 2003, shares exchange stock for debt - B7 Brand Note           4,321,673           --            4,322        298,195
March 2003, shares exchanged stock for debt - Roben Note               319,992           --              320         22,079
March 2003, shares exhanged stock for debt - Miller Note             4,695,022           --            4,695        323,957
March 2003, shares exchanged for debt - Ford PS Plan Note              737,064           --              737         50,857
March 2003, shares exchanged for payable, related party                 71,400           --               71          4,927
March 2003, sale of stock, related party                               120,000           --              120          8,280
March 2003 - shares issued for design and consulting                    50,000           --               50          8,950
March 2003, shares issued for stock based comp                         109,063           --              109         19,522
March 2003, shares issued for stock based comp, related party           18,310           --               18          3,278
March 2003, shares issued for stock based comp                         137,500           --              138         25,137
July 2003, shares issued for stock based comp                        1,130,750           --            1,131         78,221
July 2003, shares issued for stock based comp, related party            50,000           --               50          3,450
July 2003, shares issued for stock based comp                          215,181           --              216         14,849
July 2003, shares issued for stock based comp, related party           500,000           --              500         24,500
July 2003, shares exchanged for payable                                125,000           --              125          7,375
August 2003, shares issued for stock based comp                         70,000           --               70          3,430
August 2003, shares issued for stock based comp, related party         183,100           --              183         10,803
August 2003, shares issued for stock based comp                        118,406           --              118          6,986
August 2003, shares returned and canceled                              (61,000)          --              (61)            61
October 2003, shares issued for stock based comp                       146,239           --              146          7,166
Net loss for the year - PocketSpec Technologies Inc.                      --             --             --             --
------------------------------------------------------------------------------------------------------------------------------
Balance January 31, 2004                                            36,124,360        (30,000)        36,095           --

May 2004, shares exchanged for payables                                199,396           --              200         15,205
May 2004, issuance of options 500,000 shares                                 0           --                0              0
August 2004, shares issued for services, other                         275,000           --              275         16,225
August 2004, shares exchanged for payable                              196,616           --              195         11,995
August 2004, share options excersised                                   61,683           --               62          6,110
September 2004, shares returned and canceled                           (30,000)        30,000           --             --
December, 2004, share options exersised                                 58,426           --               59          4,152
December, 2004, share options sold                                     379,891           --              380         26,993
Balance January 31, 2005                                                  --             --             --             --
------------------------------------------------------------------------------------------------------------------------------
                                                                    37,265,372              0         37,266         80,680
==============================================================================================================================
</TABLE>


<TABLE>

                          POCKETSPEC TECHNOLOGIES INC.
            Consolidated Statement of Shareholders' Equity (Deficit)
                    February 1, 2002 Through January 31, 2004

<CAPTION>
                            SPLIT TABLE -- SEE ABOVE


                                                                                Common
                                                                                 Stock       Accumulated
                                                                                Options        Deficit          Total
                                                                              ------------------------------------------
<S>                                                                           <C>            <C>            <C>
Balance January 31, 2003                                                      $      --      $(2,203,806)   $ 1,060,067

February 2003, shares issued for stock based comp, related party                     --             --              915
February 2003, shares issued for stock based comp                                    --             --            2,888
March 2003, shares exchange stock for debt - B7 Brand Note                           --             --          302,517
March 2003, shares exchanged stock for debt - Roben Note                             --             --           22,399
March 2003, shares exhanged stock for debt - Miller Note                             --             --          328,652
March 2003, shares exchanged for debt - Ford PS Plan Note                            --             --           51,594
March 2003, shares exchanged for payable, related party                              --             --            4,998
March 2003, sale of stock, related party                                             --             --            8,400
March 2003 - shares issued for design and consulting                                 --             --            9,000
March 2003, shares issued for stock based comp                                       --             --           19,631
March 2003, shares issued for stock based comp, related party                        --             --            3,296
March 2003, shares issued for stock based comp                                       --             --           25,275
July 2003, shares issued for stock based comp                                        --             --           79,352
July 2003, shares issued for stock based comp, related party                         --             --            3,500
July 2003, shares issued for stock based comp                                        --             --           15,065
July 2003, shares issued for stock based comp, related party                         --             --           25,000
July 2003, shares exchanged for payable                                              --             --            7,500
August 2003, shares issued for stock based comp                                      --             --            3,500
August 2003, shares issued for stock based comp, related party                       --             --           10,986
August 2003, shares issued for stock based comp                                      --             --            7,104
August 2003, shares returned and canceled                                            --             --                0
October 2003, shares issued for stock based comp                                     --             --            7,312
Net loss for the year - PocketSpec Technologies Inc.                                 --       (2,720,192)    (2,720,192)
------------------------------------------------------------------------------------------------------------------------
Balance January 31, 2004                                                                0     (4,923,998)      (721,241)

May 2004, shares exchanged for payables                                              --             --           15,405
May 2004, issuance of options 500,000 shares                                       10,027           --           10,027
August 2004, shares issued for services, other                                       --             --           16,500
August 2004, shares exchanged for payable                                            --             --           12,190
August 2004, share options excersised                                              (1,237)          --            4,935
September 2004, shares returned and canceled                                         --             --                0
December, 2004, share options exersised                                            (1,172)          --            3,039
December, 2004, share options sold                                                 (7,618)          --           19,755
Balance January 31, 2005                                                             --         (476,212)      (476,212)
------------------------------------------------------------------------------------------------------------------------
                                                                                        0     (5,400,210)    (1,115,602)
========================================================================================================================
</TABLE>

                 See accompanying notes to financial statements

                                       F6
<PAGE>

<TABLE>
                          POCKETSPEC TECHNOLOGIES INC.
                      Consolidated Statements of Cash Flows
<CAPTION>
                                                                      For The Years Ended
                                                                            January 31,
                                                                   --------------------------
                                                                      2005            2004
                                                                   -----------    -----------
<S>                                                                <C>            <C>
Cash flows from operating activities:
     Net loss                                                         (476,212)   $(2,720,192)
     Depreciation and amortization                                      60,881        222,034
     Impairment of intangibles                                            --        1,388,512
     Stock-based compensation                                           31,462        212,824
     Non-cash interest expense, other                                     --           15,791
     Non-cash other                                                       --           23,727
     (Increase) decrease in:
         Accounts receivable, trade                                    (13,839)           193
         Inventory                                                      98,491        (33,823)
         Prepaids and accruals                                           6,901          7,583
     Increase (decrease) in:
         Payables, accruals, and other, net                            203,816        339,973
                                                                   -----------    -----------
                Net cash used by operating activities                  (88,500)      (543,378)
                                                                   -----------    -----------


Cash flows from investing activities:
     Cash paid for property, other (Note 7)                             (3,500)       (25,482)
     Cash paid for intangibles                                            --           (1,359)
                                                                   -----------    -----------
                Net cash received (used) by investing activities        (3,500)       (26,841)
                                                                   -----------    -----------


