**U.S. SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549**

**FORM 10-KSB**

**x**       **Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**

**For the fiscal year ended December 31, 2004**

** ̈**       **Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**

**Commission File Number 0032939**

**Viper Networks, Inc.****(Exact Name of Registrant as specified in its Charter)**

| **Utah**                                                                                                                                                                                                                                                                                                                                                                           | **                    ** | **87-0140279**                                                                                                                                                                                                                                                                                                                                                                     |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **(State or other jurisdiction of incorporation or organization)**                                                                                                                                                                                                                                                                                                                 |                                                                                                                              | **(IRS Employer Identification No.)**                                                                                                                                                                                                                                                                                                                                              |
| **                                                             ** | ** **                                                                                                                   | **                                                             ** |
| **10373 Roselle Street, Suite 170 San Diego, California**                                                                                                                                                                                                                                                                                                                          |                                                                                                                              | **92121**                                                                                                                                                                                                                                                                                                                                                                          |
| **(Address of Principal Executive Offices)**                                                                                                                                                                                                                                                                                                                                       |                                                                                                                              | **(Zip Code)**                                                                                                                                                                                                                                                                                                                                                                     |

**Registrant’s Telephone Number, including area code: (858) 452-8737**

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

| **Title of Each Class**       | **                    ** | **Name of Exchange on Which Registered** |
|-------------------------------|------------------------------------------------------------------------------------------------------------------------------|------------------------------------------|
| Common Stock, $.001 par value |                                                                                                                              |                                          |

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

                Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange 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 ̈ No x

                Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is not contained herein, and will notbe contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. ̈

                State issuer's revenues for its most recent fiscal year: $4,612,753.

                The aggregate market value of the voting stock held by non-affiliates   (30,865,678 shares of Common Stock) was $21,021,382as of December 31, 2004.  The stock price for computation purposes was $0.30. This value is not intended to be a representation as to the value or worth of the Registrant's shares of Common Stock.  The number of shares of non-affiliates of the Registranthas been calculated by subtracting shares held by persons affiliated with the Registrant from outstanding shares.  The number of shares outstanding of the Registrant's Common Stock as of December 31, 2004 was 121,222,899.

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**APPLICABLE ONLY TO CORPORATE ISSUERS**

                State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date.  Numberof Common Shares outstanding as of December 31, 2004 was 121,222,899.

**Documents Incorporated by Reference:**

                If the following documents are incorporated by reference, briefly describe them and identify the part of the Form 10-KSB (e.g., Part I,Part II, etc.) into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 (“Securities Act”). The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 31, 2004).

**INDEX TO ANNUAL REPORT ON FORM 10-KSB**

|                               |                                                                                                                                                              | **Page No.** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------|
| **PART I**                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                   |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                   |
|           Item 1.                                                                                   | DESCRIPTION OF BUSINESS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 3                 |
|           Item 1A.                                                                                                           | FACTORS THAT MAY AFFECT FUTURE RESULTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 14                |
|           Item 2.                                                                                                            | DESCRIPTION OF PROPERTY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 18                |
|           Item 3.                                                                                                            | LEGAL PROCEEDINGS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 18                |
|           Item 4.                                                                                                            | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 19                |
| ** **                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                   |
| **PART II**                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                   |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                   |
|           Item 5.                                                                                                            | MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 19                |
|           Item 6.                                                                                                            | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 25                |
|           Item 7.                                                                                                            | FINANCIAL STATEMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 28                |
|           Item 8.                                                                                                            | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 28                |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                   |
| **PART III**                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                   |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                   |
|           Item 9.                                                                                                            | DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSON; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 29                |
|           Item 10.                                                                                                           | EXECUTIVE COMPENSATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 31                |
|           Item 11.                                                                                                           | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 33                |
|           Item 12.                                                                                                           | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 33                |
|           Item 13.                                                                                                           | EXHIBITS AND REPORTS ON FORM 8-K                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 34                |
|           Item 14.                                                                                                           | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 35                |
| ** **                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| SIGNATURES                                                                                                                                                                     | 36                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| INDEX TO CONSOLIDATED FINANCIAL STATEMENTS                                                                                                                                     | F-1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                                                                                                                             | F-2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

**Available Information**

                Information about our Company is available to the public on our website (www.vipernetworks.com).We file reports with the Securities andExchange Commission, or SEC, which are available on our website. These reports include annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports, each of which is provided on our website after weelectronically file such materials with or furnish them to the SEC. You can also read and copy any materials we file with the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. You can obtain additional information about theoperation of the Public Reference Room by calling the SEC at 1.800.SEC.0330. In addition, the SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC,including us.

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**PART I**

                THIS FORM 10-KSB CONTAINS "FORWARD-LOOKING STATEMENTS" THAT CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING WORDS SUCH AS "BELIEVES,""EXPECTS," "MAY," "WILL," "SHOULD," OR "ANTICIPATES," OR THE NEGATIVE OF THESE WORDS OR OTHER VARIATIONS OF THESE WORDS OR COMPARABLE WORDS, OR BY DISCUSSIONS OF PLANS OR STRATEGY THAT INVOLVE RISKS AND UNCERTAINTIES.  MANAGEMENT WISHES TO CAUTION THE READERTHAT THESE FORWARD-LOOKING STATEMENTS, INCLUDING,  BUT NOT LIMITED TO, STATEMENTS REGARDING THE COMPANY’S MARKETING PLANS, GOALS, COMPETITIVE AND TECHNOLOGY TRENDS AND OTHER MATTERS THAT ARE NOT HISTORICAL FACTS ARE ONLY PREDICTIONS.  NO ASSURANCESCAN BE GIVEN THAT SUCH PREDICTIONS WILL PROVE CORRECT OR THAT THE ANTICIPATED FUTURE RESULTS WILL BE ACHIEVED.  ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY EITHER BECAUSE ONE OR MORE PREDICTIONS PROVE TO BE ERRONEOUS OR AS A RESULT OF OTHER RISKS FACING THECOMPANY. FORWARD-LOOKING STATEMENTS SHOULD BE READ IN LIGHT OF THE CAUTIONARY STATEMENTS AND IMPORTANT FACTORS DESCRIBED IN THIS FORM 10-KSB, INCLUDING, BUT NOT LIMITED TO "THE FACTORS THAT MAY AFFECT FUTURE RESULTS" SHOWN AS ITEM 1A AND IN MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. THE RISKS INCLUDE, BUT ARE NOT LIMITED TO, THE RISKS ASSOCIATED WITH AN EARLY-STAGE COMPANY THAT HAS ONLY A LIMITED HISTORY OF OPERATIONS, THE COMPARATIVELY LIMITED FINANCIAL RESOURCES OF THECOMPANY, THE INTENSE COMPETITION THE COMPANY FACES FROM OTHER ESTABLISHED COMPETITORS, TECHNOLOGICAL CHANGES THAT MAY LIMIT THE ABILITY OF THE COMPANY TO MARKET AND SELL ITS PRODUCTS AND SERVICES OR ADVERSELY IMPACT THE PRICING OF THESE PRODUCTS AND SERVICES, ANDMANAGEMENT THAT HAS ONLY LIMITED EXPERIENCE IN DEVELOPING SYSTEMS AND MANAGEMENT PRACTICES.  ANY ONE OR MORE OF THESE OR OTHER RISKS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE FUTURE RESULTS INDICATED, EXPRESSED, OR IMPLIED IN SUCH FORWARD-LOOKINGSTATEMENTS.  WE UNDERTAKE NO OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENT TO REFLECT EVENTS, CIRCUMSTANCES, OR NEW INFORMATION AFTER THE DATE OF THIS FORM 10-KSB OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED OR OTHER SUBSEQUENT EVENTS.

##### **ITEM 1.     DESCRIPTION OF BUSINESS**

**BACKGROUND**

                The Company was incorporated under the laws of Utah on February 28, 1983 under the name Tinglefoot Mining, Inc. for the purpose ofdeveloping certain mining operations. The Company was unsuccessful in its attempts to acquire the Tinglefoot Mine, was unable to establish an alternative business operation and remained dormant until 1994, when a new management team took office and changed thepurpose of the Company’s business to pursue investment opportunities in Mexico in 1995.

                On December 20, 1995, the Company changed its name to Mexico Investment Corporation and effected a reverse split of its common stock ona 1 for 40 basis.  On February 26, 1996, the Company changed its name to Baja Pacific International, Inc.

                On April 30, 1998, the Company’s shareholders approved the following: (1) the execution of an exclusive agreement withTri-National Development Corp., a Wyoming corporation headquartered in San Diego, California ("Tri-National") to service all of their telecommunication needs at Tri-National’s Hills of Bajamar resort; (2) the acquisition of a 5% stake in Future TelCommunications, a Vancouver, British Columbia telecommunications company in exchange for 200,000 common shares; and (3) a change in the Company’s name to Taig Ventures, Inc. and the Company’s Articles of Incorporation were amended on October 7,1998.  These actions were taken in furtherance of the Company’s intentions to work with Tri-National to provide a massive upgrade of its existing telecommunication facilities and the Company believed that a new management team would be better suited toexecute this new business model as well as pursue other telecommunications projects.

                In November 2000, the Company entered into a Securities Purchase Agreement and Plan of Reorganization (the "California Reorganization")with Viper Networks, Inc., a California corporation ("Viper-CA").  Viper-CA was

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formed on September 14, 2000. Under the terms of the California Reorganization, the Company exchanged 36,000,000 shares of its Common Stock for all of the then-outstanding common shares of Viper-CA and Viper-CA became awholly-owned subsidiary of the Company.  Viper-CA’s business was that of an application service provider.  The Company then changed its name to Viper Networks, Inc. and the Company effected a complete change of the Company and its Board of Directorsand officers to position the Company to execute a new business strategy as described below.

                In August 2003, the Company acquired Coliance Communications (“Coliance”) in exchange for the Company’s issuance ofan aggregate of 17,000,000 shares of the Company’s Common Stock and 450,000 shares of the Company’s Preferred Stock. All of the Preferred Stock was later converted into notes payable. As a result of this acquisition, Ronald G. Weaver and Stephen D. Youngfrom Coliance became Directors of the Company. 

                On October 15, 2003, the Company entered into a Securities Merger Agreement (the “Mid-Atlantic Agreement”) with FaridShouekani in connection with the purchase of all the common stock (the “Mid-Atlantic Shares”) of Mid-Atlantic International, Inc., a Michigan corporation (“Mid-Atlantic”) from Farid Shouekani.  Under the terms of the Mid-AtlanticAgreement, the Company acquired all of Mr. Shouekani’s Mid-Atlantic Shares in exchange for: (1) $50,000 cash within 21 days of Closing; and (2) an aggregate of 7,235,000 shares of the Company’s Common Stock with 4,235,000 of these shares (the“Special Shares”) subject to certain redemption rights (the “Redemption Rights”), at the option of Mr. Shouekani at a redemption price of $0.17 per Special Share as provided by the Mid-Atlantic Agreement. All of the Redemption Rights expire onJanuary 15, 2003 and are secured by Mid-Atlantic’s assets.  As of December 31, 2004, Mr. Shouekani exercised his Redemption Rights over 1,802,000 Special Shares. The remaining 2,433,000 Special Shares were canceled and returned to treasury.

                On January 30, 2004, the Company entered into a Securities Merger Agreement (the “Adoria Agreement”) with James Balestraci,the sole holder of the membership interests of Adoria Communications, LLC, a Delaware limited liability company (“Adoria”).  Under the terms of the Adoria Agreement, the Company acquired all of Mr. Balestraci’s membership interests in Adoria inexchange for: (1) cash payments totaling $500,000 and (2) the Company’s issuance of 2,500,000 shares of the Company’s Common Stock with 500,000 of these shares (the “Performance Shares”) of the Company’s Common Stock subject to thecondition that Adoria’s financial results in 2004 must equal or exceed its financial results in 2003.  In the event that Adoria’s financial results in 2004 do not equal or exceed its 2003 results, the Performance Shares are to be cancelled andreturned as treasury stock.

                During May 2004, the Company acquired an aggregate 50% of the membership interests of Brasil Communications, LLC (“BrasilLC”) in two concurrent transactions with Software Innovations, Inc. (“SII”) and Brasil LLC.  Brasil LLC owns and operates a VoIP network with licenses and operations in Brazil and El Salvador.  As consideration for the purchase, theCompany issued 2,000,000 shares of the Company’s common Stock to SII and $350,000 payable in cash to Brasil LLC.  Management intends to expand the Company’s global VoIP network and hardware sales into Latin America through this investment.

                With these changes, the Company re-focused its attention on providing Internet telephony services, the development of an infrastructurefor providing services to its Web-based customers (the "Graphic User Interface") and, eventually, the construction of Voice-over-Internet Protocol ("VoIP") network for business, institutions, and Internet Service Providers ("ISPs").  The Company’smanagement team and Board of Directors determined that the goals for use of the Mexico property purchased from Tri-National and construction of telecommunications facilities to the Hills of Bajamar are not within the Company’s current capabilities.  (Asused herein and unless otherwise stated, the term "Company,” "we, “and "our, " refers to the Company, Mid-Atlantic, Adoria, and Viper-CA, all subsidiaries.)

****

**Business of the Company**

                We are a leading provider of Voice over Internet Protocol, or VoIP, communications products and services. Since we began VoIPoperations in 2000, we have evolved from a pioneer in selling VIPER CONNECT, a “push to talk” technology developed by ITXC, to a next generation provider of high-quality telecommunication services and technology for internet protocol, or IP telephonyapplications. We utilize our VoIP technology to transmit digital voice communications over data networks and the Internet.

                 We branded and shipped our first VoIP product, our flagship, vPhone, in June of 2003, and acquired our first global VoIP networkwith gateways and a billing server in Detroit, Michigan in October of 2003, through our acquisition of Mid-Atlantic International, Inc. Our gateways are located as follows: four in Brazil, one in El Salvador, one in Egypt, one in Ghana, one in India, one in Israel,one in Lebanon, one in Saudi Arabia, one in Sri Lanka, one in Syria, one in the United Kingdom, six in Western Europe, two in Eastern Europe.

                In fiscal 2004 substantially all of the Company's revenues were generated from the sale and provisioning of VoIP products, services andtechnology with approximately 90% of our sales revenues derived from the sale of

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services and 10% from the sale of products as described in the section entitled, “Products and Services” below.  We do not own or hold any proprietary or intellectual property rights to the technology used inthe vPhone product.

                Our corporate structure is primarily organized around three wholly owned operating subsidiaries:

                Mid-Atlantic International, Inc., which we acquired on October 15, 2003, and Adoria Communications, LLC, which we acquired on January30, 2004, sell wholesale minutes on our VoIP network to other telecommunications providers through our internal sales force. We have de-emphasized our traditional carrier services, and to that end, we have attempted to limit our activity to selected carriers,particularly those with which we have bilateral carrier agreements.

                Viper Networks, Inc., which we acquired in November 2000, offers an alternative to traditional telephone companies through its flagshipproduct, the “vPhone”. The vPhone allows voice telephone calls to be placed to any phone number in the world at a substantial savings.  As of December 31, 2004, we had approximately 12,000 active accounts using our vPhone.

**Industry Background**

                Voice over Internet Protocol (VoIP) technology converts voice (telephone calls) into data packets, transmits the packets over datanetworks, and reconverts them back into voice at its final destination. Data networks, such as the Internet have always utilized data packet technology to transmit information between two communicating devices (such as sending an email between two computers). Themost common protocol used for communicating on these packet switched networks is internet protocol, or IP. VoIP allows for the transmission of voice along with other data over these same packet switched networks, and provides an alternative to traditional telephonenetworks.

                VoIP is an alternative technology that can replace services provided by the traditional telephone network. Unlike traditional telephonenetworks, VoIP does not use dedicated circuits for each telephone call; instead, the same VoIP network can be shared by multiple users for voice, data and video simultaneously. This type of data network is more efficient than a dedicated circuit network because thedata network is not restricted by the one-call, one-line limitation of a traditional telephone network. This improved efficiency creates cost savings that can be passed on to the consumer in the form of lower rates or retained by the VoIP provider.

                As a result of the potential cost savings and added features of VoIP many view VoIP as the future of telecommunications. VoIP hasexperienced significant growth in recent years. The traditional telephone networks maintained by many local and long distance telephone companies were designed solely to carry low-fidelity audio signals with a high level of reliability. Although these traditionaltelephone networks are very reliable for voice communications, these networks are not well suited to service the explosive growth of digital communication applications.

                Until recently, traditional telephone companies have avoided the use of packet switched networks for transmitting voice calls due tothe potential for poor sound quality attributable to latency issues (delays) and lost packets which can prevent real-time transmission. Recent improvements in packet switch technology, compression and broadband access technologies, as well as improved hardware andprovisioning techniques, have significantly improved the quality and usability of packet-switched voice calls.