Cash flows from financing activities:
     Proceeds from short-term borrowings, related party (Note 6)        58,103        121,800
     Proceeds form short-term borrowing, other (Note 7)                 37,000           --
     Repament of short term borrowings, related party (Note 6)         (28,000)          --
     Repament of short term borrowings, other (Note 7)                 (19,800)          --
     Principal payments on notes, related party (Note 6)                  (324)       (55,700)
     Proceeds from loans, related party (Note 6)                        20,000        479,550
     Proceeds from issuance of common stock                               --           17,500
     Proceeds from issuance of common stock, related party                --           10,398
     Proceeds from sale stock options, other (Note 7)                   22,794
                                                                   -----------    -----------
                Net cash provided by financing activities               89,773        573,548
                                                                   -----------    -----------
                                                                   -----------    -----------


     Net change in cash                                                 (2,227)         3,329
     Cash and cash equivalents at beginning of period                    9,780          6,451
                                                                   -----------    -----------
                Cash and cash equivalents at end of period         $     7,553    $     9,780
                                                                   ===========    ===========


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Cash paid during the year for:
         Interest                                                  $    15,676    $     4,601
                                                                   ===========    ===========
         Income taxes                                              $      --      $      --
                                                                   ===========    ===========

     Non-cash investing and financing activities:
         Common stock issued for debt, related party               $      --      $   302,517
                                                                   ===========    ===========
         Common stock issued for debt, other                       $      --      $   402,645
                                                                   ===========    ===========
         Common stock issued for services                          $    16,500    $   212,824
                                                                   ===========    ===========
         Common stock issued for payables, related party           $       989    $      --
                                                                   ===========    ===========
         Common stock issued for payables, other (Note 4)          $    26,608    $    12,498
                                                                   ===========    ===========
         Conversion of liability to debt, related party (Note 6)   $   460,325    $      --
                                                                   ===========    ===========
         Conversion of liability to debt, other (Note 7)           $    53,082    $      --
                                                                   ===========    ===========
</TABLE>

                 See accompanying notes to financial statements

                                       F-7
<PAGE>


                          POCKETSPEC TECHNOLOGIES INC.
                   Notes to Consolidated Financial Statements

Note 1:  Basis of presentation

(a)  Organization and Basis of Presentation

Our predecessor was incorporated on January 1, 2000 as FJK Millennium Fund V,
Inc. and subsequently changed its name to FJK Opportunities, Inc. On April 6,
2000, we did a reverse acquisition with Real Estate Opportunities, Inc.
(formerly Monument Galleries, Inc.), a Colorado corporation, incorporated on May
15, 1998. We acquired tracts of raw land and developed them into residential
lots for sale to homebuilders. In addition, we acquired, for redevelopment, a
commercial rental property in Denver, Colorado. During the year ended January
31, 2002, we sold all of our real estate holdings. Beginning during out third
fiscal quarter of 2001, we changed our business plan and became a developer of
color comparing instruments.

On December 4, 2001, our shareholders voted in favor of two amendments to our
Articles of Incorporation. The first amendment approved was our name change from
Real Estate Opportunities, Inc. to PocketSpec Technologies Inc. The second
amendment approved our changing our authorized shares of common stock from
10,000,000 to 50,000,000 shares. Our shareholders also elected four nominees to
our board of directors and ratified our selection of auditors for our fiscal
year ending January 31, 2003.

In May 2002, we acquired Color-Spec Technologies, Inc. in a tax-free,
stock-for-stock transaction. We exchanged a total of 8,316,353 shares of our
common stock in exchange for 100% of the common stock of Color-Spec
Technologies, Inc., which became a wholly owned subsidiary of us.

Our consolidated financial statements include the accounts of the Company and
our wholly owned subsidiary. All inter-company transactions have been eliminated
in consolidation.

We are a technology company, which is in the business of developing and
marketing color comparison devices. Previously, we were engaged in certain real
estate activity since inception through January 31, 2002. Inherent in our
business are various risks and uncertainties, including our limited operating
history, historical operating losses, and the success of recent change in
business plans. Our plans include continuing to develop our color-measuring
technology and marketing our products. Our future success will be dependent upon
our ability to market an effective and competitive color-comparing instrument on
a timely and cost-effective bases.

(b) Use of Estimates

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

(c) Cash and Cash Equivalents

                                      F-8
<PAGE>


                          POCKETSPEC TECHNOLOGIES INC.
                   Notes to Consolidated Financial Statements


The Company considers all highly liquid securities with original maturities of
three months or less when acquired to be cash equivalents. Our net cash and cash
equivalents were $7,553 as of January 31, 2005, compared to $9,780 as of January
31, 2004.

(d) Revenue and Cost Recognition

Costs that clearly relate to sales of the Company's color comparison products
are charged to earnings when incurred. Revenues from sales of products are
recognized at the time of shipment of product. Customers have the right to
return products for 90 days after purchase. Defective products are repaired or
replaced at our discretion. Refunds are issued either by check or credit as
necessary. The Company has minimal returns and therefore does not maintain an
allowance for those returns.

(e) Inventory

Inventories are stated at the lower of cost or market. Cost includes materials,
labor, direct costs, and allocated overhead. Generally, inventories are written
down to market value during the period in which impairment of such inventories
is identified. Inventory at January 31, 2005 consisted of finished goods. We
have recorded an allowance of $3,075 that directly relates to non-saleable or
discontinued products, which reduces our gross profit.

(f) Impairment of Intangible Assets

The Company  evaluates  the carrying  value of its  long-lived  assets under the

                                      F-9
<PAGE>

                          POCKETSPEC TECHNOLOGIES INC.
                   Notes to Consolidated Financial Statements


provisions of Statement of Financial Accounting standards No. 144, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of (Statement No. 144). Statement No. 144 requires impairment losses to be
recorded on long-lived assets used in operations, when indicators of impairment
are present and the undiscounted future cash flows estimated to be generated by
those assets are less than the assets' carrying amount. If such assets are
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying value or fair value, less
costs to sell. The Company expensed the carrying value of its intangible assets
as a one time charge totaling $1,388,512 for the year ending January 31, 2004.

(g) Income Taxes

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

(h) Stock Based Compensation

The Company accounts for stock-based compensation arrangements in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting
for Stock-Based Compensation," which permits entities to recognize as expense
over the vesting period the fair value of all stock-based awards on the date of
grant. Alternatively, SFAS No. 123 allows entities to continue to apply the
provisions of Accounting Principle Board ("APB") Opinion No. 25 and provide pro
forma net earnings (loss) disclosures for employee stock option grants as if the
fair-value based method defined in SFAS No. 123 had been applied. The Company
has no outstanding stock options at January 31, 2005.

(i) Transfer Pricing of Transactions Among Related Entities

The Company accounts for certain related party transactions in accordance with
SEC policies. The SEC staff has stated that assets should be valued at their
historical cost in a transfer of assets between companies under common control.

(j) Earnings Per Share

Basic earnings per share are generally calculated by dividing net income by the
weighted average number of shares outstanding. Diluted earnings per share
reflect the potential dilution that would occur if all grants, agreements, and
contracts to issue shares were exercised or converted. Diluted income per share
is the same as basic income per share for the years ended January 31, 2005 and
2004.

                                      F-10
<PAGE>


                          POCKETSPEC TECHNOLOGIES INC.
                   Notes to Consolidated Financial Statements


(k) New Accounting Pronouncements

In December 2002, the FASB issued Statements of Financial Accounting Standards
No.148, "Accounting for Stock-Based compensation - Transition and Disclosure -
an amendment of FASB Statement 123" (SFAS 123). For entities that change their
accounting for stock-based compensation from the intrinsic method to the fair
value method under SFAS 123, the fair value method is to be applied
prospectively to those awards granted after the beginning of the period of
adoption (the prospective method). The amendment permits two additional
transition methods for adoption of the fair value method. In addition to the
prospective method, the entity can choose to either (i) restate all periods
presented (retroactive restatement method) or (ii) recognize compensation cost
from the beginning of the fiscal year of adoption as if the fair value method
had been used to account for awards (modified prospective method). For fiscal
years beginning December 15, 2003, the prospective method will no longer be
allowed. The Company currently accounts for its stock-based compensation using
the intrinsic value method as proscribed by Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" and plans on continuing using
this method to account for stock options, therefore, it does not intend to adopt
the transition requirements as specified in SFAS 148. As of January 31, 2005,
the Company does not have a stock option plan in existence, however; if the
Company chooses to in the future they will be subject to these guidelines.

Note 2: Liquidity and Basis of Presentation

We generated operating revenues in our color comparison business during this
fiscal year. We incurred a loss for the year ended January 31, 2005 totaling
$462,425 compared to a loss of $2,720,192 for the year ended January 31, 2004.
We have a working capital deficit of $1,115,602 as of January 31, 2005. Our loss
for the year ended January 31, 2005 was due to continued costs of operations in
spite of increasing revenues of our color comparison business.

We have not been profitable since we entered the color comparison business. We
believe that we have begun to generate enough sales to potentially reach a
break-even during the next fiscal year. For the coming fiscal year, we plan to
vigorously market our technology and develop our operations. We believe that we
have begun to generate enough sales to potentially reach a break-even during the
second fiscal quarter. Even with our marketing plan we will continue to have
liquidity issues. If the Company cannot ultimately obtain profitable operations,
there is substantial doubt about its ability to continue as a going concern. The
consolidated financial statements do not include any adjustments should the
company be unable to continue operations as a going concern.

Note 3:   Acquisition of property

     (a)  In order to obtain specific intellectual property, on May 31, 2002 the
          Company acquired 100% of the issued and outstanding common shares of
          Color-Spec Technologies, Inc. (Color-Spec) in a stock-for-stock
          acquisition. Color-Spec has developed and holds the rights to a
          product line of color comparing instruments. Under the terms of the
          acquisition, each shareholder of Color-Spec received one common share
          of PocketSpec for each common share of Color-Spec owned. The Company


                                      F-11
<PAGE>


                          POCKETSPEC TECHNOLOGIES INC.
                   Notes to Consolidated Financial Statements


          issued a total of 8,316,353 restricted shares of common stock in
          connection with this transaction. As 50% of Color-Spec was owned by
          the president and controlling shareholder of Pocket-Spec, that portion
          of the consideration has been recorded at historical cost. The
          remaining 50% of the consideration issued for Color-Spec was valued at
          the market price of the Company's common stock on May 31, 2002 of
          $1,455,362. The amortization period for the license rights 10 years.
          The results of the Color-Spec business have been consolidated with
          those of Pocket-Spec effective May 31, 2002.

     (b)  During the year ended January 31, 2005, the Company acquired
          depreciable assets for cash for a total amount of $3,500.


Note 4: Buildings, property, equipment and depreciation.

Building, property and equipment are recorded at cost. Expenditures that extend
the useful lives of assets are capitalized. Repairs, maintenance and renewals
that do not extend the useful lives of the assets are expensed as incurred.
Depreciation is provided on the straight-line method over the following
estimated useful lives: building, 39 years; building improvements, 39 years;
furniture, 7 years; equipment, 5 years; and molds, 3 years. Depreciable assets
consisted of the following at January 31, 2004:

               Furniture                            $    49,902
               Equipment                                 37,604
               Molds                                    138,849
                                                    -----------
                                                        226,355
               Less accumulated depreciation           (161,290)
                                                    -----------
                                                    $    65,065

Note 5: Intangible assets and amortization

The Company does not have any intangible assets for the year ended January 31,
2005. Intangible assets were expensed as a one time charge in the amount of
$1,388,512 at January 31, 2004.

Note 6: Related party transactions

B7 Brand, LLC (B7B), Cherry Creek Cottage, LLC (CCC), Color-Spec Technologies,
Inc., (CST), Cynthia Kettl (CK), F. Jeffrey Krupka (FJK), Gregg Wagner (GW),
Janet Brophy (JB), Krupka-Brophy Profit Sharing Plan (KBP),Moon Unit, LLC (MU),
and Wraith Moon House, LLC (WMH) are affiliates of our Company by either common
ownership or by common management. Asset Realization, Inc. (ARI) and Cape Aloe
Corp., (CAC) became unaffiliated at January 31, 2004 when those companies
changed officers and directors.

     (a)  On August 17, 2004 the Company entered into a purchase and sale
          agreement with Color-Spec Technologies, Inc., a wholly owned

                                      F-12
<PAGE>


                          POCKETSPEC TECHNOLOGIES INC.
                   Notes to Consolidated Financial Statements


          subsidiary of PocketSpec Technologies Inc. The terms of the agreement
          conveyed all assets of its color technology business, including
          inventory, furniture, fixtures, equipment, supplies and assignment of
          lessee's interest in leases for office space, and copier, and all
          rights, title and interest in agreements as well as patents,
          trademarks, websites, and all beneficial interest of PocketSpec in its
          core operations and business. The purchase price was $1,768,627. A
          gain was not recognized on the sale due to affiliate status of CST.

     (b)  The Company has accounts payable to Cherry Creek Cottage, LLC (CCC) in
          the amount of $6,010, to Cynthia Kettl in the amount of $2,091, and to
          Frank Krupka, an employee, in the amount of $3,152. The Company has
          also paid CCC $26,103 for rent and has accrued rent in the amount of
          $28,497 due to CCC. Total rent for the year ended January 31, 2005 was
          $54,600. The Company has accrued wages totaling $80,123 which will be
          paid when cash comes available to compensate the employees for their
          work. Employees have received cash advances totaling $52,126 for the
          year ended January 31, 2005.

     (c)  Janet Brophy is The President, CEO, and board member, Cynthia Kettl is
          the Secretary/Treasurer, CFO, and board member, and Gregg Wagner is a
          board member. Officers and employees have paid expenses for the
          Company from time to time. For their payments, the Company intends to
          pay interest on the expense amounts that have been provided by the
          personnel.