                The exponential growth of the Internet in recent years has proven the scalability (or ease of expansion) of these underlying packetswitched networks. As broadband connectivity, including cable modem and digital subscriber line, or DSL, has become more available and less expensive, it is now possible for service providers like us to offer voice and video services that run over these IP networksto businesses and consumers. Providing such services has the potential to both substantially lower the cost of telephone service and equipment costs to these customers and to increase the breadth of features available to the end-user.  We anticipate that ifpresent technology and cost factor trends continue, these cost savings will continue and become more apparent to telecommunications users worldwide. 

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**Our Strategy**

                Our strategy is to become a profitable, leading provider of VoIP telephony products and services worldwide. Our current networkconsists of gateways in major population centers from which we currently serve 40 markets on a consistent basis.  Our goal, if we are able to expand our VoIP network and successfully implement our Strategy (discussed below), is to serve 108 major populationmarkets worldwide.  We also seek to expand our relationships with other providers who can “partner” with us and, if our financial resources allow, to acquire other companies that possess complimentary resources that fit within our overallstrategy.

                If we are successful in obtaining sufficient additional financial and managerial resources, we intend to implement our Strategy tobring the best possible voice products and services, at an affordable price, to consumers and businesses and enhance the ways in which these customers communicate.  The following are key elements of our strategy:
| Cap*italize on the Growth of VoIP Products and Services*.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 We believe that if we can implement our Strategy, we will be well positioned to take advantage of the expected growth of the VoIPproducts and services markets. Technology research firm JupiterResearch predicts that VoIP telephony services will grow to about 400,000 U.S. households by the end of 2004, and to 12.1 million U.S. households by 2009.                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| *Capitalize on our technological expertise to introduce new products and features.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                 Over the past three years, we have developed or acquired several core technologies that form the backbone of our VoIP service and whichwe intend to use to develop product enhancements and future products.                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| *Offer the best possible service and support to our customers with a world class customer support organization.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                 If we can implement our Strategy, we seek to make significant upgrades to our existing system infrastructure to enhance the support wecan provide to new and existing subscribers, as well as our distribution partners. In an emerging industry with world-changing technologies, we are focused on our customers and their experience with Viper Networks, Inc.                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| *Offer the best possible service and support to our customers with a world class customer support organization.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                 We have established relationships with several resellers and distributors of telecommunications products. To further accelerate growthof our vPhone and future consumer and enterprise offerings, we intend to build upon our existing relationships and establish new relationships with distributors, value added resellers and system integrators, other service providers and retailers with strong localsales and marketing channels to make our products more readily available and accessible to potential customers of our service. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| *Focus Viper Networks on Opportunities in Emerging Markets and New Service Offerings.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                 Viper Networks’ Mid-Atlantic International, Inc. and Adoria Communications LLC targets international markets undergoingtelecommunications deregulation, which we believe will provide high margin opportunities. As our financial resources allow, we seek to continue to enhance and expand our global VoIP network into new markets by internal growth, acquisition and strategic alliances. Ourplan is to develop, expand and integrate new services into our existing managed platform.                                           |

                Our ability to implement our Strategy, as described above, is subject to our ability to raise sufficient additional capital, attractand retain additional managerial talents, and meet the many competitive and technological challenges that face us as a small company. Further, while we believe that our technical expertise in integrating VoIP functions and technologies provides us with certainadvantages over traditional telecommunications companies, the barriers to entry into the VoIP industry are not high and many of the risks that we face are beyond our control. (See “Factors That May Affect Future Results,” in Item 1a below.)

**Our Solution**

                We are currently a provider of high quality cost effective Voice over the Internet solutions for consumer and business users. Oursecure, reliable method of communication is growing in demand in the global economy where distance is not an obstacle but communications cost are.  Low rates, reliable, high quality connection are the three factors fuel the efficiency of the global enterpriseand the success of our day-to-day business.

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                We believe our products and services help improve the cost, quality, availability, and reliability, of communications. Our“vPhone” delivers to our customer’s rich robust communications and applications through our planned global VoIP network, which automatically locates remote servers at the closest point to the end user thereby eliminating the high cost of longdistance connectivity. Our current network consists of gateways in major population centers.  Using VoIP we can terminate (or send) our customers' calls using the most efficient route available.

**Products and Services**

*vPhone*

                The vPhone is a USB powered telephone device that allows calls to be placed to any phone number in the world over our global VoIPnetwork. The vPhone:
|               | •      | Works with Dial-Up or Broadband Internet connections.                                                    |
|--------------------------------------------------------------------------------|--------------------------------------|----------------------------------------------------------------------------------------------------------|
|               | •      | Allows our customers to pay only for the minutes used without monthly fees, contracts or hidden charges. |
|               | •      | Connects and installs in minutes with the included vPhone Software and USB cable.                        |
|               | •      | Allows customers to purchase additional minutes from your convenient online.                             |

*IP Phone Adaptor (IPA)*

**

                The IP Phone Adaptor is a USB powered device that allows a user to connect any standard telephone to a personal computer in order toplace calls over our global VoIP network.  The IP Phone Adaptor:
|               | •      | Works in conjunction with our vPhone Dialer software on either a Broadband or Dial-up Internet connection. |
|--------------------------------------------------------------------------------|--------------------------------------|------------------------------------------------------------------------------------------------------------|
|               | •      | Typically used with cordless phones to allow the user to make calls from anywhere inside a home or office. |

*Broadband Phone Adaptor (BPA)*

                The Broadband Phone Adaptor is a network device that allows a user to connect up to 2 standard telephones (or 1 phone and 1 faxmachine): 
|               | •      | The device requires a Broadband Internet connection.                         |
|--------------------------------------------------------------------------------|--------------------------------------|------------------------------------------------------------------------------|
|               | •      | Does not require our vPhone Dialer software.                                 |
|               | •      | Not required to be connected to a computer to operate.                       |
|               | •      | The 2 line capability makes it an ideal device for SOHO office applications. |

*WI-Fi Vphone*

                The Viper Networks Wi-Fi vPhone is an intelligent IP communications device that:
|               | •      | Operates on 802.1lb wireless networks.                                |
|--------------------------------------------------------------------------------|--------------------------------------|-----------------------------------------------------------------------|
|               | •      | Allows users to make calls over our global VoIP network.              |
|               | •      | Device does not require our vPhone Dialer software.                   |
|               | •      | Does not need to be connected to a personal computer to operate.      |
|               | •      | Can be used in most any 802.11 Wi-Fi “Hot Spot” location. |

*IP PBX*

                The Viper Networks IP PBX provides:
|               | •      | Multi functional telephone features and calling services to Business users.                                                                   |
|--------------------------------------------------------------------------------|--------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|
|               | •      | Provides this service via the Internet to users who can utilize either Viper provided telephones or can obtain them from third party vendors. |

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*Wholesale Operations*

                Mid-Atlantic International, Inc. and Adoria Communications, LLC sells wholesale minutes on our VoIP network to other telecommunicationsproviders through our internal sales force. We have de-emphasized our traditional carrier services, and to that end, we have attempted to limit our activity to selected carriers, particularly those with which we have bilateral carrier agreements.

**Sales, Marketing and Promotional Activities**

                We currently sell and market our vPhone to end users through our direct sales force, web site and third party resellers.  ViperNetworks products and services are offered to these third parties through reseller agreements.  These agreements typically provide a 20% to 40% in discounted pricing (from approximate retail pricing levels) for both product purchases and minutes with a one yearterm and an option to renew the term for an additional one year period.  All agreements require the customer to pre-pay for all products and services. To date, we have not incurred significant advertising and promotional expenses as we have not had the workingcapital to fund significant mass media advertising expenditures.

                We offer individuals and businesses the opportunity to become resellers of our products and services through our distributor andreseller programs. Resellers are able to purchase bulk accounts and hardware at reseller specific rates and prices that they are then able to resell these accounts to private individuals under the Viper Networks brand.  In certain circumstances, resellers areable to purchase bulk accounts and hardware at reseller specific rates and prices that they are then able to resell these accounts to private individuals under a private brand.  We have not found that the resellers have had any impact on our marketing andselling effort since they allow us to resell unsold minutes.

**Competition**

                We face several competitors who each possess significantly greater financial and managerial resources. These competitors include,iConnectHere, Net2Phone, Vonage and Packet8 as well as incumbent telephone carriers, and other providers of traditional telephone service.

                The market for telecommunications services is intensely competitive.  In addition to the competitors listed above, many companiesoffer products and services like ours and many have a well established presence in major metropolitan centers.  They also have substantially greater financial, distribution, and marketing resources than we do.  We may not be able to compete successfullywith these companies and others that may enter the market. If we do not succeed in this competitive marketplace, we will lose customers and our revenue will be substantially reduced and our business, financial condition, and results of operations may be materiallyand adversely affected.

                The market for enhanced Internet and IP communications services is new and rapidly evolving.  We believe that the primarycompetitive factors determining success in the Internet and IP communications market are quality of service, the ability to meet and anticipate customer needs through multiple service offerings, responsive customer care services and price. Future competition couldcome from a variety of companies both in the Internet and telecommunications industries.  These industries include major companies who have greater resources and large subscriber bases than we have. We also compete in the growing market of discounttelecommunications services including calling cards, prepaid cards, call-back services, dial-around or 10-10 calling and collect calling services.  In addition, some Internet service providers have begun to aggressively enhance their real-time interactivecommunications, focusing initially on instant messaging, although we expect them to begin to provide PC-to-phone services.

                We anticipate that as markets develop and technology and commercial acceptance of our products and services evolve, other new andlikely larger competitors may offer products and services similar to those we offer. In this event we may be facing significant and continuing challenges in implementing our strategy. This may force us to change or alter our strategy or otherwise undertake new andunforeseen actions. 

                However, we face substantial competition from a number of larger companies with substantially greater resources and longer operatinghistories and we may not be able to compete effectively.  We also face competition from private and start-up companies given the limited barriers to entry in our business.

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                While we may experience indirect competition from companies such as Vocaltec, Cisco Systems, Inc. and Net2Phone, which manufacture ormarket products similar to ours and may offer services similar to us, currently these companies typically only provide their services to companies like ours to sell and market them.  As a result, these companies are also potential competitors.

                Traditional telecommunications companies, such as AT&T, Sprint, MCI WorldCom and Qwest Communications International, may offerenhanced Internet and IP communications services in both the United States and internationally.  All of these competitors are significantly larger than we are and have substantially greater financial, technical and marketing resources, larger networks, a broaderportfolio of services, stronger name recognition and customer loyalty, well-established relationships with target customers, and an existing user base to which they can cross-sell their services.  These and other competitors may be able to bundle services andproducts that are not offered by us together with enhanced Internet and IP communications services, which could place us at a significant competitive disadvantage.  Many of these types of competitors enjoy economies of scale that can result in lower costsstructure for transmission and related costs, which could cause significant pricing pressures within the industry.

**Operations**

                Key elements of our system include: provisioning, customer access, network security, call routing, call monitoring, call reliabilityand detailed call records. Our platform monitors our process of digitizing and compressing voice into packets and transmitting these packets over data networks around the world and if additional bandwidth is required, we will expand bandwidth to meetdemand.

                We maintain a system which is a software-based product that manages call admission, call control and routes calls to an appropriateendpoint. Unless the recipient is using an Internet telephony device, the packets are sent to a gateway belonging Viper Networks or to one of our partner telecommunications carriers where the packets are reassembled and the call is transferred to the PSTN (PublicSwitched Telephone Network) and directed to a regular telephone anywhere in the world. Our billing and back office systems manage and enroll customers and bill calls as they originate and terminate on the service.  If sufficient additional financial resourcesare available, we may look to acquire additional gateways in Beijing, Hong Kong, Osaka, Philippines, Seoul, Singapore, and Thailand as market conditions and suitable opportunities arise.

**Research and Development**

                The VoIP market is characterized by rapid technological changes and advances. Accordingly, if sufficient financial resources becomeavailable, we plan to make substantial investments in the design and development of new products and services and enhancements and features to existing products and services as well as investments in our global VoIP network. Our current and future research anddevelopment efforts relate to our vPhone and the acquisition and development of new endpoints for subscribers of our service. The development of new products and the expansion of our global VoIP network are essential to our success.

                To date, we have not incurred significant research and development expenses as we have not had the working capital to fund significantdevelopment expenditures.

**Suppliers**

                We outsource the manufacturing of our vPhone to third-party manufacturers. While we believe that relations with our suppliers are good,there can be no assurance that our suppliers will be able or willing to supply products and services to us in the future or if they are supplied, that they will offer these products and services at prices that allow us to resell them at a profit. While we believethat we could replace our suppliers if necessary, our ability to provide service to our subscribers would be materially and adversely impacted for a protracted period, and this could have an adverse effect on our business, financial condition and results ofoperations.

**Industry Overview**

                Historically, the communications services industry has transmitted voice and data over separate networks using differenttechnologies.  Traditional carriers have typically built telephone networks based on circuit switching technology, which establishes and maintains a dedicated path for each telephone call until the call is terminated

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(sent). With a circuit-switched system a telephone call is placed, a circuit is established, and the circuit remains dedicated for transmission of the call and is unavailable to transmit any other call. This restricted use oftransmission capacity has become inefficient in light of the increased demand for voice services and the proliferation of data networks, with their enhanced functionality and efficiency.

                Data networks have typically been built utilizing packet switching technology, such as IP, which divides signal into packets that aresimultaneously routed over different channels to a final destination where they are reassembled in the original order in which they were transmitted.  Packet switching provides for more efficient use of the capacity in the network because the network does notestablish dedicated circuits and does not require a fixed amount of bandwidth to be reserved for each transmission.  As a result, substantially greater traffic can be transmitted over a packet-switched network, such as the Internet, than a circuit-switchednetwork.

                Early packet-switched networks suffered from poor sound quality attributable to delays and lost packets.  However, recentimprovements in packet switching, compression broadband access technologies, hardware and the use of privately-managed networks have allowed for quality, real-time transmission. As a result, packet switching technology now allows service providers to converge theirtraditional voice and data networks and to carry voice, fax and data traffic over the same network. These improved efficiencies of packet-switching technology create network cost savings that can be passed on to the consumer in the form of lower long distancerates.  In addition, international telephone calls carried over the Internet or private IP networks are less expensive than similar calls carried over circuit-switched networks primarily because they bypass the international settlement process, which representsa significant portion of international long distance tariffs.

                Over the last decade, the volume of traffic on data networks has grown at a faster rate than traditional telephone networks. Thisgrowth has been driven by several factors, including technological innovation, high penetration of personal computers and, in particular, by the rapid expansion of the Internet as a global medium for communications, information and commerce.  International DataCorporation, a market research firm, estimates that the number of Internet users worldwide will grow from approximately 142 million in 1998 to approximately 399 million in 2002. This increase in data traffic has necessitated additional data network capacity andquality.  As a result, businesses have invested billions of dollars in order to meet this need.

                We believe that the combination of increasing demand for voice services and the proliferation of data networks, with their enhancedfunctionality and efficiency, is driving the convergence of voice traffic and data networks, including the Internet.  We expect this transfer of traffic to accelerate as corporation and network infrastructure providers attach increasing value to data networksand as the functionality of computers and computing devices, such as personal digital assistants, is enhanced by voice capability.

**     Voice on Data Networks**

                Voice on the Internet or voice-over-Internet Protocol (VoIP) consists of both traditional and enhanced voice and fax services betweenordinary phones and the addition of interactive voice capability to computers, web sites and e-mail.  Voice on the Internet serves both the extensive market of existing phone users and the expanding market of computer users.  We believe data networksprovide lower cost than the traditional telephone network and are better suited to deliver future enhanced services to both phone users and computer users.  Moreover, the Internet is the most cost-effective data network for transmitting any type of dataworldwide, including voice.

                Telephony based on Internet protocols emerged in 1995, with the invention of a personal computer program that allowed the transport ofvoice communications over the Internet via a microphone connected to a personal computer.  Initial sound quality was poor and the service required that both parties to the conversation use personal computers instead of telephone.  In 1996, the advent of thegateway for the first time offered anyone with access to a telephone the ability to complete calls on the Internet.  A gateway is a device that transfers calls from the traditional telephone network to a network such as the Internet, and vice versa.

                Despite advances in VoIP technology, Voice over the Internet has only recently improved to the point of allowing quality, real-timevoice communications.  We believe that, overall, the VoIP marketplace is still in its infancy.  Most enterprise customers and consumers still rely on traditional, circuit-switched telephone services.  In our opinion, the full advantages of VoIP willnot be realized for another two to five years, giving companies like Viper Networks an opportunity to make an early entrance into the market.