     (d)  For the year ended January 31, 2005, the Company has short term loans
          totaling from affiliates totaling $58,103. The Company borrowed $2,200
          from MU, $1,100 from WM, $14,000 from B7B, $15,000 from GW, and
          $25,803 from FJK. The Company repaid MU $2,200, WM $1,100, B7 $3,850,
          and rolled GW's loan of $15,000 plus $2,000 points into a note payable
          totaling $17,000. The Company also paid CK $3,850 and paid principal
          payments on a note payable totaling $324. The Company also rolled into
          a note payable to Gregg Wagner an account payable in the amount of
          $8,865, converting his short term loans and a payable for a total of
          $25,864.

     (e)  The Company has notes payable to affiliates totaling $1,145,046. Terms
          of the notes are listed below.

          1.   Note payable to FJK in the amount of $136,826. The note consists
               of $82,500 as settlement of accrued wages, and an account payable
               in the amount of $54,326. The note bears interest at 8% starting
               October 1, 2004 with monthly payments in the amount of $1,434
               beginning November 1, 2004. The note matures October 1, 2007.
               Accrued interest through January 31, 2005 totals $3,709.

          2.   Note payable to JB in the amount of $206,455. The note consists
               of $5,415 of accrued interest, $54,535 from an account payable,
               $116,505 from accrued wages, and $6,000 from a short term loan,


                                      F-13
<PAGE>


                          POCKETSPEC TECHNOLOGIES INC.
                   Notes to Consolidated Financial Statements

               and $24,000 from a prior note payable balance. The note bears
               interest at 8% with monthly payments in the amount of $3,254
               starting November 1, 2004. The note matures October 1, 2007.
               Accrued interest through January 31, 2005 totals $5,597.

          3.   Note payable to Frank Krupka in the amount of $63,180. The note
               consists of $18,236 from an account payable, $43,944 from accrued
               wages, and $1,000 from a short term loan. The note bears interest
               at 8% with monthly payments in the amount of $1,207 starting
               November 1, 2004. The note matures October 1, 2007. Accrued
               interest through January 31, 2005 totals $1,713.

          4.   Note payable to Cynthia Kettl in the amount of $117,844. The note
               consists of $141 of accrued interest, $176 from an account
               payable, $81,000 from accrued wages, $12,650 from a short term
               loan, and $23,877 from a prior note payable. The note bears
               interest at 8% with monthly payments in the amount of $2,325
               starting November 1, 2004. The note matures October 1, 2007.
               Accrued interest through January 31, 2005 totals $3,195.


          5.   Note payable to Gregg Wagner in the amount of $29,733. The note
               consists of $944 of accrued interest, $629 from an account
               payable, and $28,160 from a prior note payable balance. The note
               bears interest at 8% with monthly payments in the amount of
               $1,402 starting November 1, 2004. The note matures October 1,
               2007. Accrued interest through January 31, 2005 totals $806.

          6.   Note payable to B7B in the amount of $411,730. The note combined
               two notes payable in the original amounts of $300,000 and
               $127,600. Both notes payable had accrued interest in the total
               amount of $46,980. A short-term loan from B7B in the amount of
               $37,150 was included in the combined note payable. $100,000 was
               separated from the note payable and made into two notes in the
               amount of $50,000 each, one payable to a current board member and
               the other to an individual. The combined note payable bears
               interest at 8% with monthly payments in the amount of $4,315
               starting November 1, 2004. The note matures October 1, 2007.
               Accrued interest through January 31, 2005 totals $11,162.

          7.   Note payable to Cherry Creek Cottage, LLC in the amount of
               $77,000. The note consists of $69,500 from a note payable it
               acquired from Cape Aloe Corp. and $7,500 from a short term loan.
               The note bears interest at 8% starting October 1, 2004 with
               monthly payments in the amount of $807 beginning November 1,
               2004. The note matures October 1, 2007. Accrued interest through
               January 31, 2005 totals $2,088.

          8.   Note payable to Wraith Moon House, LLC in the amount of $6,351.
               The note consists of $551 from accrued interest and $5,800 from a
               prior note balance. The note bears interest at 8% starting

                                      F-14
<PAGE>


                          POCKETSPEC TECHNOLOGIES INC.
                   Notes to Consolidated Financial Statements


               October 1, 2004 with monthly payments in the amount of $67
               beginning November 1, 2004. The note matures October 1, 2007.
               Accrued interest through January 31, 2005 totals $172.

          9.   Note payable to KBP in the amount of $45,927. The Company
               borrowed $36,350 from KBP for use as operating capital. The terms
               of the note required payment of $3,635 in interest points which
               was deducted from the $39,985 principal balance, netting the
               Company $36,350 cash. The note also combines accrued interest in
               the amount of $5,942 and bears interest at 8% with monthly
               payments in the amount of $480. The note matures October 1, 2006.
               Accrued interest through January 31, 2005 totals $1,245.

          10.  Note payable to Philip Robertson in the amount of $50,000. The
               note consists of $50,000 as part of the original B7B $127,600
               note that was combined with $300,000 note to B7B. The note bears
               interest at 8% starting October 1, 2004 with monthly payments in
               the amount of $523 beginning November 1, 2004. The note matures
               October 1, 2007. Accrued interest through January 31, 2005 totals
               $1,356.

               The Company repaid principal in the amount of $324 to CK during
               the year ended January 31, 2005. The Company combined $127,903 of
               accounts payable, accrued wages totaling $323,949, $59,973, split
               one note of $127,600 into two notes of $50,000 each, one payable
               to an affiliate, and combined the balance of $27,600 into one
               note, for a total amount of $589,425. The note to B7B for
               $127,600 was closed, a former affiliate's note (ARI) in the
               amount of $1,500 was changed to non-affiliate status, and $17,000
               from GW for a net conversion amount totaling $443,325.

     (f)  For the year ended January 31, 2005 the Company expensed interest from
          notes payable to affiliates totaling $70,385 and interest points
          totaling $10,864.

     (g)  Shareholders' Equity.

               The Company issued 9,903 shares to a former employee for
          services. The shares were valued at $.10 per share at the date of
          issuance, or a total amount of $980.

     (h)  The Company has agreed to pay GW $50 from each sale of its software
          device combined product known as ColorQA Pro Software System, and $50
          from each sale of its ColorQA Series 4 USB devices sold to various
          vendors, commencing after receipt of $5,150 from the pending sale of
          another 10 units. The payments will be accumulated and the total
          amounts shall be credited to the note payable to Gregg Wagner.

     (i)  On March 5, 2002 the Company entered into an office lease agreement
          with CCC. The agreement requires $4,000 per month rental of office
          space commencing April 1, 2002 and continuing

                                      F-15

<PAGE>

                          POCKETSPEC TECHNOLOGIES INC.
                   Notes to Consolidated Financial Statements


     (j)  through April 1, 2007. The agreement also requires payment of the
          yearly property tax. During the year ended January 31, 2005 the
          Company paid rent to CCC totaling $54,600. The Company had accrued
          rent payable to CCC in the amount of $28,497. The Company agreed to
          change the office space lease from a triple net lease to monthly and
          pay $5,100 per month starting August 1, 2004.

Note 7:  Transactions with non-affiliates

     (a)  The Company reworked a mold used in the production of its product line
          at a cost of $3,500.

     (b)  The Company has trade receivables totaling $18,191 and inventory net
          of reserve totaling $199,474. The inventory consists of finished
          products. The Company also has accounts payable in the amount of
          $39,623 and accrued liabilities totaling $6,496 for insurance and
          other expenses.

     (c)  The Company has notes payable to non-affiliates totaling $67,482. The
          notes and respective terms are listed below.


          1.   Note payable to ARI in the amount of $1,633. The note consists of
               accrued interest in the amount of $133 and a prior note amount of
               $1,500. The note bears interest at 8% starting October 1, 2004
               with monthly payments in the amount of $17. The note matures
               October 1, 2007. Accrued interest through January 31, 2005 totals
               $44.

          2.   Note payable to an individual in the amount of $15,949. The note
               consists of accrued interest in the amount of $1,449 and a prior
               note amount of $14,500. The note bears interest at 8% starting
               October 1, 2004 with monthly payments in the amount of $168. The
               note matures October 1, 2007. Accrued interest through January
               31, 2005 totals $432.

          3.   Note payable to and individual in the amount of $50,000. The note
               bears interest at 8% starting October 1, 2004 with monthly
               payments in the amount of $523. The note matures October 1, 2007.
               Accrued interest through January 31, 2005 totals $1,356.

     (d)  For the year ended January 31, 2005, the Company $37,000 from a
          non-affiliate (CAC) and repaid $19,800 to the same third party.

     (e)  During the year ended January 31, 2005 the Company converted $52,082
          into debt. $133 was from accrued interest along with a prior
          outstanding note in the amount of $1,500 due to ARI, $1,449 was from
          accrued interest due to an individual, and $50,000 was from part of
          the original B7B $127,600 note that was split between an individual
          and a director of the Company.

Note 8:  Operating leases

                                      F-16
<PAGE>

                          POCKETSPEC TECHNOLOGIES INC.
                   Notes to Consolidated Financial Statements


We have an operating lease for our office space located at 3225 East 2nd Ave.,
Denver, Colorado 80206. On March 5, 2002, we signed a lease, effective from
April 1, 2002 to April 1, 2007, with B7B an affiliate of an employee, F. Jeffrey
Krupka. We pay B7B $4,000 per month on a triple net lease, along with real
estate taxes, property insurance, maintenance and repairs, telephone expenses,
and other normal expenses of the property. Effective August 1, 2004 the Company
agreed to pay $5,100 monthly and change the lease from a triple net lease to
monthly.

We also have an operating lease for office copying equipment. The agreement was
signed on March 4, 2003 and is effective through November 4, 2007. Monthly lease
payments total $1,318.

Total monthly leases payments are approximately $6,418. Total amount paid for
the year ended January 31, 2005 and 2004 was $75,835 and $69,816 respectively.

Future minimum lease payments under the office and equipment leases described
above are approximately as follows.

                       Year                  Amount
                       ----               ----------
                       2006               $   78,588
                       2007                   78,588
                       2008                   29,790
                       2009                        0
                                          -----------
                                          $  186,966
                                          ===========


Note 9:  Shareholders' equity

     (a)  Related parties

               The Company issued 9,903 shares to a former employee for
          services. The shares were valued at $.10 per share at the date of
          issuance, or a total amount of $980.

     (b)  Non-affiliates

          1.   For the year ended January 31, 2005 the Company issued 275,000
               shares of common stock to individuals for services rendered. The
               value of the shares was expensed and recorded as stock based
               compensation in the amount of $16,500. The Company also issued

          2.   386,109 shares of common stock totaling $26,608, or approximately
               $.07 per share for the extinguishment of accounts payable

          2.   An individual exercised 500,000 stock options from a total option
               available from PocketSpec Technologies Inc. of 500,000 shares of
               its common stock as part of an agreement with a software writer


                                      F-17
<PAGE>


                          POCKETSPEC TECHNOLOGIES INC.
                   Notes to Consolidated Financial Statements


               in Italy. The options exercised had a total value of $4,935 for
               commissions on sales of software provided to the Company in
               accordance with an agreement and received cash totaling $22,794.
               Total value of all stock issuances to non-affiliates was $70,837.

          3.   For the year ended January 31, 2005 the Company cancelled 30,000
               shares of its treasury common stock. The stock was returned to
               the status of authorized and unissued.

     (c)  Shares issued to acquire property, prior year

          On May 31, 2002 we acquired 100% of the issued and outstanding common
          shares of Color-Spec Technologies, Inc. in a stock-for-stock
          acquisition. The transaction was approved on May 31, 2002 by
          shareholders of Color-Spec Technologies, Inc. Under the terms of the
          acquisition, each shareholder of Color-Spec Technologies, Inc.
          received one common share of our stock for each common share of stock
          owned by the Color-Spec Technologies, Inc. shareholder. As a result,
          we own all of the assets of Color-Spec Technologies, Inc., including
          their intellectual property. We issued a total of 8,316,353 restricted
          shares of our common stock in connection with this transaction.

          During the third quarter of our fiscal year ended January 31, 2003 the
          Company entered into a trademark license agreement with Solartech,
          During the third quarter of our fiscal year ended January 31, 2003 the
          Company entered into a trademark license agreement with Solartech,
          Inc. located in Michigan. The purpose of the agreement was to acquire
          use of its hand held solar meters for use with the Company's hand held
          color-measuring devices, primarily the BronzCheckTM product line.
          Terms of the agreement include a non-exclusive right to use the
          Licensed Mark in the promotion of solar meters for a period of ten
          (10) years. The property was acquired for 200,000 shares of common
          stock valued at $24,000 or $.12 per share.


Note 10: Income taxes

A reconciliation of U.S. statutory federal income tax rate to the effective rate
follows for the years ended January 31, 2005 and 2004.

                                                 Years ended
                                                  January 31,
                                                    2005           2004
                                                -------------   -----------

       U.S. statutory federal rate..........         -34.00%       -34.00%
       State income tax rate................          -3.06%        -3.30%
       Increase in valuation
          allowance.........................          37.06%        37.30%
                                                -------------   -----------
                                                       0.00%         0.00%
                                                =============   ===========

                                      F-18
<PAGE>


                          POCKETSPEC TECHNOLOGIES INC.
                   Notes to Consolidated Financial Statements



At January 31, 2005, the Company has a net operating loss carryforward for
federal income tax purposes of approximately $5,976,187, which was fully allowed
for in the valuation allowance of $2,292,455. The valuation allowance offsets
the net deferred tax asset for which there is no assurance of recovery. The
change in the valuation allowance for the years ended January 31, 2005 and 2004
was $176,455 and $495,000, respectively. Due to the uncertainty of the ultimate
utilization of the net operating loss carryforward, no tax benefit for losses
has been provided by the Company in the accompanying financial statements. The
net operating loss carryforward will expire through the year 2025.