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**     The Economics of Internet Telephony**

                Long distance telephone calls transported over the Internet are less expensive than similar calls carried over the traditionaltelephone network primarily because the cost of using the Internet is not determined by the distance those calls need to travel.  Also, routing calls over the Internet is more cost-effective than routing calls over the traditional telephone network because thetechnology that enables Internet telephony is more efficient than traditional telephone network technology. The great efficiency of the Internet creates cost savings that can be passed on to the consumer in the form of lower long distance rates or retained by thecarrier as higher margins.

                Beyond cost benefits, innovation in the provision of enhanced services is expected to yield increased functionality as well. We believesuch enhanced functionality will expand the addressable market for Internet services to include anyone with a telephone, and that this market is potentially larger than the market for any other existing Internet service which requires a computer for access. Moreover,computer users will benefit from interactive voice being an option in web browsing and other computer-based communications.

**     Limitations of Existing Internet Telephony Solutions**

                The growth of voice on the Internet has been limited in the past due to poor sound quality caused by technical issues such as delays inpacket transmission and bandwidth limitations related to Internet network capacity and local access constraints. However, the continuing addition of data network infrastructure, recent improvements in packet-switching and compression technology, new softwarealgorithms and improved hardware have substantially reduced delays in packet transmissions and the effect of these delays.

                Several large long distance carriers, including AT&T and Sprint, have announced Internet telephony service offerings.  SmallerInternet telephone service providers have also begun to offer low-cost Internet telephony services from personal computers to telephones and from telephones to telephones. Traditional carriers have substantial investments in traditional telephone network technology,and therefore have been slow to embrace Internet technology.  We believe that these service offerings by large long distance carriers and smaller providers are generally available in limited geographic areas and can only complete calls to a limited number oflocations.

                In recent years, commercial web sites have grown in popularity.  Efforts to enhance these web sites with voice enabled e-commercefeatures such as click-and-call contact with a customer service agent have been hampered by the early quality problems with voice on the Internet described above.  In addition, we believe that the infrastructure required for a global network is too expensive formost companies to deploy on their own.

**     Increasing Trends Toward Outsourcing Telephony Solutions**

                We believe that the global reach and functionality of the Internet makes it especially suited for enhanced voice services.  Theseservices, which may include web-to-phone, phone-to-PC and unified messaging, could be a significant source of additional revenues to Internet portals, Internet service providers and web sites that are seeking to expand their service offerings.  Such voiceservices require considerable expertise and capital to deploy and may involve execution risk for any Internet portal, Internet service provider or web site lacking this expertise.  We expect that Internet portals, Internet service providers and web sites willincreasingly outsource their communications services to companies, like us, that provide the network and expertise necessary to facilitate those services rather than incurring the risk and delay of developing and deploying an array of communications servicesthemselves and undertaking the task of building a global network.

**     Government Regulation**

                The use of the Internet and private IP networks to provide telephone service is a recent market development.  While we believethat the provision of voice communications services over the Internet and private IP networks is currently permitted under United States law, some foreign countries have laws or regulations that may prohibit voice communications over the Internet.

                *United States.*  We believe that, under U.S. law, the Internet-related services that the Company provides constituteinformation services as opposed to regulated telecommunications services, and, as such, are not currently

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actively regulated by the FCC or any state agencies charged with regulating telecommunications carriers.  Nevertheless, aspects of our operations may be subject to state or federal regulation, includingregulation-governing universal service funding, disclosure of confidential communications and excise tax issues.  We cannot provide assurances that Internet-related services will not be actively regulated in the future.  Several efforts have been made inthe U.S. to enact federal legislation that would either regulate or exempt from regulation services provided over the Internet.  Increased regulation of the Internet may slow its growth, particularly if other countries also impose regulations.  Suchregulation may negatively impact the cost of doing business over the Internet and materially adversely affect our business, operating results, financial condition and future prospects.

                The FCC has considered whether to impose surcharges or other common carrier regulations upon certain providers of Internet telephony,primarily those which, unlike the Company, provide Internet telephony services directly to end users. While the FCC has presently refrained from such regulation, the regulatory classification of Internet telephony remains unresolved.

                Specifically, the FCC has expressed an intention to further examine the question of whether certain forms of phone-to-phone Internettelephony are information services or telecommunications services. The two are treated differently in several respects, with certain information services being regulated to a lesser degree.

                The FCC has noted that certain forms of phone-to-phone Internet telephone bear many of the same characteristics as more traditionalvoice telecommunications services and lack the characteristics that would render them information services.

                If the FCC were to determine that certain Internet-related services including Internet telephony services are subject to FCCregulations as telecommunications services, the FCC could subject providers of such services to traditional common carrier regulation, including requirements to make universal service contributions, and pay access charges to local telephone companies.  It isalso possible that the FCC may adopt a regulatory framework other than traditional common carrier regulation that would apply to Internet telephony providers.  Any such determinations could materially adversely affect our business, financial condition, operatingresults and future prospects to the extent that any such determinations negatively affect the cost of doing business over the Internet or otherwise slow the growth of the Internet.  Congressional dissatisfaction with FCC conclusion could result in requirementsthat the FCC impose greater or lesser regulation, which in turn could materially adversely affect our business, financial condition, operating results and future prospects.

                State regulatory authorities may also retain jurisdiction to regulate certain aspects of the provision of intrastate Internet telephonyservices.  Several state regulatory authorities have initiated proceedings to examine the regulation of such services.  Others could initiate proceedings to do so.

                *International. * The regulatory treatment of Internet telephony outside of the U.S. varies widely from country tocountry and is subject to constant change.  Until recently, most countries either did not have regulations addressing Internet telephony or other VoIP services, classifying these services as unregulated enhanced services.  As the Internet telephony markethas grown and matured, increasing numbers of regulators have begun to reconsider whether to regulate VoIP services.  Some countries currently impose little or no regulation on these services, as in the United States.  Conversely, other countries thatprohibit or limit competition for traditional voice telephony services generally do not permit Internet telephony or VoIP services or strictly limit the terms under which it may be provided.  Still other countries regulate Internet telephony and VoIP serviceslike traditional voice telephony services, requiring Internet telephony companies to make universal service contributions and pay other taxes.  Countries may also determine on a case-by-case basis whether to regulate Internet telephony and VoIP services as voiceservices, as enhanced services or as another service. The varying and constantly changing regulation of Internet telephony and VoIP in the countries in which we currently provide or may provide services may materially adversely affect our business financial conditionand results of operations.

                The European Commission regulatory regime, for example, distinguishes between voice telephony services and other telecommunicationsservices. The European Commission stated that only phone-to-phone communications reasonably could be considered voice telephony and that, at present, even phone-to-phone Internet telephony does not meet all elements of its voice telephone definition. Therefore, theEuropean Commission concluded that, at the present time, voice over Internet services cannot be classified as voice telephony.  More recently, in September 2000, after requesting comments from interested parties the European Commission issued a subsequentcommunication in which it reaffirmed that Internet telephony is not currently voice telephony.

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                As a result of the European Commission’s conclusion, providers of Internet telephony should be subjected to no more than ageneral authorization or declaration requirement by European Union member countries.  However, Viper cannot provide assurances that more stringent regulatory requirements will not be imposed by individual member countries of the European Union, since Commissioncommunications, unlike directives, are not binding on the member states.  The member countries therefore are not obligated to reach the same conclusions as the Commission on this subject so long as they adhere to the definition of voice telephony in the ServicesDirective.  Moreover, in its January 1998 IP Telephony Communication, the European Commission state that providers of Internet telephony whose services satisfy all elements of the voice telephony definition and whose users can dial out to any telephone numbercan be considered providers of voice telephony and may be regulated as such by the member states of the European Union.

                We will also be providing services in countries where the regulation of Internet telephony is more restrictive than in the UnitedStates or the European Union.  In some of those countries, we may be forced to find strategic partners within those countries to help us obtain regulatory approval.  Changes in the regulatory regimes of countries where we do business, then may have theeffect of limiting or prohibiting Internet telephony services, to one or more countries in which we currently operate or seek to operate in the future.

                Also, in the event we expand into additional foreign countries, such countries may assert that we are required to qualify to dobusiness in the particular foreign country, that we are otherwise subject to regulation, or that we are prohibited from conducting our business in that country.  Our failure to qualify as a foreign corporation in a jurisdiction in which we are required to do so,or to comply with foreign laws and regulations, would materially adversely affect our business, financial condition and results of operations by subjecting us to taxes and penalties and/or by precluding us from, or limiting us in, enforcing contracts in suchjurisdictions.  Likewise, our customers and partners may be or become subject to requirements to qualify to do business in a particular foreign country, otherwise to comply with regulations, or to cease from conducting business in that country. We cannot becertain that our customers and partners are currently in compliance with regulatory or other legal requirements in their respective countries, that they will be able to comply with existing or future requirements, and/or that they will continue in compliance with anyrequirements.  The failure of our customers and partners to comply with these requirements could materially adversely affect our business, financial conditions and results of operations.

                Finally, the International Telecommunications Union, or the ITU, an international treaty organization that deals withtelecommunications matters, has not taken any action in favor or against Internet telephony.  In 2000, however, the ITU convened meetings and published reports on the Internet and Internet telephony issues, partly in response to concerns from some developingcountries over Internet Telephony and tariffing of international Internet backbone traffic.  The ITU will hold additional meetings and will issue additional reports on Internet telephony during 2001 that may encourage some countries to increase or reduce theirregulation of Internet telephony.  In particular, an ITU study group is examining how international Internet backbone providers compensate each other for traffic.  These efforts, which may take several years to be completed and which are currently opposedby the United States and some European countries, may eventually result in changes in national or international regulations dealing with financial compensation for international Internet traffic which could affect certain of our costs.

**     Certain Other Regulations Affecting the Internet**

                *United States.*****  Congress has recently adopted legislation that regulates certain aspects of the Internet,including online content, user privacy and taxation.  In addition, Congress and other federal entities are considering other legislative and regulatory proposals that would further regulate the Internet.  Congress has, for example, considered legislation ona wide range of issues including Internet spamming, database privacy, gambling, pornography and child protection, Internet fraud, privacy and digital signatures.  Various states have adopted and are considering Internet-related legislation.  Increased U.S.regulation of the Internet may slow its growth, particularly if other governments follow suit, which may negatively impact the cost of doing business over the Internet and materially adversely affect our business, financial condition, results of operations and futureprospects.

                *International.*  The European Union has also enacted several directives relating to the Internet.  The EuropeanUnion has, for example, adopted a directive that imposes restrictions on the collection and use of personal data.  Under the directive, citizens of the European Union are guaranteed rights to access their data, rights to know where the data originated, rights tohave inaccurate data rectified, rights to recourse in the event of unlawful processing and rights to withhold permission to use their data for direct marketing.  The directive could, among

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other things, affect U.S. companies that collect or transmit information over the Internet from individuals in European Union member states, and will impose restrictions that are more stringent than current Internet privacystandards in the U.S.  In particular, companies with offices located in European Union countries will not be allowed to send personal information to countries that do not maintain adequate standards of privacy.

                Although Viper does not engage in the collection of data for purposes other than routing its services and billing for its services, thedirective is quite broad and the European Union privacy standards are stringent.  Accordingly, the potential effect on the development of Viper in this area is uncertain.

                As of December 31, 2004, we had 10 full time employees and numerous other part time employees and independent contactors.

**ITEM 1A.     FACTORS THAT MAY AFFECT FUTURE RESULTS**

****

                The Company’s business organization, the Company’s reliance upon certain technology and third parties, competitive trendsin the marketplace, and other factors all involve elements of substantial risk. In many instances, these risks arise from factors over which the Company will have little or no control.  Some adverse events may be more likely than others and the consequence ofsome adverse events may be greater than others.  No attempt has been made to rank risks in the order of their likelihood or potential harm.  In addition to those general risks enumerated elsewhere, any purchaser of the Company's Common Stock should alsoconsider the following factors.
| ***1.  Continued Operating Losses & Early-Stage Company.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| The Company has incurred $7,885,328 in losses during the twelve months ending December 31, 2004 and cumulative losses of $11,046,080 since the Company’s inception through December 31, 2004. The Company is anearly-stage company and may well incur significant additional losses in the future as well and there can be no assurance that the Company will be successful or that it will be profitable in the future.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| ***2.  Current Financial Structure, Limited Equity, Limited Working Capital & Need for Additional Financing.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| While the Company’s management believes that its financial policies have been prudent, the Company has relied, in large part, upon the use of common stock financing to provide a substantial portion of the Company’sfinancial needs. The Company anticipates that it will need to raise significant additional capital to implement is business plan. While the Company believes that it will be successful, the Company has had only limited discussions with potential investors and therecan be no guarantee that the Company will receive additional capital from any investors or, if it does receive sufficient additional capital, that it can obtain additional capital on terms that are reasonable in light of the Company’s current circumstances.Further, the Company has not received any commitments or assurances from any underwriter, investment banker, venture capital fund, or other individual or institutional investor.                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| ***3.  Auditor's Opinion: Going Concern.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| The Company’s independent auditors, Armando C. Ibarra, CPA, P.C., have expressed substantial doubt about the Company's ability to continue as a going concern since the Company is an early-stage company and there existsonly a limited history of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| ***4.  Subordinate to Existing and Future Debt & Authorized But Unissued Preferred Stock.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| All of the Common Stock is subordinate to the claims of the Company's existing and future creditors and the holders of the Company's existing preferred stock and any that may be issued in the future.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| ***5.  Dependence & Reliance Upon Others.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Some of our products and services may rely upon hardware, software, and communications systems provided by others. For this reason we may become dependent upon third parties which may materially and adversely affect ourability to offer distinct products and services which may result in adverse pricing pressures on our products with resulting adverse impact on our profits, if any.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| ***6.  Recent Acquisitions & Limited History of Operations.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| During the fiscal year ending December 31, 2004, we generated $4,612,783 in net sales revenues, primarily through our acquisition of Coliance and Mid-Atlantic in 2003 and our acquisition of Adoria in 2004. We will need tofurther increase our revenues and successfully develop and implement our business strategy in an ever-changing and challenging marketplace if we are to succeed. In the event that we are not able to successfully develop and implement our business strategy, we may besubject to continuing significant risks and resulting financial volatility.                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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| -14-                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Our limited history and the continuing technological and competitive challenges that we face are beyond our ability to control.  For these and other reasons we may incur continuing and protracted losses with the resultthat an investor  may lose all or substantially all of their investment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| *** ***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| ***7.  Price Competition on Certain Services.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| The products and services that we intend to offer may, through changing technology and cost structures, become commodities which result in intense price competition. While we believe that we will be able to distinguish ourproducts and services from competing products, services, and technologies offered by others, if we fail to distinguish ourselves from others, this could hinder market acceptance of our services, force reductions in contemplated sales prices for our products andservices, and reduce our overall sales and gross margins. Potential customers may view price as the primary distinguishing characteristic between our products and services and those of our competitors.  This could result in the Company incurring significant andprotracted losses.  Further, we are selling into a market that has a broad range of desired product characteristics and features which may make it difficult for us to develop products that will address a broad enough market to be commercially viable. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| ***8.  Absence of Barriers to Entry & Lack of Patent Protection.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Our planned products and services are not unique and others could easily copy our strategy and provide the same or similar services since there are no significant barriers to entering the business of providing Internettelephone services or VoIP networks and no significant barriers to entry are expected in the future.  In addition, we do not hold and do not expect to hold any patent protection on any of our planned products or services.  For these reasons we may facecontinuing financial losses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| ***9.  Limited Customer Base.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| While we seek to implement our plans, we have a limited customer base and there can be no assurance that we will grow and develop a sufficient customer base that generates sufficient sustainable revenues that provide stableprofit margins.  The absence of growth at pricing levels that can provide for sustainable revenues and profit margins may greatly inhibit our ability to attract additional capital and otherwise lead to volatile results from operations with consequent adverse andmaterial impact on our financial condition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| ***10.  Limited Control Over Third Parties & Planned Products/Services.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| We intend to offer VoIP and Video-over-IP network design and planning services and in so doing, we anticipate that we will be acting as “general contractor” in bringing together various third party vendors tocomplete a VoIP solution based on a customer’s specific needs and preferences.  As a result, since we may not be able to control the products and services that these third parties provide, we may not be able to control the quality of our products andservices.  This may adversely impact our ability to implement our business plan and otherwise allow us to differentiate our product effectively in the marketplace.                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| ***11.  Customers, Technology/Feature Options & Commercial Viability.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| If we are able to implement our business plan, we will be selling our products and services into a marketplace that is experiencing a convergence of competing technologies. Typically, telecommunications providers desireextremely robust products with the expectation of a relatively long effective life. As a result and depending on the outcome of unknown trends in technology, market forces, and other variables, we may not attract a broad enough market to achieve commercialviability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| ***12.  New Technologies May Be Developed.***   New products or new technologies may be developed that supplant or provide lower-cost or better-performing alternatives to our planned productsand services.  This could negatively impact our financial results.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| ***13.  Government Regulation.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Our planned operations will likely be subject to extensive telecommunications-based regulation by the United States and foreign laws and international treaties.  In the United States we are subject to various FederalCommunications Commission ("FCC") rules and regulations.  Current FCC regulations suggest that our VoIP will not be unduly burdened by new and expanded regulations. However, there can be no assurance that the occurrence of regulatory changes would notsignificantly affect our operations by restricting our planned operations or increasing the opportunity of our competitors.  In the event that government regulations change, there can be no assurance that the costs and burdens imposed on us will not materiallyand adversely impact our planned business.                                                                                                                                                                                                                             |
| *** ***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