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

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

Note 11: Commitments

The Company does not have any employment agreements with Mr. Krupka, Ms. Kettl,
and Ms. Brophy. Mr. All employment agreements were terminated by the Company and
accepted by the officers during the year ended January 31, 2005.

Note 12: Concentrations

None.

Note 13: Reclassification

Certain amounts in the prior year financial statements have been reclassified
for comparative purposes to conform with the presentation in the current year
financial statements.


Note 14: Subsequent events.

On February 23, 2005 the Company filed a Statement of Information for PocketSpec
Technologies Inc. The filing gave notice for a shareholder

                                      F-20
<PAGE>


                          POCKETSPEC TECHNOLOGIES INC.
                   Notes to Consolidated Financial Statements


meeting to be held on March 29, 2005 in order to increase the number of
authorized common stock shares from 50,000,000 to 900,000,000. The meeting was
held and the shareholders authorized the increase by a 52% vote.



ITEM 8. DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

We did not have any disagreements on accounting and financial disclosures with
our present accounting firm during the reporting period. On June 5, 2002, our
Board of Directors voted to change our Certifying Accountants from Cordovano and
Harvey, P.C. to Hein & Associates, LLP. On June 6, 2002 Hein & Associates, LLP
finalized their client background check and formally accepted us as a client for
the fiscal 2003 audit. Cordovano and Harvey, P.C. had rendered opinions on our
audit for the past two years. The change in Certifying Accountants was made so
that we could utilize the specific accounting experience and expertise of Hein &
Associates, LLP. On April 2, 2005, the offices of PocketSpec Technologies Inc.
Changed Certifying Accountants from Hein & Associates, LLP to Cordovano and
Honeck LLP. The change in Certifying Accountants was made so that we could
reduce audit costs and receive accounting experience and the expertise of
Cordovano and Honeck LLP.

There were no  disagreements  between us and  Hein & Associates, LLP with
respect  to  our  accounting   principles  or  practices,   financial  statement
disclosure  or audit scope or  procedure,  which,  if not resolved to the former
Certifying Accountant's  satisfaction,  would have caused them to make reference
to the subject matter of the  disagreement in connection  with their report.  We
have authorized Hein and Associates, LLP to respond fully to inquiries of
Cordovano and Honeck LLP concerning our financial statements.

                                    PART III

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

     Our Directors and Executive Officers, their ages and positions held with us
as of January 31, 2005 are as follows:


                                           YEAR BECAME            POSITION
      NAME                 AGE              DIRECTOR              IN COMPANY
-----------------          ---              -----------           -----------

Janet Brophy               49               2001                  President,
                                                                  Director &
                                                                  Chairman of
                                                                  he Board

Cynthia Kettl              57               2000                  Secretary,
                                                                  Treasurer &
                                                                  Director

                                       21
<PAGE>


Gregg Wagner               46               2002                  Director

Philip Robertson           51               2003                  Director

Our Directors will serve in such capacity until our next annual meeting of
shareholders and until their successors have been elected and qualified. The
officers serve at the discretion of our Directors. There are no family
relationships among our officers and directors, nor are there any arrangements
or understandings between any of our directors or officers or any other person
pursuant to which any officer or director was or is to be selected as an officer
or director.

Janet Brophy. Ms. Brophy has been our President and CEO since July, 2003. She
previously served as Secretary and has been one of our Directors since May 2001.
From 1988 to 1998, she was involved in the off site management of apartment
buildings in the Denver, Colorado area and other real estate activities. She was
a homemaker from 1998 until she joined us in May 2001. She has been involved in
real estate oriented businesses since 1978. Ms. Brophy attended Arizona State
University.

Cynthia Kettl. Ms. Kettl has been our Treasurer and CFO since September 1999.
She has been involved with Platinum Financial Fund, LLC, a private investment
company, since 1998 and was employed by Krupka and Associates, LLC, a private
investment company from October 1995 to 1998. Ms. Kettl received a Bachelor's
degree in Business Management from Metropolitan State College in 1981, a
Bachelor's degree in Accounting from Metropolitan State College in 1998, and an
Associates Degree in Business from Community College North Denver in 1977.

Gregg Wagner. Mr. Wagner has been one of our Directors since September 2002.
From 1998 to the present, he has been the owner and design consultant for LOMA,
Incorporated, a private firm, which produces optical products. From 1993 to
1998, he was Senior Mechanical Design Engineer for IVI Corporation, a private
mechanism, illuminator, and optics design firm. He has been involved with
optical design since 1979. He holds one patent and has five patents pending in
the optical design area. Mr. Wagner attended the University of Colorado.

Philip Robertson. Mr. Robertson has been one of our Directors since September
2003. Mr. Robertson in the Chief Executive Officer of Premier Manufacturing and
Supply Chain Service, Inc. located in Longmont, Colorado. Mr. Robertson's work
experience Spans 26 years and includes various Vice-Presidency positions,
Managing Director, and other Director and Manager level positions in materials,
operations, and business Development companies. His educational background
includes an M.B.A. from San Jose State University and an undergraduate degree in
Business Management.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934.

Section 16(a) of the Securities Exchange Act of 1934 (the "34 Act") requires Our
officers and directors and persons owning more than ten percent of the
Outstanding Common Stock, to file initial reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC"). Additionally,
Item 405 of Regulation S-B under the 34 Act requires us to identify in its Form
10-KSB and proxy statement those individuals for whom one of the above
referenced reports was not filed on a timely basis during the most recent fiscal
year or prior fiscal years. Given these requirements, we have the following
report to make under this section. None of our officers or directors made timely

                                       22
<PAGE>


Form 3 or 4  filings.  Mr.  Robertson  did not  make  either  a Form 3 or Form 4
filing. Ms. Kettl did not make a timely Form 5 filing.

AUDIT COMMITTEE AND FINANCIAL EXPERT

Our board of  directors  has  established  an audit  committee  comprised of Ms.
Cynthia  Kettl and Mrs.  Janet Brophy.  Ms. Kettl has the  requisite  education,
background or experience to be considered an "audit committee  financial expert"
as  that  term is  defined  by the  SEC.  Mrs.  Brophy  and  Ms.  Kettl  are not
independent of management.

ITEM 10. EXECUTIVE COMPENSATION.

The following table sets forth the Summary Compensation Table for the Chief
Executive Officer. Except as indicated in the footnotes to this section, no
other compensation not covered in the following table was paid or distributed by
the Company to such persons during the period covered. No executive officer
received compensation in excess of $100,000 during the past fiscal year.

<TABLE>
                           SUMMARY COMPENSATION TABLE
<CAPTION>

                               Annual Compensation                                 Long Term Compensation
                           ---------------------------                          ---------------------------
                                 Awards Payouts

Name                                                            Other
Restricted                         All
And                                           Salary            Annual            Stock            LTIP
Other
Principal                                  Compensation         Bonus          Compensation       Award(s)
Options/
Position                       Year            ($)                ($)             ($)
----------                 ----------       ----------        ----------        ----------       ----------
<S>                        <C>              <C>               <C>               <C>              <C>
Janet                            2004        $     -0-
Brophy                          2003        $  112,190              --
Chairman (1)                    2002        $   96,300              --
Chairman (1)                    2001        $   14,017              --
                                2000        $     -0-               --
</TABLE>

-------------------
(1)  Ms. Brophy became an officer and director in 2001. She became our Chairman
     in 2003. No payment for wages was paid to Ms. Brophy. All wages were
     accrued for the year ended January 31, 2004. MS. Brophy's employment
     agreement was terminated during the year ended January 31, 2005.


We have no compensation committee, retirement, pension, sharing, stock option,
insurance or other similar programs but plan to establish such programs in the
future, although there are no definitive plans to do so at this time.

We do not pay members of our Board of Directors any fees for attendance or
similar remuneration, but reimburse them for any out-of-pocket expenses incurred
by them in connection with our business.

2003 STOCK COMPENSATION PLAN 1

We have a current registration statement on Form S-8 for our 2003 Stock
Compensation Plan I. A total of 1,000,000 shares have been registered under the

                                       23
<PAGE>


plan. We have issued a total of 674,826 shares and no options under this plan as
of January 31, 2004.

Code of Ethics

The Company endeavors to adhere to the requirements as dictated by the SEC and
provide assurances to outside investors and interested parties that the
Company's officers, directors and principal financial officer adhere to a
reasonably responsible code of ethics and as such, we have adopted code of
ethics that applies to our executive officers, including Mrs. Brophy, our Chief
Executive Officer and President, and Ms. Kettl, our Chief Financial Officer.


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

     The following sets forth the number of shares of our $.0.001 par value
common stock beneficially owned by (i) each person who, as of January 31, 2004,
was known by us to own beneficially more than five percent (5%) of its common
stock; (ii) the individual Directors of the Registrant and (iii) the Officers
and Directors of the Registrant as a group. As of January 31, 2004, there were a
total of 33,094,360 shares issued and outstanding.

  NAME AND ADDRESS                  AMOUNT AND NATURE OF             PERCENT
 OF BENEFICIAL OWNER             BENEFICIAL OWNERSHIP (1)(2)          CLASS
-----------------------          ---------------------------         -------

Cynthia Kettl                               775,829                    2.08%
3225 East 2nd Ave
Denver, Colorado 80206

Janet Brophy (3)                          5,687,540                   15.26%
6195 South Akron Way
Greenwood Village, Colorado 80111

Gregg Wagner                              1,078,785                    2.89%
1368 Cedar Avenue
Boulder, CO 80304

Philip Robertson (4)                        100,000                    0.27%

All Officers and Directors as a Group     7,642,154                   20.51%
(four persons)

---------------------
     (1)  All ownership is beneficial and on record, unless indicated otherwise.

     (2)  Beneficial owners listed above have sole voting and investment power
          with respect to the shares shown, unless otherwise indicated.

     (3)  Includes 1,404,444 shares owned of record by Ms. Brophy. Includes
          shares owned of record by B7 Brand, LLC. Asset Realization, Inc.,
          Advanced Gas & Oil Corp, Cape Aloe Corp, are entities formerly under
          common control of Ms. Brophy. The Krupka-Brophy Profit Sharing Plan is
          an entity controlled by Ms. Brophy. Includes 15,536 shares owned
          jointly by Mr. Krupka and Ms. Brophy, but does not include shares
          owned by the Krupka-Murr Gift and Education Foundation, for which Ms.

                                       24
<PAGE>

          Brophy disclaim beneficial ownership. Does not include any shares
          owned by Ms. Brophy's children, for which she disclaims any beneficial
          ownership.

     (4) Includes shares owned jointly by Mr. Robertson and his wife.
---------------------

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Our business office is located at 3225 East 2nd Ave., Denver, Colorado
80206. On March 5, 2002, we signed a lease, effective from April 1, 2002 to
April 1, 2007, with an organization affiliated with one of our employees, F.
Jeffrey Krupka. We pay this organization $4,000 per month on a triple net lease,
Along with real estate taxes, property insurance, maintenance and repairs,
telephone expenses, and other normal expenses of the property. We have granted
Mr. Krupka the non-exclusive use of the leased property for himself and as an
office location for his other business interests. Effective August 1, 2004 the
Company agreed to pay $5,100 monthly and change the lease from a triple net
lease to monthly.

     We have terminated  previous  agreements with CD ROM, USA, Inc. and CD ROM,
Inc., which are private  companies owned by Mr. Roger Hutchison,  who was one of
our directors at the time.  Under our agreement with CD ROM, Inc., he remains an
approved supplier of products.

     We did not pay our Treasurer, Ms. Kettl, during the year ended January 31,
2005. All wages owing Ms. Kettl have been accrued and will be paid when cash
becomes available, for accounting services during the 2005 fiscal year.

     Asset Realization, Inc. (ARI), B7 Brand, LLC (B7B), Cape Aloe Corp., (CAC),
Cherry Creek Cottage, LLC (CCC), Color-Spec Technologies,  Inc., (CST), Krupka &
Associates, LLC (K&A), F. Jeffrey Krupka (FJK), Janet Brophy (JB), Krupka-Brophy
Profit Sharing Plan (KBP), and Platinum Financial Fund, LLC (PFF), Wraith Moon
House, LLC (WMH) are affiliates of our Company by either common ownership or by
common management. Asset Realization, Inc. (ARI) and Cape Aloe Corp., (CAC), are
no longer considered affiliates as of January 31, 2004.

     On May 31, 2002 we acquired 100% of the issued and outstanding common
shares of Color-Spec Technologies, Inc. in a stock-for-stock acquisition. The
transaction was approved on May 31, 2002 by shareholders of Color-Spec
Technologies, Inc. Under the terms of the acquisition, each shareholder of
Color-Spec Technologies, Inc. received one common share of our stock for each
common share of stock owned by the Color-Spec Technologies, Inc. shareholder. As
a result, we own all of the assets of Color-Spec Technologies, Inc., including
their intellectual property. We issued a total of 8,316,353 restricted shares of
our common stock in connection with this transaction. As PockeSpec Technologies
Inc. and Color-Spec Technologies, Inc. were under common control, the
acquisition was recorded at historical cost and the historical results of
operations have been combined for all periods presented.

     During the third quarter of our fiscal year ended January 31, 2003 the
Company entered into a trademark license agreement with Solartech, Inc. located
in Michigan. The purpose of the agreement was to acquire use of its hand held
solar meters for use with the Company's hand held color-measuring devices,

                                       25
<PAGE>


primarily the BronzCheckTM product line. Terms of the agreement include a
non-exclusive right to use the Licensed Mark in the promotion of solar meters
for a period of ten (10) years. The property was acquired for 200,000 shares of
common stock valued at $24,000 or $.12 per share.