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| ***14.  Control.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Our officers and directors directly and indirectly hold an aggregate of 40,701,626 shares of the Company’s common stock (before including any shares issuable upon exercise of any options).  This representsapproximately 33.5% of the Company’s total outstanding shares as of December 31, 2004 and thereby allows the Company’s officers and directors to retain significant influence over the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ***15.  Prior Filing of Form 10-SB.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| In June of 2001 we prepared and filed a registration statement on Form 10-SB with the U.S. Securities and Exchange Commission (the "SEC").  Subsequently, our then legal counsel delivered a letter (dated November 15, 2001)to the SEC which, by its terms, stated that the SEC had agreed to allow us to withdraw the registration statement. At the time the Company’s management believed, in reliance upon assurances from the Company’s then legal counsel, that the Company had beenallowed to withdraw the registration statement, notwithstanding that the Securities Exchange Act of 1934 (the "Exchange Act") provides that any withdrawal of a Form 10-SB registration statement (at any time after 60 days from the date at which it is originally filed)requires that the registrant: (a) file Form 15 with the SEC; (b) meet certain requirements that allow the registrant to file Form 15 to terminate the registration of the securities that were previously registered on Form 10-SB; and (c) file such other periodicreports as required to ensure compliance with Section 13(a) of the Exchange Act up to the date at which the Form 15 is filed. Subsequently, in September 2004, the Company received a letter from the SEC (the "SEC Letter") informing the Company that the Company had notsatisfied its obligations to file periodic reports required under Section 13(a) of the Exchange Act. While we believed that we had reasonably relied upon the assurances from our legal counsel (that we had effectively withdrawn the Form 10-SB registration statement),we are determined to complete all past and current periodic filings and to comply with the SEC Letter as expeditiously as possible. However, we have not received any assurances from the SEC that we will not be subject to any adverse enforcement action by the SEC.While we did not seek to avoid our obligations under the Exchange Act in any way, our prior actions in mistakenly believing that we had no obligation to file periodic reports required by the Exchange Act exposes us to risk of liability for significant civil fines andthe SEC could, among other enforcement actions, suspend trading in our Common Stock. Further, we offered and sold securities in reliance upon exemptions that were predicated on our mistaken belief that the registration statement had been withdrawn. For these andother reasons we may be exposed to liability. We intend to continue a dialogue with the staff of the SEC and, as information is collected and documents are prepared, to complete all filings needed to demonstrate that we are fulfilling our obligations under theExchange Act with due care and in full observance of our obligations as a "reporting company" thereunder. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ***16. Dependence Upon Key Personnel and New Employees.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| We believe that our success will depend, to a significant extent, on the efforts and abilities of Ronald G. Weaver, Jason A. Sunstein, John L. Castiglione, Farid Shouekani, and James Balestraci. The loss of the services of anyof them could have a material and continuing adverse effect on the Company.  Our success also depends upon our ability to attract and retain qualified employees.  Hiring to meet our anticipated operations will require that we assimilate significant numbersof new employees during a relatively short period of time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ***17. Absence of Key Man Insurance.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| We currently do not maintain any key man life insurance on the life of any of our officers or directors and there are no present plans to obtain any such insurance. In the event that any one or more of them are unable toperform their duties, the Company's business may be adversely impacted and our results of operations and financial condition would be materially and adversely impacted for a protracted period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ***18.  Lack of Independent Evaluation of Business Plan & Proposed Strategy.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| We have not obtained any independent or professional evaluation of our business plan and our business strategy and we have no present plans to obtain any such evaluation. There can be no assurance that we will successfullyincrease revenues, or if revenues we do, that we can do so at levels that will allow us to achieve or maintain profitability.  If we are unsuccessful, our results of operations and financial condition would be materially and adversely impacted and investorswould likely lose all or a significant portion of their investment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ***19.  No Planned Dividends.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| We do not anticipate that we will pay any dividends on our Common Stock.  Any profits that we may generate, if any, will be reinvested.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

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| ***20. Potential Dilution.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Funding of our planned business is likely to result in substantial and on-going dilution of our existing stockholders. While there can be no guarantee that we will be successful in raising additional capital, if we aresuccessful in obtaining any additional capital, existing stockholders may incur substantial dilution.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| ***21. Matter of Public Market and Rule 144 Stock Sales.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| As of December 31, 2004, there were 86,351,874 shares of the Company’s Common Stock that were “restricted securities” and which may be sold pursuant to Rule 144.  Since September 16, 2002, we have had alimited public trading market for our Common Stock in the “Pink Sheets” market. Since that date trading volumes have been volatile with sporadic liquidity levels.  Further, our Common Stock is (as of the date of the filing of this Report) a“Penny Stock” and for this reason we face continuing difficulties in our efforts to gain a liquid trading market and there can be no assurance that any liquid trading market will ever develop or, if it does develop, that it can be maintained. In the eventthat we are able to complete the filing of all periodic reports (the “Periodic Reports”) required by Section 13(a) of the Securities Exchange Act of 1934 (the "Exchange Act"), we may be able to avoid any significant adverse enforcement action by the SECarising out of our lack of compliance with the Exchange Act. Rule 144 provides that a person holding restricted securities for a period of one year may thereafter sell in brokerage transactions, an amount not exceeding in any three month period 1% of our outstandingCommon Stock. Further, unless the Company can complete all of the required Periodic Reports and remain current in the filing of all future Periodic Reports, persons holding restricted stock will not be able to avail themselves of the safe harbor provisions of Rule144. Persons who are not affiliated with the Company and who have held their restricted securities for at least two years are not subject to the volume limitation. In any trading market for our Common Stock, possible or actual sales of our Common Stock by presentshareholders under Rule 144 may have a depressive effect on the price of our Common Stock even if a liquid trading market develops. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| ***22.  General Risks of Low Priced Stocks.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| In any trading market for our Common Stock, we anticipate that our Common Stock will be deemed a "Penny Stock" which will limit trading and liquidity and thereby the retail market for the Common Stock. The limitations areprimarily due to the burdens that are imposed on brokers whose customers may wish to acquire our Common Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

                In that event, a shareholder may find it more difficult to dispose of, or to obtain accurate quotations as to the price of our CommonStock. In the absence of a security being quoted on NASDAQ, or the Company having $2,000,000 in net tangible assets, trading in the Common Stock is covered by Rule 3a51-1 promulgated under the Securities Exchange Act of 1934 for non-NASDAQ and non-exchange listedsecurities. Under such rules, broker/dealers who recommend such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or anannual income exceeding $200,000 or $300,000 jointly with their spouse) must make a special written suitability determination for the purchaser and receive the purchaser's written agreement to a transaction prior to sale.

                Securities are also exempt from this rule if the market price is at least $5.00 per share, or for warrants, if the warrants have anexercise price of at least $5.00 per share. The Securities Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure related to the market for penny stocks and for trades in any stock defined as a penny stock.

                The Commission has adopted regulations under such Act which define a penny stock to be any NASDAQ or non-NASDAQ equity security thathas a market price or exercise price of less than $5.00 per share and allow for the enforcement against violators of the proposed rules.

                In addition, unless exempt, the rules require the delivery, prior to any transaction involving a penny stock, of a disclosure scheduleprepared by the Commission explaining important concepts involving a penny stock market, the nature of such market, terms used in such market, the broker/dealer's duties to the customer, a toll-free telephone number for inquiries about the broker/dealer'sdisciplinary history, and the customer's rights and remedies in case of fraud or abuse in the sale.

                Disclosure also must be made about commissions payable to both the broker/dealer and the registered representative, current quotationsfor the securities, and, if the broker/dealer is the sole market maker, the broker/dealer must disclose this fact and its control over the market.  Monthly statements must be sent disclosing

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recent price information for the penny stock held in the account and information on the limited market in penny stocks.

                While many NASDAQ stocks are covered by the proposed definition of penny stock, transactions in NASDAQ stock are exempt from all butthe sole market-maker provision for (i) issuers who have $2,000,000 in tangible assets has been in operation for at least three years ($5,000,000 if the issuer has not been in continuous operation for three years), (ii) transactions in which the customer is aninstitutional accredited investor, and (iii) transactions that are not recommended by the broker/dealer.

                In addition, transactions in a NASDAQ security directly with the NASDAQ market maker for such securities, are subject only to the solemarket-maker disclosure, and the disclosure with regard to commissions to be paid to the broker/dealer and the registered representatives.  The Company's securities are subject to the above rules on penny stocks and the market liquidity for the Company'ssecurities could be severely affected by limiting the ability of broker/dealers to sell the Company's securities.

**ITEM 2.     DESCRIPTION OF PROPERTY**

**Principal Office**

                Our headquarters is located at 2070 Business Center Drive, Suite 210, Irvine, California 92612 at which we have 1477 square feet ofspace under a month to month lease at a cost of $2437 per month.

                We also maintain an administrative office at 10373 Roselle Street, Suite 170, San Diego, California 92121 at which we have 4415 squarefeet of space under a 2 year lease at a cost of $4239 per month.

                Our subsidiary, Mid-Atlantic International, Inc. is located at 49 S. Plaza Blvd, Suite B31, Rochester Hills, Michigan 48307, maintainsoffices and support facilities totaling approximately 1000 square feet of space under a 12 month lease at a cost of $1000 per month.

                Our subsidiary, Adoria Communications, LLC with offices at 140 Wood Road Suite 200, Braintree, Massachusetts 02184, maintains officesand support facilities totaling less than 1000 square feet of space under a month to month lease at a cost of under $1000 per month.

**Hills of Bajamar Industrial Space**

                 During September 1998, we entered into an agreement with a related party to purchase 50 acres of real property known as the Hillsof Bajamar, located in Ensenada, Mexico.  The property is valued at a predecessor cost  of $125,000.   We intended to sell lots for residential development and build a communications facility for residents in the surrounding area.   Asconsideration for the land, the Company issued 3,000,000 shares of our Series B Preferred Stock. On June 30, 2001, all of the Series B Preferred Stock was converted into 400,000 shares of our Common Stock.  As of December 31, 2004, the Company had not receivedclear title to the land.

****

**ITEM 3.     LEGAL PROCEEDINGS**

***Viper Networks, Inc. vs Greenland Corp.***

                On June 11, 2004 the Company filed an action in Superior Court seeking among other things, recission of an April 25, 2003 agreementwith Greenland Corp.  The Company considers the contract it entered into with Greenland (wherein Greenland was to receive 2,500,000 common shares of the Company) to have been obtained by fraud.  Greenland made numerous false statements and materialomissions regarding Greenland Corp.’s financial condition, and failed to disclose investigations and litigation pending or threatened which would impair the value of Greenland.  Indeed, subsequent to entering into this transaction, the Company discoveredthat Greenland had undisclosed tax liabilities nearing $2,000,000.  The Internal Revenue Service had imposed tax liens against the property owned by Greenland.  The Company also recently learned that at the time of the contract, Greenland Corp.’smajority shareholder and controlling Board of Directors transferred (“up-streamed”) roughly $1,300,000 from Greenland Corp.

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                It is unfortunate that this transaction resulted in litigation, but it is imperative that the Board of Directors of Viper Networksfulfill its fiduciary responsibility and protect its’ shareholders best interests.  As such, we intend to take any and all action necessary to protect the rights of our shareholders.   In order to minimize legal fees, as of the date of thisfiling, this case is in Arbitration.  Unfortunately, Greenland has been seeking other forums to force the sale of the Viper stock outside of arbitration (which, to date, the Company has thwarted).  The Company feels confident that all matters will beresolved in the Company’s favor, and the 2,500,000 common shares will be returned to treasury.

                The Company's officers and directors are aware of no other threatened or pending litigation, which would have a material, adverseeffect on us. From time to time we are a defendant (actual or threatened) in certain lawsuits encountered in the ordinary course of its business, the resolution of which, in our opinion, should not have a material adverse effect on our financial position, results ofoperations, or cash flows. 

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

                None.

**PART II**

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

                As of December 31, 2004, the Company's Common Stock traded in the non-Over the Counter "Pink Sheets" listed in the National DailyQuotations Service under the symbol, VPER.  Trading in the stock commenced on September 16, 2002 and only a limited and volatile trading market exists with only sporadic and limited interest by market makers.

                Stockholders who may seek to sell any Shares of the Common Stock will not likely find any significant liquidity and therefore may notbe able to sell any significant volume of the Company’s Common Stock.  As of December 31, 2004, the Company had 359 stockholders and several market makers.

                The following table reflects the high and low prices of the Company's Common Stock for the two years ended December 31,2004.

| **Year**                                                                                                     |                                                              | **Period**                                                                                                                                                                                                                                 |                                                                                                                                                              | **High** |                                                              | **Low**                                                      |
|--------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|--------------------------------------------------------------|--------------------------------------------------------------|
|                                                                                                              |                                                              |                                                                                                                                                                                                                                            |                                                                                                                                                              |          |                                                              |                                                              |
| 2004                                                                                                         |                                                              | First Quarter                                                                                                                                                                                                                              |                                                                                                                                                              | $        | 1.55                                                         |                                                              | $ | 0.35 |
|                                                                                                         |                                                              | Second Quarter                                                                                                                                                                                                                             |                                                                                                                                                              | $        | 0.72                                                         |                                                              | $ | 0.36 |
|                                                                                                         |                                                              | Third Quarter                                                                                                                                                                                                                              |                                                                                                                                                              | $        | 0.46                                                         |                                                              | $ | 0.23 |
|                                                                                                         |                                                              | Fourth Quarter                                                                                                                                                                                                                             |                                                                                                                                                              | $        | 0.47                                                         |                                                              | $ | 0.27 |
| 2003                                                                                                         |                                                              | First Quarter                                                                                                                                                                                                                              |                                                                                                                                                              | $        | 0.04                                                         |                                                              | $ | 0.01 |
|                                                                                                         |                                                              | Second Quarter                                                                                                                                                                                                                             |                                                                                                                                                              | $        | 0.05                                                         |                                                              | $ | 0.01 |
|                                                                                                         |                                                              | Third Quarter                                                                                                                                                                                                                              |                                                                                                                                                              | $        | 0.18                                                         |                                                              | $ | 0.02 |
|                                                                                                         |                                                              | Fourth Quarter                                                                                                                                                                                                                             |                                                                                                                                                              | $        | 0.49                                                         |                                                              | $ | 0.08 |
|                    |            |                                         |                            |          |            |            |  |            |

                The Company has followed the policy of reinvesting earnings, if any, and, consequently, has not paid any cash dividends.  At thepresent time, no change in this policy is under consideration by the Board of Directors.  The payment of cash dividends in the future will be determined by the Board of Directors in light of conditions then existing, including the Company's earnings, financialrequirements and condition, opportunities for reinvesting earnings, business conditions and other factors. 

                In May 2002, the Company offered and sold an aggregate of 1,323,962 shares of the Company’s Common Stock to seven investors at$0.10 per share. Of these shares, 25,000 shares were sold for cash with proceeds of $2,500.  The remaining shares, totaling 1,298,962 shares were issued to five persons as follows (each at a value of $0.10 per share): (a) 222,500 shares were issued to twoindividuals in payment for services; (b) 210,000 shares to James Wray, an officer and director of the Company in payment for services; (c) 430,000 shares to Jason A. Sunstein, an officer and director of the Company in payment for services; and (d) 436,462 shares toJohn L. Castiglione, an officer and director of the Company in payment for services and in payment of monies owed for funds previously advanced to the Company. All of the persons who purchased the shares were Accredited Investors.

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All of the shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer and no commissions were incurred by the Company in connection with the transaction.All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933.  Each of the investors were sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate themerits and risks associated with the purchase of the Company’s securities.

                In September 2002, the Company offered and sold an aggregate of 1,387,500 shares of the Company’s Common Stock to nineinvestors.  Of these shares, 120,000 shares were sold to two persons in consideration of the Company’s receipt of $14,000.  The remaining shares, totaling 1,267,500 shares, were issued in exchange for the Company’s receipt of services.  Allof the shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer and no commissions were incurred by the Company in connection with the transaction. All of the shares were offered and sold undera claim of exemption provided by Section 4(2) of the Securities Act of 1933.  Each of the investors were sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchaseof the Company’s securities.