ITEM 13. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The Audit Committee reviews and determines whether specific projects or
expenditures with our independent auditors, Cordovano and Honeck LLP potentially
affect their independence. The Audit Committee's policy requires that all
services the Company's independent auditor may provide to the Company, including
audit services and permitted audit-related services, be pre-approved in advance
by the Audit Committee. In the event that an audit or non-audit service requires
approval prior to the next scheduled meeting of the Audit Committee, the auditor
must contact the Chairman of the Audit Committee to obtain such approval. The
approval will be reported to the Audit Committee at its next scheduled meeting.

The following table sets forth the aggregate fees billed to us by HEIN &
ASSOCIATES LLP for the years ended January 31, 2005 and January 31, 2004:

                                                  2005              2004
                                               ---------         ---------
Audit fees (1)                                  $14,932 (1)       $ 50,168
Audit-related fees (2)                            --    (2)             --
Tax fees (3)                                      --    (3)             --
All other fees                                    --                    --
                                               ---------         ---------
Total audit and non-audit fees                 $ 14,932            $ 50,168
                                               =========          =========

-----------------------
(1)  Includes fees for professional services rendered for the audit of
     PocketSpec Technologies Inc.'s annual financial statements and review of
     PocketSpec Technologies Inc.'s annual report on Form 10-KSB for the year
     2005 and 2004 for reviews of the financial statements included in
     PocketSpec Technologies Inc.'s quarterly reports on Form 10-QSB for the
     first three quarters of fiscal 2005.

(2)  Includes fees billed for professional services rendered in fiscal 2005 and
     2004, in connection with acquisition planning, due diligence and related
     SEC registration statements.

     (3)  Includes fees billed for professional services rendered in fiscal 2005
          and 2004, in connection with tax compliance (including U.S. federal
          and state returns) and tax consulting.
-----------------------

                                     PART IV

ITEM 14. CONTROLS AND PROCEDURES.

     (a)  Janet Brophy, who serves as the Company's president and chief
          executive officer, and Cynthia Kettl, who serves as chief financial
          officer, after evaluating the effectiveness of the Company's
          disclosure controls


                                       26
<PAGE>


     (b)  and procedures as of the filing date of this quarterly report (the
          "Evaluation Date") concluded that as of the Evaluation Date, the
          Company's disclosure controls and procedures were adequate and
          effective to ensure that information required to be disclosed by the
          Company in reports that it files or submits under the Exchange Act is
          recorded, processed, summarized and reported as specified in the SEC's
          rules and forms.

     (c)  Changes in internal control over financial reporting. There were no
          changes in the Company's internal control over financial reporting for
          the year ended January 31, 2005 that have materially affected, or are
          reasonably likely to materially affect, internal control over
          financial reporting.

ITEM 15. EXHIBITS AND REPORTS ON FORM 8-K.

The following financial information is filed as part of this report:

     (1)  FINANCIAL STATEMENTS

     (2)  SCHEDULES

     (3)  EXHIBITS. The following exhibits required by Item 601 to be filed
          herewith are incorporated by reference to previously filed documents:


EXHIBIT NO.       DESCRIPTION
-----------    -----------------------------------------------------------------


       3A+     Articles of Incorporation for Monument Galleries, Inc.

       3B+     Bylaws for Monument Galleries

       3C+     Articles of Amendment changing the name to Real Estate
               Opportunities, Inc.

       3D+     Amended Bylaws for Real Estate Opportunities, Inc.

       3E      Amended and Restated Articles of Incorporation.

      10.1+    Warranty Deed dated December 27, 2000 for acquisition of Denver
               real estate

      10.2+    Deed of Trust dated December 15, 2000 for acquisition of Denver
               real estate.

      10.3+    Purchase and Sale Agreements for Frederick, Colorado real
               estate between Real Estate Opportunities, Inc. and
               Krupka-Brophy Profit Sharing Plan.

      10.4+    Combined Purchase Agreement and Settlement Agreement for
               Firestone, Colorado real estate between Real Estate
               Opportunities, Inc. and Krupka- Brophy Profit Sharing Plan
               dated February 3, 2000.

                                       27
<PAGE>


      10.5+    Modification of Promissory Note related to Firestone, Colorado
               real estate transaction.

      10.6 +   Technology License Agreement from Color-Spec Technologies, Inc.

      10.7 +   Trademark License Agreement from Color-Spec Technologies,
               Inc.

      10.8 +   Employment Agreement with F. Jeffrey Krupka.

      10.9 +   Employment Agreement with Janet Brophy.

      10.10+   Employment Agreement with Cynthia Kettl.

      10.11+   Employment Agreement with Gregg Wagner.

      10.12+   Wrigley Agreement

      10.13+   Tyger POS Agreement

      10.14+   Amendment to Agreement

      10.15+   Solartech Agreement

      10.16+   Solartech License Agreement

      10.17+   2003 Employment Agreement with Jeff Krupka

      10.18+   2003 Employment Agreement with Cynthia Kettl

      31.1     Certification of CEO pursuant to Sec. 302
      31.2     Certification of CFO pursuant to Sec. 302
      32.1     Certification of CEO pursuant to Sec. 906
      32.2     Certification of CFO pursuant to Sec. 906


 + Previously Filed

     (c)  REPORTS ON FORM 8-K. We filed the following report on Form 8-K during
          the fourth quarter of the fiscal year ended January 31, 2005

          December 17, 2004 Investment Banking Agreement, Sloan Securities



                                   SIGNATURES

In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



PocketSpec Technologies Inc.

CHIEF EXECUTIVE OFFICER



Dated: MAY 13, 2005                                 By:  /s/ JANET BROPHY
       ------------                                     ----------------------
                                                         Janet Brophy
                                                         President


CHIEF FINANCIAL OFFICER

                                       28


Dated: MAY 13, 2005                             By:   /s/ CYNTHIA KETTL
       --------------                                 ----------------------
                                                      CYNTHIA KETTL
                                                      Chief Financial Officer

                                       29




PocketSpec Technologies Inc.

CHIEF EXECUTIVE OFFICER

Dated: MAY 13, 2005                                 By: /s/ JANET BROPHY
       ------------                                     ----------------------
                                                         Janet Brophy
                                                         President

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

CHIEF FINANCIAL OFFICER

Dated: MAY 13, 2005                                 By:  /s/ CYNTHIA KETTL
       --------------                                    ----------------------
                                                         CYNTHIA KETTL
                                                         Treasurer


Dated: MAY 13, 2005                                 By:  /s/ PHILIP ROBERTSON
       --------------                                    ----------------------
                                                         Philip Robertson
                                                         Director

Dated: MAY 13, 2005                                 By:  /s/ CYNTHIA KETTL
       --------------                                    ----------------------
                                                         CYNTHIA KETTL
                                                         Director

Dated: MAY 13, 2005                                 By:  /s/ JANET BROPHY
       --------------                                    ----------------------
                                                         JANET BROPHY
                                                         Director


Dated: MAY 13, 2005                                By:   /s/ GREGG WAGNER
       --------------                                    ----------------------
                                                         GREGG WAGNER
                                                         Director
                                                         Chief Executive Officer

                                       30