                In October 2002, the Company offered and sold an aggregate of 668,376 shares of the Company’s Common Stock to five persons inexchange for services received by the company with all of the shares valued at $0.225 per share. All of the persons who purchased the shares were Accredited Investors. All of the shares were offered and sold by the Company’s management without the use of anunderwriter or NASD registered broker-dealer and no commissions were incurred by the Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933.  Each ofthe investors were sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

                In November 2002, the Company offered and sold 25,000 shares of the Company’s Common Stock to one person in consideration of theCompany’s receipt of services.  The shares were valued at $0.167 per share. The purchaser of the shares was an Accredited Investor and the shares were offered and sold by the Company’s management without the use of an underwriter or NASD registeredbroker-dealer and no commissions were incurred by the Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933.  The purchaser was sophisticated andexperienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

                In February 2003, the Company issued 950,000 shares of the Company’s Common Stock to one person in consideration of theCompany’s receipt of services.  The shares were valued at $0.03 per share. The purchaser of the shares was an Accredited Investor and the shares were offered and sold by the Company’s management without the use of an underwriter or NASD registeredbroker-dealer and no commissions were incurred by the Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. The purchaser was sophisticated andexperienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

                In early May 2003, the Company issued 1,100,000 shares of the Company’s Common Stock to one person in consideration of theCompany’s receipt of services.  The shares were valued at $0.03 per share. The purchaser of the shares was an Accredited Investor and the shares were offered and sold by the Company’s management without the use of an underwriter or NASD registeredbroker-dealer and no commissions were incurred by the Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. The purchaser was sophisticated andexperienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

                Later in May 2003, the Company issued 11,100,000 shares of the Company’s Common Stock to four investors.  Of these shares,800,000 shares were issued in connection with the acquisition of a 49% interest in PC Mailbox valued at $0.05 per share, 2,500,000 shares were issued in connection with the purchase of certain assets from Greenland Corp. valued at $0.023 per share and all of theremaining 7,800,000 shares were issued in consideration of the Company’s receipt of services.  The shares were valued at $0.038 per share. Each of the purchasers of the shares were an Accredited Investor and the shares were offered and sold by theCompany’s management without the use of an underwriter or NASD registered broker-dealer and no commissions were incurred

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by the Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. Each purchaser was sophisticated and experienced infinancial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

                Late in May 2003, the Company issued an aggregate of 11,947,966 shares of the Company’s Common Stock as follows:  (1)162,133 shares were issued in connection with the purchase of certain assets; (2) 1,785,833 shares were issued in exchange for an aggregate of $70,045 in cash received by the Company; and (3) 10,000,000 shares were issued to the Company’s Employee CompensationFund. The shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer and no commissions were incurred by the Company in connection with the transaction. All of the shares were offered and soldunder a claim of exemption provided by Section 4(2) of the Securities Act of 1933. Each purchaser was sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of theCompany’s securities.

                In June 2003, the Company issued 2,500,000 shares of the Company’s Common Stock in connection with a proposed purchase ofassets.  The issuance of the shares was later cancelled in August 2003 and the shares were returned to the Company.  The shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer and nocommissions were incurred by the Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. Each purchaser was sophisticated and experienced in financial,business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

                In July 2003, the Company issued 2,800,000 shares of the Company’s Common Stock to one person in consideration of theCompany’s receipt of services.  The shares were valued at $0.03 per share. The purchaser of the shares was an Accredited Investor and the shares were offered and sold by the Company’s management without the use of an underwriter or NASD registeredbroker-dealer and no commissions were incurred by the Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. The purchaser was sophisticated andexperienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

                In August 2003, the Company issued 5,000,000 shares of the Company’s Common Stock plus 450,000 shares of the Company’sPreferred Stock.  The 5,000,000 shares were issued to 12 persons in connection with the acquisition of a 40% interest in Coliance Communications with each share valued at $0.05001 per share. The 450,000 shares of Preferred Stock were issued to three purchasersand were converted to notes payable. The shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer and no commissions were incurred by the Company in connection with the transaction. All of theshares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. Each purchaser was sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate the merits and risksassociated with the purchase of the Company’s securities.

                Later in August 2003, the Company issued an aggregate of 13,000,000 shares of the Company’s Common Stock as follows: (1)12,000,000 shares were issued 2 persons in connection with the acquisition of the remaining 60% of Coliance Communications valued at $0.025 per share; and (2) 1,000,000 shares issued to one purchaser in payment for legal services for the period from June 2002 throughMay 2003 with these shares valued at $0.09 per share. The shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer and no commissions were incurred by the Company in connection with thetransaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. Each purchaser was sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate themerits and risks associated with the purchase of the Company’s securities.

                Later, in August 2003, the Company issued 500,000 shares of the Company’s Common Stock to Steven Hanks in payment for services tothe Company and in settlement of certain claims.  All of the shares were valued at $0.06 per share.

                In early September 2003, the Company issued 3,250,000 shares of the Company’s Common Stock to one person in consideration of theCompany’s receipt of services.  The shares were valued at $0.03 per share. The

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purchaser of the shares was an Accredited Investor and the shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer and no commissions were incurred bythe Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. The purchaser was sophisticated and experienced in financial, business, and investment mattersand otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

                In mid September 2003, the Company issued 4,000,000 shares of the Company’s Common Stock to two persons in connection with thepurchase of land.  All of the shares were valued at $220,000 or $0.055 per share. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. Each purchaser was sophisticated and experienced infinancial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

                Later, in September 2003 the Company issued an aggregate of 7,030,000 shares of the Company’s Common Stock to two officers anddirectors of the Company, as follows:  (1) 3,515,000 shares of the Company’s Common Stock were issued to Jason A. Sunstein in payment for labor services; and (2) 3,515,000 shares of the Company’s Common Stock were issued to John L. Castiglione inpayment for labor services.  All of the shares were valued at $.025 per share. Both of the purchasers of the shares were Accredited Investors and the shares were offered and sold by the Company’s management without the use of an underwriter or NASDregistered broker-dealer and no commissions were incurred by the Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. The purchasers were sophisticatedand experienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

                In mid October 2003, the Company issued 1,491,707 shares of the Company’s Common Stock to fifteen investors and the Companyreceived $30,125 in cash. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933 and the shares were offered and sold by the Company’s management without the use of an underwriter or NASDregistered broker-dealer and no commissions were incurred by the Company in connection with the transaction. The purchaser was sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associatedwith the purchase of the Company’s securities.

                In late October 2003, the Company offered and sold an aggregate of 15,847,500 shares of the Company’s Common Stock asfollows:

|         | (1)      | 312,500 shares were issued upon the Company’s receipt of $15,625 in cash from one investor;                                                                                                                                                                                                                                                                                                                                                                                                                      |
|--------------------------------------------|-----------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                            | (2)                               | 7,535,000 shares were issued in connection with the acquisition of Mid-Atlantic with 3,300,000 shares valued at $0.10 per share and 4,235,000 shares valued at $0.17 per share, which contained certain redemption rights andprivileges; and                                                                                                                                                                                                                                                                           |
|                                            | (3)                               | 8,000,000 shares were issued to officers and directors of the Company in payment for services in connection with the purchase of Mid-Atlantic valued at $0.04 per share, as follows: (a) 2,000,000 shares were issued to Jason A.Sunstein, an officer and director; (b) 2,000,000 shares were issued to John L. Castiglione, an officer and director; (c) 2,000,000 shares were issued to Ronald G. Weaver, an officer and director; and (d) 2,000,000 shares were issued to Stephen D. Young, an officerand director. |

                In January 2004, the Company issued 2,100,000 shares of the Company’s CommonStock to one purchaser in exchange for the Company’s receipt of $210,000 in cash. All of the shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer and no commissions were incurred bythe Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. The purchasers were sophisticated and experienced in financial, business, and investment mattersand otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

                In early February 2004, the Company issued an aggregate of 1,800,000 shares of the Company’s Common Stock to one purchaser inexchange for the Company’s receipt of $450,000 in cash.  The shares were valued at $0.25 per share. The shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer and no commissionswere incurred by the Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the

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Securities Act of 1933. The purchaser was sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’ssecurities.

                In early March 2004, the Company issued 1,802,000 shares of the Company’s Common Stock to nine investors in connection with theacquisition of Mid-Atlantic. The shares were accorded an aggregate value of $450,500. The shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer and no commissions were incurred by the Companyin connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. The purchasers were sophisticated and experienced in financial, business, and investment matters andotherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

                In mid March 2004, the Company issued an aggregate of 5,000,000 shares of the Company’s Common Stock to five officers anddirectors of the Company with each share valued at $0.04 per share.  The share issuances were as follows:  (1) 1,000,000 shares to Farid Shouekani; (2) 1,000,000 shares to Jason A. Sunstein; (3) 1,000,000 shares to John L. Castiglione; (4) 1,000,000 sharesto Ronald G. Weaver; and (5) 1,000,000 shares to Stephen D. Young. All of the purchasers of the shares were Accredited Investors and the shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealerand no commissions were incurred by the Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. The purchasers were sophisticated and experienced infinancial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

                Later, in March 2004, the Company issued 2,500,000 shares of the Company’s Common Stock in connection with the acquisition ofAdoria Communications. The shares were accorded an aggregate value of $3,074,500 and were issued to one purchaser. The purchaser of the shares was an Accredited Investor and the shares were offered and sold by the Company’s management without the use of anunderwriter or NASD registered broker-dealer and no commissions were incurred by the Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. The purchaserwas sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

                Later, in March 2004, the Company issued an aggregate of 1,295,000 shares of the Company’s Common Stock to nine purchasers inexchange for the Company’s receipt of an aggregate of $323,750 in cash. All of the shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer, however the Company did pay a finder afinder’s fee equal to 8% of the aggregate amount received, with 7% paid in cash and 1% paid by the issuance of the Company’s Common Stock.  Apart from the payment of a finder’s fee, no commissions were incurred by the Company in connection withthe transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. Each purchaser was sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluatethe merits and risks associated with the purchase of the Company’s securities.

                In late March 2004, the Company issued an aggregate of 1,669,184 shares of the Company’s Common Stock to 34 investors in exchangefor the Company’s receipt of an aggregate of $310,500 in cash. All of the shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer.  The Company did pay 150,000 shares of theCompany’s Common Stock as a finders fee in connection with the Company’s issuance of 1,062,500 of these shares.  However, apart from the issuance of these shares to a finder, no other fees or commissions were incurred by the Company in connectionwith the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. The purchasers were sophisticated and experienced in financial, business, and investment matters and otherwise able toevaluate the merits and risks associated with the purchase of the Company’s securities.

                In early April 2004, the Company issued 95,000 shares of the Company’s Common Stock to three purchasers in exchange for theCompany’s receipt of an aggregate of $17,500 in cash. All of the shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer, however the Company did pay a finder a finder’s fee equalto 8% of the aggregate amount received, with 7% paid in cash and 1% paid by the issuance of the Company’s Common Stock.  Apart from the payment of a finder’s fee, no commissions were incurred by the Company in connection with the transaction. All ofthe shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. Each purchaser was

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sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

                Later in April, the Company issued additional shares of the Company’s Common Stock as follows:
|         | (1)      | 10,000 shares to one purchaser in exchange for the Company’s receipt of cash of $1,000;        |
|--------------------------------------------|-----------------------------------|------------------------------------------------------------------------------------------------------|
|                                            | (2)                               | 240,000 shares to two purchasers in exchange for the Company’s receipt of cash of $60,000; and |
|                                            | (3)                               | 110,000 shares to two purchasers in exchange for the Company’s receipt of cash of $27,500.     |

****

                In each transaction, the Company paid a finder a finder’s fee equal to 8% of the aggregate amount received, with 7% paid in cashand 1% paid by the issuance of the Company’s Common Stock. The finder merely introduced the Company to each purchaser and apart from the payment of a finder’s fee, no commissions were incurred by the Company in connection with the transaction. All of theshares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. Each purchaser was sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate the merits and risksassociated with the purchase of the Company’s securities.

                In May 2004, the Company issued an aggregate of 610,000 shares of the Company’s Common Stock to five investors in exchange forthe Company’s receipt of an aggregate of $152,500 in cash.  The Company paid a finder a finder’s fee equal to 13% of the aggregate amount received, with 7% paid in cash and 6% paid by the issuance of the Company’s Common Stock. The findermerely introduced the Company to each purchaser and apart from the payment of a finder’s fee, no commissions were incurred by the Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section4(2) of the Securities Act of 1933. Each purchaser was sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

                In late June 2004, the Company issued 575,000 shares of the Company’s Common Stock to one investor in exchange for theCompany’s receipt of $115,000 in cash.  All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933 and the shares were offered and sold by the Company’s management without the use of anunderwriter or NASD registered broker-dealer and no commissions were incurred by the Company in connection with the transaction. The purchaser was sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate the meritsand risks associated with the purchase of the Company’s securities.

                Later in June 2004, the Company issued 2,000,000 shares of the Company’s Common Stock in connection with the acquisition of a37.5% interest in Brasil Communications, LLC.  The shares were valued at $0.46 per share. The investor was an Accredited Investor and the shares were offered and sold by the Company’s management without the use of an underwriter or NASD registeredbroker-dealer and no commissions were incurred by the Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. The investor was sophisticated and experiencedin financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

                In July 2004, the Company issued 187,500 shares of the Company’s Common Stock to one purchaser in consideration of theCompany’s receipt of cash of $9,375.  The shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer and no commissions were incurred by the Company in connection with the transaction.All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. The purchaser was sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate the merits andrisks associated with the purchase of the Company’s securities.

                In early August 2004, the Company issued an aggregate of 545,000 shares of the Company’s Common Stock to five investors inexchange for the Company’s receipt of cash of $136,250.  The Company paid a finder a finder’s fee equal to 13% of the aggregate amount received, with 7% paid in cash and 6% paid by the issuance of the Company’s Common Stock.  The findermerely introduced the Company to each investor. All of the shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer and no commissions were incurred by the Company in connection with thetransaction. In addition, all of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933.

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Each purchaser was sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

                Later in August 2004, the Company issued 1,800,000 shares of the Company’s Common Stock to one investor in exchange for theCompany’s receipt of $180,000 in cash.  All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933 and the shares were offered and sold by the Company’s management without the use of anunderwriter or NASD registered broker-dealer and no commissions were incurred by the Company in connection with the transaction. The purchaser was sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate the meritsand risks associated with the purchase of the Company’s securities.

                In September 2004, the Company issued shares of the Company’s Common Stock as follows:

****
|         | (1)      | A total of 45,192 shares of the Company’s Common Stock were issued in payment of legal services.  All of these shares were valued at aggregate of $0.6425 per share;                                                                                                                                                                                                                  |
|--------------------------------------------|-----------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                            | (2)                               | A total of 100,000 shares of the Company’s Common Stock were issued to Paul E. Atkiss, an officer and director of the Company in payment for services.  All of these shares were valued at aggregate of $0.4175 pershare;                                                                                                                                                             |
|                                            | (3)                               | An aggregate of 6,000,000 shares of the Company’s Common Stock were issued in payment for services by the following officers and directors with each receiving 1,000,000 shares: (a) Farid Shouekani; (b) Jason A. Sunstein;(c) James Balestraci; (d) John L. Castiglione; (e) Ronald G. Weaver; and (f) Stephen D. Young.   All of these shares were valued at $0.04 per share; |
|                                            | (4)                               | A total of 250,000 shares were issued in settlement of a dispute with all of the shares issued to one purchaser.  All of these shares were valued at $0.51 per share;                                                                                                                                                                                                                       |
|                                            | (5)                               | A total of 20,000 shares were issued to one purchaser in consideration of the Company’s receipt of cash $10,000 for a value of $0.50 per share;                                                                                                                                                                                                                                            |
|                                            | (6)                               | A total of 50,000 shares were issued to one purchaser in payment of certain accrued and unpaid interest on a Company debt.  These shares were valued at $0.06 per share;                                                                                                                                                                                                                    |
|                                            | (7)                               | An aggregate of 503,893 shares were issued to three purchasers in connection with the conversion of notes aggregating $150,000 previously issued to them by the Company plus accrued interest of $1,168. These shares were valuedat $0.30 per share;                                                                                                                                             |
|                                            | (8)                               | A total of 225,000 shares were issued to two purchasers in payment for services received by the Company.  These shares were valued at aggregate of $0.45 per share; and                                                                                                                                                                                                                     |
|                                            | (9)                               | A total of 76,333 shares were issued to one purchaser in payment for services.  These shares were valued at aggregate of $0.4569 per share.                                                                                                                                                                                                                                                 |

****

                All of the shares were offered and sold by the Company’s management without the use of an underwriter or NASD registeredbroker-dealer and no commissions were incurred by the Company in connection with the transaction. All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933. Each purchaser was sophisticated andexperienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.  In the case of the shares sold to officers and directors, all of the purchasers wereAccredited Investors.

                On October 17, 2004, the Company effected a forward split of the Company’s Common Stock so that, as effected, each stockholderreceived one share of the Company’s Common Stock for every ten share of the Company’s Common Stock held as of the record date.

                All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933 and theshares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer and no commissions were incurred by the Company in connection with the transaction. Each purchaser was sophisticated and experienced infinancial, business, and investment matters and otherwise able to evaluate the merits and risks associated with the purchase of the Company’s securities.

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

                The Company’s discussion and analysis of its financial condition and results of operations are based upon its consolidatedfinancial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.  The preparation of these financial statements requires management to make estimates

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and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and related disclosures of contingent liabilities.  On an ongoing basis, management evaluates its estimates, including thosethat relate to income tax contingencies, revenue recognition, and litigation.  Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form thebasis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions and conditions.  If actual results significantlydiffer from management's estimates, the Company's financial condition and results of operations could be materially impaired.

***Comparison of Fiscal Year Ending December 31, 2004 and Fiscal Year Ending December 31, 2003***

                During the fiscal year ending December 31, 2004, we recorded $4,612,783 as net sales revenues. This compares to the fiscal year endingDecember 31, 2003 (the "Fiscal 2003") when we recorded $433,376 as net sales revenue.

                During Fiscal 2004, our Cost of sales was $4,082,588 which resulted in a gross margin as a percentage of net sales revenues ofapproximately 11.5%. This compares to Fiscal 2003 where our Cost of sales was $296,853 which resulted in a gross margin percentage of net sales revenues was approximately 31.5%. Competitive conditions, product and sales mix, and technology trends impacted our grossmargin in both of these years.

                During Fiscal 2004 we incurred $3,660,801 in selling, general and administrative expenses. This compares to Fiscal 2003 when weincurred $1,462,567 in selling, general and administrative expenses.  The increase of approximately 114.80% from Fiscal 2003 to Fiscal 2004 was due primarily to the increased average monthly amount of selling, general and administrative expenses incurred as theCompany developing and implementing its business plan. Overall, selling, general and administrative expenses were primarily made up of wages and salaries, office expenses, fees and costs incurred for legal and accounting services, and other administrativecosts.

                During Fiscal 2004, we recorded an Equity loss from unconsolidated subsidiaries of $127,800.  And during Fiscal 2004, we incurredan Operating Loss of $3,284,003 compared to an Operating Loss of $1,355,443 during Fiscal 2003. The increase in the amount of the loss in Fiscal 2004 was due primarily to the increased selling, general and administrative expenses we incurred as we completed theacquisition of Adoria Communications, LLC.

                During Fiscal 2004, we incurred interest expense of $73,060 compared to $60,495 in interest expense during Fiscal 2003. In addition, inFiscal 2004 we had $15,761 in realized loss on marketable securities compared to Fiscal 2003 when we incurred $8,173 in realized loss on marketable securities. During Fiscal 2004, we had bad debt expense of $83,712 compared to Fiscal 2003 when we $0 in bad debtexpense and a charge of $4,488,238 for impairment of an intangible.

                As a result, during Fiscal 2004 we had a net loss of $7,910,925 compared to Fiscal 2003 when we had a net loss of$2,200,854.

                Basic loss per share for Fiscal 2004 was $.08 compared to Fiscal 2003 when we had a basic loss per share of $.06.  During Fiscal2004, we had 101,961,298 weighted average shares outstanding. By comparison, during Fiscal 2003 we had 37,243,157 weighted average shares outstanding.

**Liquidity and Capital Resources**

                At December 31, 2004, we had $40,945 in cash. At the same time, we had $59,324 in other current assets. In contrast, as of December 31,2004, our total current liabilities were $1,308,326 which consisted primarily of the following material amounts: $375,564 in Accounts payable, $61,915 in Accrued liabilities, $607,094 in Related party obligations, $97,647 in short term and current portion of longterm debt, and $81,380 in Stock subscription deposit.

                During Fiscal 2004, our cash needs were met primarily by the sale of common stock and loans from certain of our shareholders.  Wecan not be assured that we will continue to obtain funds from these or any other sources to meet our need for additional capital resources.

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                Overall, our liquidity and access to capital is very limited.  Net Working Capital as of December 31, 2004 was ($573,649). We havenot received any commitment for additional financing and given the size of our company, we may be limited to loans and other cash infusions from officers, directors, existing stockholders, and persons affiliated or associated with one or more of them.  If we areto implement our business plan, we will need to raise significant amounts of additional capital and during the period ending December 31, 2004 we had not received any commitment that any such additional financing would be forthcoming or, if could be obtained, that itcan be obtained on reasonable terms in light of our circumstances at that time. In addition, if any financing should be obtained, existing shareholders will likely incur substantial, immediate, and permanent dilution of their existing investment.

                As of December 31, 2004, the Company expects that it will need at least $1,300,000 to cover our anticipated operating expenses for thetwelve month period thereafter. 

**Critical Accounting Policies**

                The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the UnitedStates of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements; and the reported amount of revenues and expensesduring the reporting periods.  We are required to make judgments and estimates about the effect of matters that are inherently uncertain.  Actual results could differ from our estimates.  While we are a development-stage company, the most significantareas involving our judgments and estimates are principally those involving our current liabilities.

****

**Safe Harbor for Forward-Looking Statements**

                This Form 10-KSB contains forward-looking statements as defined by federal securities laws which are made pursuant to the safe harborprovisions of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are statements concerning plans, objectives, goals, strategies, expectations, intentions, projections, developments, future events, performance or products,underlying (express or implied) assumptions and other statements which are other than historical facts.  In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "expects," "intends," "plans,""anticipates," "contemplates," "believes," "estimates," "predicts," "projects," and other similar terminology or the negative of these terms. From time to time we may publish or otherwise make available forward-looking statements of this nature.  All suchforward-looking statements, whether written or oral, and whether made by us or on our behalf, are expressly qualified by the cautionary statements described in this Form 10-KSB, including those set forth in Section 1A entitled "Factors That May Affect FutureResults."  In addition, we undertake no obligation to update or revise any forward-looking statement to reflect events, circumstances, or new information after the date of this Form 10-KSB or to reflect the occurrence of unanticipated or other subsequent events,and we disclaim any such obligation.

**Impact of Inflation**

                Because of the nature of its services, the Company does not believe that inflation had a significant impact on its sales orprofits.

**Recent Accounting Pronouncements**

                In July 2002, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard(“SFAS”) No. 146 – *Accounting for Costs Associated with Exit or Disposal Activities*.  SFAS No. 146 provides guidance on the recognition and measurement of liabilities associated with exit or disposal activities.  Under SFAS No. 146,liabilities or costs associated with exit or disposal activities should be recognized when the liabilities are incurred and measured at fair value.  This statement is effective prospectively for exit ort disposal activities initiated after December 31,2002.  The adoption is not expected to have a material effect on the Company’s results of operation or financial condition.

                In November 2002, the FASB issued FASB issued FASB Interpretation No. 45 (“FIN 45”), -- *Guarantor’s Accounting andDisclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others*,” FIN 45 requires that a liability be recorded in the guarantor’s balance sheet upon issuance of a guarantee.  In addition, FIN 45 requiresdisclosures about the guarantees that an entity has issued, including a rollforward of the

-27-

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entity’s product warranty liabilities. The Company will apply the recognition provisions of FIN 45 prospectively to guarantees issued after December 31, 2002.  The disclosure provisions of FIN 45 are effective for,and are reflected in, the 2002 financial statements.  The adoption of FIN 45 is not expected to have a material effect on the Company’s results of operation or financial condition.

                In November 2002, the Emerging Issues Task Force (EITF) issued Issue No. 00-21, “*Accounting for Revenue Arrangements withMultiple Deliverables*.” This Issue addresses determination of whether an arrangement involving more than one deliverable contains more than one unit of accounting and how arrangement consideration should be measured and allocated to the separate units ofaccounting.  EITF Issue No. 00-21 will be effective for revenue arrangements entered into in fiscal periods beginning after June 15, 2003 or the Company may elect to report the change in accounting as a cumulative-effect adjustment.  The Company isreviewing EITF Issue No. 00-21 and has not yet determined the impact that this issue will have on its operating results and financial condition.

**ITEM 7.     FINANCIAL STATEMENTS**

The financial statements and related financial information required to be filed hereunder are indexed on page F-1 of this report and are incorporated herein by reference.

**ITEM 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUTANTS**

                None.

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| **PART III** |
|--------------|

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

                **Directors and Executive Officers**

                The members of the Board of Directors of the Company serve until the next annual meeting of stockholders, or until their successorshave been elected.  The Company’s by-laws provide for four authorized directors.  Currently, the Company has only three directors and intends, as opportunities become available, to identify one additional director to serve on the Company’s Boardof Directors.

                The officers serve at the pleasure of the Board of Directors.  Information as to the directors and executive officers of theCompany is as follows:

| **Name**            |                                                  | **Age** | **        ** | **Position**                                      | **        ** | **Date Elected** |
|---------------------|--------------------------------------------------|---------|------------------------------------------------------|---------------------------------------------------|------------------------------------------------------|------------------|
|                     |                                                  |         |                                                      |                                                   |                                                      |                  |
| Ronald G. Weaver    |          | 59      |                                                      | President, Chief Executive Officer & Director |                                                      | 2003             |
| John L. Castiglione |                                                  | 33      |                                                      | Treasurer and Director                            |                                                      | 2000             |
| Farid Shouekani     |                                                  | 40      |                                                      | Director                                          |                                                      | 2003             |
| Jason A. Sunstein   |                                                  | 33      |                                                      | V.P. Finance, Secretary and Director              |                                                      | 2000             |
| Paul E. Atkiss      |                                                  | 49      |                                                      | Chief Financial Officer and Director              |                                                      | 2004             |
| James Balestraci    |                                                  | 39      |                                                      | Director                                          |                                                      | 2004             |

                Each of the foregoing persons may be deemed a "promoter" of the Company, as that term is defined in the rules and regulationspromulgated under the *Securities Act of 1933*. 

                ***Ronald G. Weaver, age 59,*** is President, Chief Executive Officer, and Director of the Company and has held these positionssince June 2003.  From 1999 to 2002, Mr. Weaver served as Chief Operating Officer of Digital Services Group, Inc. where he created a multi-year business plan while directing overall revenue growth of 47% in China and Taiwan and in Europe and :Latin America. From1997 to 1999, Mr. Weaver served as Vice President of World Wide Sales of Global VoIP Sound. From 1994 to 1997, Mr. Weaver served as Vice President of World Wide Sales and Marketing at Franklin Telecom where he created turnkey VoIP sales systems for Latin America,Europe, Asia, and the Pacific Rim and opened up nine new telecom markets and established the NATO satellite communications services backbone. From 1984 to 1997, Mr. Weaver served as National Distribution Sales Manager at Panasonic AOG.  From 1980 to 1984, Mr.Weaver served as National Sales and Marketing Manager at Western Digital. Mr. Weaver received his Bachelor of Arts (degree) in Business Administration and Economics from the University of California at Los Angeles (1973), completed studies at New Mexico StateUniversity in Organizational Psychology (1975), completed studies in French at California State University (1988), and completed studies at MSU in Russian.

                ***John L. Castiglione, age 32,*** is Treasurer and Director of the Company and has held these positions since September2000.  Prior to joining the Company, Mr. Castiglione held marketing positions with Fujitsu Business Communications Systems (1999), Starbucks Specialty Sales (1998), TSR Wireless (1996-1998), and ICG Communications (1998-2000). Mr. Castiglione attended San DiegoState University where he studied Business as well as Industrial and Organizational Psychology.

                ***Farid Shouekani, age 40,*** is Chief Technical Officer and Director of the Company and has held these positions sinceOctober 2003. For the past 10 years Mr. Shouekani has held positions in VoIP, telecommunications and engineering with such Companies as TEC Cellular, Robotron and Crescent International. Most recently he helped design, build and deploy MidAtlantic International's World Wide VoIP (Voice over Internet Protocol) network which was acquired by Viper Networks in 2003. Mr. Shouekani has a Bachelor of Science Degree in Electrical Engineering and a Masters of Science Degree in Computer Engineering from FloridaTech.

                ***Jason A. Sunstein, age 32***, is Vice President Finance and Secretary and Director and has held thesepositions since 2000.  Prior to joining the Company, Mr. Sunstein was a V.P. and Secretary of Tri-National Development Corp., formerly a publicly-traded real estate company.  In October of 2001, Tri-National filed for

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bankruptcy reorganization.  Mr. Sunstein resigned from Tri-National in May of 2002.  During 1998 and 1999 while Mr. Sunstein was corporate secretary at Tri-National, Tri-National retained the servicesof a finder to introduce it to potential investors.  It was later discovered that the finder had violated certain Wisconsin securities laws.  With the result that Tri-National refunded and rescinded the investments made by these investors.  Mr.Sunstein attended the School of Business at San Diego State University where he majored in Finance.

                ***Paul E. Atkiss, age 49,*** is Chief Financial Officer and Director of the Company and has held these positions since June2003. Mr. Atkiss brings to the Company over 25 years of accounting and finance experience with privately held and publicly traded corporations. Mr. Atkiss spent 12 years with Jaycor, most recently as Controller, where he was responsible for theaccounting systems, consolidated reporting, financial and tax audits, banking, and insurance. Mr. Atkiss holds a Bachelor of Science degree from San Diego State University and is a California CPA.

                ***James Balestraci, age 39,*** is Chief of International Wholesale Operations and Director and has held this position sinceJanuary 2004.  Prior to joining the Company, Mr. Balestraci was the President and founder of Adoria Communications, LLC and served in that capacity for 2 years. Mr. Balestraci joins Viper Networks with over 11 years of successful telephony engineering and salesexperience having worked for some of the premier firms in the industry. This includes 9 years with Network Plus, Inc.

**Advisory Board Member**

                The Company has established an Advisory Board.  Currently the Company has only one Advisory Board Member but the Company mayincrease the size of the Board if opportunities arise.  The Advisory Board provides advice to the Company’s management from time to time and as requested.  The Company has not established any compensation arrangements for the services it receives frompersons who provide advice in their capacity as Advisory Board Members.

                ***Paul Goss, age 61,*** is an Advisory Board Member of the Company. Mr. Goss has been legal counsel to the Company sinceSeptember 2000.  Mr. Goss has been the Executive Vice President and General Counsel for One Capital Corporation, a private merchant bank with offices in New York and Denver since 1990.  Prior to joining Capital One, Corporation, Mr. Goss was engaged in theprivate practice of law in Denver, Colorado with a concentration in real estate, corporate, and securities law.  He is a member of the Denver and Colorado Bar Associations.  Mr. Goss has a Masters in Business Administration (degree) in addition to his JurisDoctor (degree) from the University of Denver.

**Compliance with Section 16(a) of the Exchange Act**

                Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires that the Company’s directors,executive officers, and persons who own more than 10% of the Company’s Common Stock (collectively, “Covered Persons”) to file reports of ownership (Form 3) and reports changes in ownership of Common Stock (Forms 4 and Forms 5) with the Securitiesand Exchange Commission as well as the Company and any exchange upon which the Company's Common Stock is listed.

                The Company is required to identify Covered Persons that the Company knows have failed to file or filed late Section 16(a) reportsduring the previous fiscal year. To the Company's knowledge, the following Covered Persons during the fiscal year ended December 31, 2004 failed to file on a timely basis reports required by Section 16(a) of the Exchange Act:

| **Name**                                                                                                                                                   |                                                              | **Position**                                                                                                                                               |                                                              | **No. of Reports Not Filed on a Timely Basis(1)**                                                                                                          |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|
| NONE                                                                                                                                                       |            |                                                                                                                                                            |            |                                                                                                                                                            |
| **                         ** |                                                              | **                         ** |                                                              | **                         ** |

| Footnote: |                                                                                                                                                                                                                                                                       |  |
|-----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|
| (1)       | To the Company's knowledge, based solely on a review of the copies of the reports furnished to the Company by such persons, in the fiscal year ended December 31, 2004 such persons have subsequently filed the reports requiredby Section 16(a) of the Exchange Act. |

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**ITEM 10.     EXECUTIVE CONPENSATION**

                The Company's Board of Directors has authorized the compensation of its officers with the following annual cash salaries:

**SUMMARY COMPENSATION TABLE**

|                                                                             | **Annual Compensation** | **Long-Term Compensation**                                                                        |                  |
|-----------------------------------------------------------------------------|-------------------------|---------------------------------------------------------------------------------------------------|------------------|
|                                                                             |                         |                                                                                                   |                  |
|                                                                             |                         |                                                                                                   |                  |  | **Awards               Payouts** |  |
|                                                                             |                         |                                                                                                   |                  |  |  |  |
| **Name and Principal Position (a)**                                         | **Year (b)**            | **Salary ($)(c)**                                                                                 | **Bonus ($)(d)** | **Other Annual Compen- sation ($)(e)*** | **Restricted Stock Awards (s)($)(f)** | **Securities Underly-ing Options/ SARs (#)(g)** | **LTIP Payouts ($)(h)** | **All Other Compen- sation (1)($)(i)** |
|                                                                             |                         |                                                                                                   |                  |  |  |  |  |  |
| Ronald G. Weaver, President, CEO and Director                               | 2002 2003 2004          | $           0 $  17,146 $141,000 | $ 0 $ 0 $ 0      | $ ------- $ ------- $ 9,000 | $ 0 $ 0 $ 80,000 | 0 0 0 | $ 0 $ 0 $ 0 | $ 0 $ 0 $ 0 |
| John L. Castiglione, CEO, Treasurer, and Director                           | 2002 2003 2004          | $           0 $  19,446 $141,000 | $ 0 $ 0 $ 0      | $   6,000 $  19,446 $   9,000 | $  64,000 $179,301 $  80,000 | 250,000 250,000 0 | $ 0 $ 0 $ 0 | $ 0 $ 0 $ 0 |
| Farid Shouekani, Director                                                   | 2002 2003 2004          | $           0 $  24,000 $120,000 | $ 0 $ 0 $ 0      | $           0 $   1,831 $   8,787 | $  64,000 $179,301 $  80,000 | 0 250,000 0 | $ 0 $ 0 $ 0 | $ 0 $ 0 $ 0 |
| Jason A. Sunstein, V.P. Finance, Secretary & Director                   | 2002 2003 2004          | $           0 $  19,446 $141,000 | $ 0 $ 0 $ 0      | $   6,000 $  19,446 $   9,000 | $  64,000 $179,301 $  80,000 | 250,000 250,000 0 | $ 0 $ 0 $ 0 | $ 0 $ 0 $ 0 |
| Paul E. Atkiss, CFO & Director                                          | 2004                    | $  75,000                                                                               | $ 0              | $           0 | $  33,625 | 1,000,000 | $ 0 | $ 0 |
| James Balestraci Chief of International Wholesale Operations & Director | 2004                    | $132,353                                                                                          | $ 0              | $           0 | $  40,000 | 0 | $ 0 | $  6,753 |
|                                                                             |                         |                                                                                                   |                  |  |  |  |  |  |
| All Directors as a Group (5 persons)                                        |                         |                                                                                                   |                  |  |  |  |  |  |

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                With respect to cash salaries, the Company may change or increase salaries as the Company's profits and cash flow allow.

**OPTION/SAR GRANTS IN 2004 FISCAL YEAR**(Fiscal Year Individual Grants)

| ****

**Name (a)** | ****

**No. of Securities Underlying Options/SARs Granted (#) (b)** | ****

**Percent of Total Options/ SARs Granted to Employees in Fiscal Year (c)** | ****

**Exercise of Base Price ($/Sh) (d)** | ****

**Expiration Date (e)** |
|--------------------|---------------------------------------------------------------------|----------------------------------------------------------------------------------|---------------------------------------------|-------------------------------|
|                    |                                                                     |                                                                                  |                                             |                               |
| Paul E. Atkiss     | 500,000 500,000                                                     | 100% 100%                                                                        | $(.526) $(.450)                             | 06/02/2009 09/17/2006         |

| Footnote: |                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)       | During the calendar year ending December 31, 2004, Mr. Atkiss was awarded the following as stock options:  (a) an option to purchase 500,000 shares of the Company’s common stock at an exercise price of $0.526 pershare with the option expiring on June 2, 2009; and (b) an option to purchase 500,000 shares of the Company’s common stock at an exercise price of $0.450 per share with the option expiring on September 17, 2009. |

                The Company does not currently compensate its Directors for their services as directors. The Board of Directors did not include anyindependent directors as of December 31, 2004. Such Directors will be added as needed and at the same time such directors are appointed or elected, the Company may institute a system of compensation either in the form of attendance fees or option awards.

                With respect to cash salaries, the Company may change or increase salaries as the Company's profits and cash flow allow.  Theamount of any increase in salaries and compensation for existing officers has not been determined at this time and the number and dollar amount to be paid to additional management staff that will likely be employed has not been determined.

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

                The following table sets forth information relating to the beneficial ownership of Company common stock by those persons beneficiallyholding more than 5% of the Company's Common Stock, by the Company's directors and executive officers, and by all of the Company's directors and executive officers as a group as of December 31, 2004.

|                                               |                                |                                                                                |                                            |                                                         |                                            |                                                  |
|-----------------------------------------------|--------------------------------|--------------------------------------------------------------------------------|--------------------------------------------|---------------------------------------------------------|--------------------------------------------|--------------------------------------------------|
| **(1) Title Of Class**                        |                                | ****

**(2) Name And Address Of Beneficial Owner**                             |                                            | ****

**(3) Amount And Nature Of Beneficial Owner (1)** |                                            | ****

**(4) Percent Of Class (1) (2)** |
|                                               |                                |                                                                                |                                            |                                                         |                                            |                                                  |
| Common Stock                                  |       | Ronald G. Weaver 10373 Roselle Street Suite 170 San Diego, California 92121    |                   | 9,000,000                                               |                                            | 7.17%                                            |
| Common Stock                                  |                                | John L. Castiglione 10373 Roselle Street Suite 170 San Diego, California 92121 |                                            | 12,766,684                                              |         | 10.17%                                           |
| Common Stock                                  |                                | Farid Shouekani 10373 Roselle Street Suite 170 San Diego, California 92121     |                                            | 5,480,000                                               |                                            | 4.36%                                            |
| Common Stock                                  |                                | Jason A. Sunstein 10373 Roselle Street Suite 170 San Diego, California 92121   |                                            | 11,994,942                                              |                                            | 9.56%                                            |
| Common Stock                                  |                                | James E. Balestraci 10373 Roselle Street Suite 170 San Diego, California 92121 |                                            | 4,600,000                                               |                                            | 3.66%                                            |
| Common Stock                                  |                                | Paul E. Atkiss 10373 Roselle Street Suite 170 San Diego, California 92121      |                                            | 1,110,000                                               |                                            | 0.88%                                            |
|                                               |                                |                                                                                |                                            |                                                         |                                            |                                                  |
| Officers and Directors as a group (6 persons) |                                |                                                                                |         | 44,951,626                                              |                                            | 35.82%                                           |
|                                               |                                |                                                                                |                                            |                                                         |                                            |                                                  |
|                                               |                                |                                                                                |                                            |                                                         |                                            |                                                  |

**ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**

****

                As a result of several transactions, Jason A. Sunstein, an officer and director of the Company, paid certain of the Company’sexpenses which totaled $10,330 during the twelve months ending December 31, 2002, totaling $16,737 as of December 31, 2002. The Company subsequently repaid Mr. Sunstein all of these amounts.

                As a result of several transactions, John L. Castiglione, an officer and director of the Company, paid certain of the Company’sexpenses which totaled $23,251 during the twelve months ending December 31, 2002, totaling $26,603 as of December 31, 2002. The Company subsequently repaid Mr. Castiglione all of these amounts.

                In August 2003, the Company’s Board of Directors approved the acquisition of Coliance Communications (“Coliance”)which included the purchase of the shares of Coliance acquired from Ronald G. Weaver and Stephen D. Young. In this transaction, the Company issued 8,000,000 shares of the Company’s Common Stock to Ronald G. Weaver, who became the Company’s Chief ExecutiveOfficer and a Director and 9,000,000 shares of the Company’s Common Stock to Stephen D. Young, who became the Company’s Chairman of the Board.

                On October 15, 2003, the Company’s Board of Directors approved the acquisition of Mid-Atlantic International, Inc., a Michigancorporation (“Mid-Atlantic”) from Farid Shouekani.  Under the terms of the Mid-Atlantic Agreement, the Company acquired all of Mr. Shouekani’s Mid-Atlantic Shares in exchange for: (1) $50,000 cash within 21 days of Closing; and (2) an aggregateof 7,235,000 shares of the Company’s Common Stock with

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4,235,000 of these shares (the “Special Shares”) subject to certain redemption rights (the “Redemption Rights”), at the option of Mr. Shouekani at a redemption price of $0.17 per Special Share asprovided by the Mid-Atlantic Agreement. All of the Redemption Rights expire on January 15, 2003 and are secured by Mid-Atlantic’s assets.  As of December 31, 2004, Mr. Shouekani exercised his Redemption Rights over 1,802,000 Special Shares. The remaining2,433,000 Special Shares were canceled and returned to treasury.  Mr. Shouekani also became a Director of the Company.

                On January 30, 2004, the Company entered into a Securities Merger Agreement (the “Adoria Agreement”) with James Balestraci,the sole holder of the membership interests of Adoria Communications, LLC, a Delaware limited liability company (“Adoria”).  Under the terms of the Adoria Agreement, the Company acquired all of Mr. Balestraci’s membership interests in Adoria inexchange for: (1) cash payments totaling $500,000 and (2) the Company’s issuance of 2,500,000 shares of the Company’s Common Stock with 500,000 of these shares (the “Performance Shares”) of the Company’s Common Stock subject to thecondition that Adoria’s financial results in 2004 must equal or exceed its financial results in 2003.  In the event that Adoria’s financial results in 2004 do not equal or exceed its 2003 results, the Performance Shares are to be cancelled andreturned as treasury stock.  Mr. Balestraci also became a Director of the Company.

                During the calendar year ending December 31, 2004, Mr. Atkiss was awarded the following as stock options:  (a) an option topurchase 500,000 shares of the Company’s common stock at an exercise price of $0.526 per share with the option expiring on June 2, 2009; and (b) an option to purchase 500,000 shares of the Company’s common stock at an exercise price of $0.450 per sharewith the option expiring on September 17, 2009.

**ITEM 13.     EXHIBITS AND REPORTS ON FORM 8-K**
| (a)                                                                            | The following Exhibits are attached or incorporated by reference, as stated below.                                              |
|--------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|
|               |                                                                                                                                 |
|  3.1(a)                                                                   | Articles of Amendment to Articles of Incorporation of Tinglefoot Mining, Inc.*                                                  |
|  3.1(b)                                                                   | Articles of Amendment to Articles of Incorporation of Mexico Investment Corporation*                                            |
|  3.1(c)                                                                   | Articles of Amendment to the Articles of Incorporation of Baja Pacific International, Inc.*                                     |
|  3.1(d)                                                                   | Articles of Incorporation of Taig Ventures, Inc.**                                                                              |
|  3.1(e)                                                                   | Articles of Incorporation for Coliance Communications, Inc.#*                                                                   |
|  3.1(f)                                                                   | Articles of Incorporation for Mid-Atlantic International, Inc.#*                                                                |
|  3.1(g)                                                                   | Articles of Organization for Adoria Communications, LLC                                                                         |
|  3.3                                                                      | By-Laws for Viper Networks, Inc.*                                                                                               |
|  3.3(a)                                                                   | By-Laws for Coliance Communications, Inc.                                                                                       |
|  3.3(b)                                                                   | By-Laws for Mid-Atlantic International, Inc.                                                                                    |
| 10.1                                                                           | Securities Purchase Agreement and Plan of Reorganization*                                                                       |
| 10.2                                                                           | Viper Networks, Inc. 2000 Equity Incentive Plan*                                                                                |
| 10.3                                                                           | Employment Agreement (Wray)*                                                                                                    |
| 10.4                                                                           | Employment Agreement (Castiglione)*                                                                                             |
| 10.5                                                                           | Employment Agreement (Sunstein)*                                                                                                |
| 10.6                                                                           | Agreement of Purchase and Sale of Assets (between Viper Networks, Inc. And Tri-National Development Corporation)*               |
| 10.7                                                                           | Addendum to the Agreement of Purchase and Sale of Assets Between Viper Networks, Inc. And Tri-National Development Corporation* |
| 10.8                                                                           | Settlement Agreement And General Release of Claims (between Viper Networks, Inc. And Tri-National Development Corporation)*     |
| 10.9                                                                           | Month-to-Month Industrial Lease**                                                                                               |
| 10.10                                                                          | Month-to-Month Industrial Lease***                                                                                              |
| 10.11                                                                          | Securities Merger Agreement (Mid-Atlantic)                                                                                      |
| 10.12                                                                          | Amendment to Securities Merger Agreement (Mid-Atlantic)                                                                         |
| 10.13                                                                          | Securities Merger Agreement (Adoria)                                                                                            |
| 23.1                                                                           | Consent of Independent Accountants, Armando C. Ibarra, C.P.A., P.C.                                                             |
| 31.1                                                                           | Certification by Chief Executive Officer                                                                                        |
| 31.2                                                                           | Certification by Chief Executive Officer                                                                                        |
| 32.1                                                                           | Certification by Chief Executive Officer of the Company Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.              |
| 32.2                                                                           | Certification by Chief Executive Officer of the Company Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.              |

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|               |                                                                                                  |
|--------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------|
|                                                                                |                                                                                                  |
|                                                                                | *Previously filed with Form 10-SB or 10-SB-Amendment No. 1 and incorporated herein by reference. |
|                                                                                | **Previously filed with 2001 Form 10-KSB and incorporated herein by reference.                   |
|                                                                                | ***Previously filed with 2002 Form 10-KSB and incorporated by reference herein.                  |
|                                                                                | #*Previously filed with 2003 Form 10-KSB and incorporated by reference herein.                   |
|                                                                           |                                                                                                  |
| (b)                                                                            | The Company filed the following Reports on Form 8-K during the year ending December 31, 2004:    |
|                                                                                | -     Form 8K December 30, 2004                                         |

**ITEM 14.     PRINCIPAL ACCOUNTANT FEES AND SERVICES**

**Audit Fees**

                The anticipated aggregate fees to Armando C. Ibarra, CPA, P.C., for professional services rendered for the audit of the Company’sannual financial statements for the fiscal year ended December 31, 2004 and for the reviews of the financial statements included in the Company’s Quarterly Reports on Form 10-QSB for that fiscal year are estimated at $ 10,000. No other fees for audit-relatedservices were billed or paid to Armando C. Ibarra, CPA, P.C. Audit related services generally include fees for accounting consultations, business acquisitions, and work related thereto.

**Audit Committee Charter**

****

                The Company intends to establish an Audit Committee of the Company’s Board of Directors and thereby to establish a Charter forthe Audit Committee.  For the year ending December 31, 2004 and due to limited financial resources, the Company has delayed the implementation of these plans until such later date at which the Company may have the financial resources available.

**Audit Committee Report**

                Since the Company did not establish an Audit Committee for the year ending December 31, 2004, no Audit Committee Report for that periodis available.

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**SIGNATURES**

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

**Viper Networks, Inc.**
| By:  /s/ *Ronald G. Weaver* Ronald G. Weaver Chief Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                             |                                 | Date: April 15, 2005 |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------|
|                                                                                 |                                                                                                                                                                                            |                      |
| By:  /s/*Paul E. Atkiss* Paul E. Atkiss Chief Financial Officer                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            | Date: April 15, 2005 |

                In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in thecapacities and on the dates indicated.
| By:  /s/ *Ronald G. Weaver* Ronald G. Weaver Chief Executive Officer & Director                                                                                                                                                                                                                                                                                                                                                                                              |                                 | Date: April 15, 2005 |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------|
|                                                                                 |                                                                                                                                                                                            |                      |
| By: /s/ *John L. Castiglione* John L. Castiglione Treasurer & Director                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                            | Date: April 15, 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                            |                      |
| By:  /s/*Jason A. Sunstein* Jason A. Sunstein Vice President Finance, Secretary & Director                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                            | Date: April 15, 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                            |                      |
| By:  /s/*Paul E. Atkiss* Paul E. Atkiss Chief Financial Officer                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            | Date: April 15, 2005 |

-36-

----

| **Index to Financial Statements**                                                                     |                                                                                            |
|-------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------|
|                                                                                                  |                 |
| Report of Independent Registered Public Accounting Firm                                               | F-2                                                                                        |
|                                                                                                  |                                                                                            |
| Consolidated Balance Sheet as of December 31, 2004                                                    | F-3                                                                                        |
|                                                                                                  |                                                                                            |
| Consolidated Statements of Operations for the Years Ended December 31, 2004 and 2003                  | F-4                                                                                        |
|                                                                                                  |                                                                                            |
| Consolidated Statements of Stockholders’ Deficit for the Years Ended December 31, 2004 and 2003 | F-5                                                                                        |
|                                                                                                  |                                                                                            |
| Consolidated Statements of Cash Flows for the Years Ended December 31, 2004 and 2003                  | F-6 – F-7                                                                  |
|                                                                                                  |                                                                                            |
| Notes to the Consolidated Financial Statements                                                        | F-8                                                                                        |

F-1

----

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of DirectorsViper Networks, Inc.10373 Roselle Street, Suite 170San Diego, CA 92121

We have audited the accompanying consolidated balance sheet of Viper Networks, Inc. and subsidiaries of December 31, 2004 and 2003 and the related consolidated statements of operations, changes in shareholders’ equityand cash flow for the years then ended. These consolidated financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these consolidated financial statements based on our 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 aboutwhether 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 usedand 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 Viper Networks, Inc., and subsidiaries as of December 31, 2004 and 2003,and the results of their operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 2 to the consolidated financial statements, the Company’slosses from operations raise doubt about its ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| /s/ Armando C. Ibarra                                        |
|--------------------------------------------------------------|
| ARMANDO C. IBARRA, CPA April 14, 2005 Chula Vista, Ca. 91910 |

F-2

----

| **VIPER NETWORKS, INC. AND SUBSIDIARIES** Consolidated Balance Sheet |
|----------------------------------------------------------------------|

****

|                                                                                                                                                                                                                                                                           |         |               |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|---------------|---|
|                                                                                                                                                                                                                                                                                |         | December 31,  |   |
|                                                                                                                                                                                                                                                                                |         | 2004          |   |
|                                                                                                                                                                                                                                                                                |         |               |   |
| ASSETS                                                                                                                                                                                                                                                                         |
| Current Assets:                                                                                                                                                                                                                                                                |         |               |   |
|         Cash                                                                                                                                                                                                                                | $       | 49,956        |   |
|         Sort-term investments                                                                                                                                                                                                               |         | 5,000         |   |
|         Accounts receivable, net of allowance for doubtful accounts             and sales returns (Note 4)                                                                           |         | 121,948       |   |
|         Inventories                                                                                                                                                                                                                         | 72,020  |
|         Other current assets (Note 4)                                                                                                                                                                                                       | 59,324  |
|                                                                                                                                                                                                                                                                                |         |               |   |
|                 Total current assets                                                                                                                                                                |         | 305,248       |   |
|                                                                                                                                                                                                                                                                           |         |               |   |
| Property and equipment, net (Note 4)                                                                                                                                                                                                                                           |         | 497,226       |   |
| Purchased intangible assets, net                                                                                                                                                                                                                                               | 524,641 |
|                                                                                                                                                                                                                                                                                |         |               |   |
|                                                                                                                                                                                                                                                                                |         |               |   |
|                 Total assets                                                                                                                                                                        | $       | 1,327,115     |   |
|                                                                                                                                                                                                                                                                                |         |               |   |
|                                                                                                                                                                                                                                                                           |         |               |   |
|                                                                                                                                                                                                                                                                           |         |               |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                                     |
| Current liabilities:                                                                                                                                                                                                                                                           |         |               |   |
|         Accounts payable                                                                                                                                                                                                                    | $       | 375,564       |   |
|         Accrued liabilities (Note 4)                                                                                                                                                                                                        |         | 61,915        |   |
|         Loans from related party (Note 6)                                                                                                                                                                                                   |         | 607,094       |   |
|         Taxes payable                                                                                                                                                                                                                       |         | 2,623         |   |
|         Deferred revenues                                                                                                                                                                                                                   |         | 82,103        |   |
|         Short term debt                                                                                                                                                                                                                     |         | 97,647        |   |
|         Stock subscription deposit (Note 7)                                                                                                                                                                                                 | 81,380  |
|                                                                                                                                                                                                                                                                                |         |               |   |
|                 Total current liabilities                                                                                                                                                           |         | 1,308,326     |   |
|                                                                                                                                                                                                                                                                                |         |               |   |
|                                                                                                                                                                                                                                                                           |         |               |   |
| Commitments and Contingencies (Note 9)                                                                                                                                                                                                                                         |         | -             |   |
|                                                                                                                                                                                                                                                                           |         |               |   |
| Stockholders equity:                                                                                                                                                                                                                                                           |         |               |   |
|         Preferred stock: Class A, authorized 100,000 shares at $1.00 par            value, -0- shares issued and outstanding (Note 10)                                                    |         | -             |   |
|         Preferred stock: Class B, authorized 10,000,000 shares at $1.00 par            value, -0- shares issued and outstanding (Note 10)                                                 |         | -             |   |
|         Common stock: 250,000,000 shares authorized of $0.001 par value,                      121,222,899 shares issued and outstanding |         | 121,223       |   |
|         Additional paid-in capital                                                                                                                                                                                                          |         | 11,425,685    |   |
|         Stock subscription receivable (Note 5)                                                                                                                                                                                              |         | (125,000      | ) |
|         Unearned stock-based compensation                                                                                                                                                                                                   |         | (253,318      | ) |
|         Accumulated deficit                                                                                                                                                                                                                 |         | (11,071,676   | ) |
|         Accumulated comprehensive loss                                                                                                                                                                                                      | (78,125 | )             |
|                                                                                                                                                                                                                                                                                |         |               |   |
|                 Total stockholders’ equity                                                                                                                                                    |         |   18,789 |   |
|                                                                                                                                                                                                                                                                                |         |               |   |
|                                                                                                                                                                                                                                                                           |         |               |   |
|                 Total liabilities and stockholders’ equity                                                                                                                                    | $       | 1,327,115     |   |
|                                                                                                                                                                                                                                                                                |         |               |   |

The accompanying notes are an integral part of these consolidated financial statements.F-3

----

| **VIPER NETWORKS, INC. AND SUBSIDIARIES** Consolidated Statements of Operations |
|---------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | Year ended December 31, |                                                                                                                                                              |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                              |                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | 2004                         |                                                                                                                                                              |  | 2003 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                              |                                                                                                                                                              |  |  |  |
|                                                                                                      |  |                              |                            |  |       |  |                            |  |
| Net Revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | $                            | 4,612,783                                                                                                                                                    |  |  | $ | 433,376 |  |
| Cost of revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                              | 4,108,185                                                                                                                                                    |  |  |  | 296,853 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                              |                                                                                                                                                              |  |  |  |  |  |
|         Gross Margin                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                              | 504,598                                                                                                                                                      |  |  |  | 136,523 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                              |                                                                                                                                                              |  |  |  |  |  |
| General and administrative                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |                              | 3,660,801                                                                                                                                                    |  |  |  | 1,462,566 |  |
| Equity loss from unconsolidated subsidiaries                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |                              | 127,800                                                                                                                                                      | 29,400 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                              |                                                                                                                                                              |  |  |  |  |  |
| Loss from operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                              | (3,284,003                                                                                                                                                   | ) |  |  | (1,355,443 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                              |                                                                                                                                                              |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                              |                                                                                                                                                              |  |  |  |  |
| Other income (expenses)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                              |                                                                                                                                                              |  |  |  |  |  |
|         Realized gain on marketable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |                              | 15,761                                                                                                                                                       |  |  |  | 8,173 |  |
|         Interest expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |                              | (73,060                                                                                                                                                      | ) |  |  | (60,495 | ) |
|         Bad debt expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |                              | (83,712                                                                                                                                                      | ) | - |  |
|         Other income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                              | 2,327                                                                                                                                                        |  |  |  | (3048 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                              |                                                                                                                                                              |  |  |  |  |  |
|                 Total other income (expenses)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                              | (138,684                                                                                                                                                     | ) |  |  | (55,370 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                              |                                                                                                                                                              |  |  |  |  |  |
| Loss before extraordinary item                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                              | (3,422,687                                                                                                                                                   | ) |  |  | (1,410,813 | ) |
| Impairment of purchased intangibles                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |                              | (4,488,238                                                                                                                                                   | ) |  |  | (790,041 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                              |                                                                                                                                                              |  |  |  |  |  |
| Net loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | $                            | (7,910,925                                                                                                                                                   | ) |  | $ | (2,200,854 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                              |                                                                                                                                                              |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                              |                                                                                                                                                              |  |  |  |  |  |
| Basic loss per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | $                            | (0.08                                                                                                                                                        | ) |  | $ | (0.06 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                              |                                                                                                                                                              |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                              |                                                                                                                                                              |  |  |  |  |  |
| Weighted average number of shares outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |                              | 101,961,298                                                                                                                                                  |  |  |  | 37,243,157 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                              |                                                                                                                                                              |  |  |  |  |  |

The accompanying notes are an integral part of these consolidated financial statements.F-4

----

| **VIPER NETWORKS, INC. AND SUBSIDIARIES** Consolidated Statements of Stockholders’ Deficit |
|--------------------------------------------------------------------------------------------------|

|                                                                                          |  |                          |                Common Stock               |        | Additional Paid-In Capital |        |                                                                                                                    | Stock Subscriptions      |   |                                                                                                                    | Unearned stock-based |                          |   | Accumulated                                                                                                        |   |                          | Other Comprehensive |                                                                                                                    |        | Total Stockholders’ |   |
|------------------------------------------------------------------------------------------|--|--------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|--------|--------------------------------------------------------------------------------------------------------------------|--------------------------|---|--------------------------------------------------------------------------------------------------------------------|----------------------|--------------------------|---|--------------------------------------------------------------------------------------------------------------------|---|--------------------------|---------------------|--------------------------------------------------------------------------------------------------------------------|--------|---------------------------|---|
|                                                                                          |  |                          | Shares                                                                                                                                                                                     |        |                            | Amount |                                                                                                                    | (Deficit)                |   |                                                                                                                    | Receivable           |                          |   | Compensation                                                                                                       |   |                          | Deficit             |                                                                                                                    |        | Loss                      |   |  | Deficit |  |
|                                                                                          |  |                          |                                                                                                                                                                                            |        |                            |        |                                                                                                                    |                          |   |                                                                                                                    |                      |                          |   |                                                                                                                    |   |                          |                     |                                                                                                                    |        |                           |   |  |  |  |
|                                                                                          |  |      |                                                                                             |   |        |        |                     |      |   |                     |                      |      |   |                     |   |      |                     |                     |   |       |   |                     |  |     |  |                     |  |     |  |                     |  |
| Balance, December 31, 2002                                                               |  |                          | 17,640,689                                                                                                                                                                                 |        |                            | $      | 17,641                                                                                                             |                          | $ | 1,046,165                                                                                                          |                      |                          | $ | (125,000                                                                                                           | ) |                          | $                   | (4,700                                                                                                             | )      |                           | $ | (959,897 | ) |  | $ | - |  |  | $ | (25,791 | ) |
| Issuance of common stock for cash                                                        |  |                          | 7,538,457                                                                                                                                                                                  |        |                            |        | 7,538                                                                                                              |                          |   | 400,722                                                                                                            |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | - |  |  |  | 408,260 |  |
| Issuance of common stock for services received                                           |  |                          | 28,130,000                                                                                                                                                                                 |        |                            |        | 28,130                                                                                                             |                          |   | 930,095                                                                                                            |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | - |  |  |  | 958,225 |  |
| Issuance of common stock loan interest                                                   |  |                          | 675,000                                                                                                                                                                                    |        |                            |        | 675                                                                                                                |                          |   | 51,650                                                                                                             |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | - |  |  |  | 52,325 |  |
| Issuance of common stock for acquisition                                                 |  |                          | 24,602,000                                                                                                                                                                                 |        |                            |        | 24,602                                                                                                             |                          |   | 1,093,728                                                                                                          |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | - |  |  |  | 1,118,330 |  |
| Employee compensation fund                                                               |  |                          | 210,000                                                                                                                                                                                    |        |                            |        | 210                                                                                                                |                          |   | 54,745                                                                                                             |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | - |  |  |  | 54,955 |  |
| Stock-based compensation                                                                 |  |                          | -                                                                                                                                                                                          |        |                            |        | -                                                                                                                  |                          |   | 324,274                                                                                                            |                      |                          |   | -                                                                                                                  |   |                          |                     | (319,848                                                                                                           | )      |                           |   | - |  |  |  | - |  |  |  | 4,426 |  |
| Comprehensive loss                                                                       |  |                          | -                                                                                                                                                                                          |        |                            |        | -                                                                                                                  |                          |   | -                                                                                                                  |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | (48,018 | ) |  |  | (48,018 | ) |
| Net loss for the year ended         December 31, 2003 |  |                          | -                                                                                                                                                                                          |        |                            |        | -                                                                                                                  |                          |   | -                                                                                                                  |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | (2,200,854 | ) |  |  | - |  |  |  | (2,200,854 | ) |
|                                                                                          |  |                          |                                                                                                                                                                                            |        |                            |        |                                                                                                                    |                          |   |                                                                                                                    |                      |                          |   |                                                                                                                    |   |                          |                     |                                                                                                                    |        |                           |   |  |  |  |  |  |  |  |  |  |  |
| Balance, December 31, 2003                                                               |  |                          | 78,796,146                                                                                                                                                                                 |        |                            |        | 78,796                                                                                                             |                          |   | 3,901,379                                                                                                          |                      |                          |   | (125,000                                                                                                           | ) |                          |                     | (324,548                                                                                                           | )      |                           |   | (3,160,751 | ) |  |  | (48,018 | ) |  |  | 321,858 |  |
| Issuance of common stock for cash                                                        |  |                          | 14,244,836                                                                                                                                                                                 |        |                            |        | 14,245                                                                                                             |                          |   | 2,127,218                                                                                                          |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | - |  |  |  | 2,141,463 |  |
| Issuance of common stock for services received                                           |  |                          | 12,113,382                                                                                                                                                                                 |        |                            |        | 12,114                                                                                                             |                          |   | 908,047                                                                                                            |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | - |  |  |  | 920,161 |  |
| Issuance of common stock loan interest                                                   |  |                          | -                                                                                                                                                                                          |        |                            |        | -                                                                                                                  |                          |   | -                                                                                                                  |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   |  |  |  |  | - |  |  |  |  |  |
| Issuance of common stock for acquisition                                                 |  |                          | 4,500,000                                                                                                                                                                                  |        |                            |        | 4,500                                                                                                              |                          |   | 4,090,000                                                                                                          |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | - |  |  |  | 4,094,500 |  |
| Conversion of notes payable and interest                                                 |  |                          | 646,322                                                                                                                                                                                    |        |                            |        | 646                                                                                                                |                          |   | 201,327                                                                                                            |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | - |  |  |  | 201,973 |  |
| Issuance of common stock for stock dividend                                              |  |                          | 10,632,213                                                                                                                                                                                 |        |                            |        | 10,632                                                                                                             |                          |   | (10,632                                                                                                            | )                    |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | - |  |  |  |  |  |
| Employee Compensation Fund                                                               |  |                          | 290,000                                                                                                                                                                                    |        |                            |        | 290                                                                                                                |                          |   | 213,645                                                                                                            |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | - |  |  |  | 213,935 |  |
| Stock-based compensation                                                                 |  |                          | -                                                                                                                                                                                          |        |                            |        | -                                                                                                                  |                          |   | (5,299                                                                                                             | )                    |                          |   |                                                                                                                    |   |                          |                     | 71,230                                                                                                             |        |                           |   | - |  |  |  | - |  |  |  | 65,931 |  |
| Comprehensive loss                                                                       |  |                          | -                                                                                                                                                                                          |        |                            |        | --                                                                                                                 |                          |   | -                                                                                                                  |                      |                          |   | -                                                                                                                  |   |                          |                     | --                                                                                                                 |        |                           |   | - |  |  |  | (30,107) |  |  |  | (30,107 | ) |
| Net Loss for the year ended         December 31, 2004 |  |                          | -                                                                                                                                                                                          |        |                            |        | -                                                                                                                  |                          |   | -                                                                                                                  |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | (7,910,925 | ) |  |  | - |  |  |  | (7,910,925 | ) |
|                                                                                          |  |                          |                                                                                                                                                                                            |        |                            |        |                                                                                                                    |                          |   |                                                                                                                    |                      |                          |   |                                                                                                                    |   |                          |                     |                                                                                                                    |        |                           |   |  |  |  |  |  |  |  |  |  |  |
| Balance, December 31, 2004                                                               |  |                          | 121,222,899                                                                                                                                                                                |        |                            | $      | 121,223                                                                                                            |                          | $ | 11,425,685                                                                                                         |                      |                          | $ | (125,000                                                                                                           | ) |                          | $                   | (253,318                                                                                                           | )      |                           | $ | (11,071,676 | ) |  | $ | (78,125 | ) |  | $ | 18,789 |  |
|                                                                                          |  |                          |                                                                                                                                                                                            |        |                            |        |                                                                                                                    |                          |   |                                                                                                                    |                      |                          |   |                                                                                                                    |   |                          |                     |                                                                                                                    |        |                           |   |  |  |  |  |  |  |  |  |  |  |

The accompanying notes are an integral part of these consolidated financial statements.F-5

----

| **VIPER NETWORKS, INC. AND SUBSIDIARIES** Consolidated Statements of Cash Flows |
|---------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Year Ended December 31, |                                                                                                                                                              |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                         |                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 2004                    |                                                                                                                                                              |  | 2003 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                         |                                                                                                                                                              |  |  |  |
|                                                                                                      |                         |                            |  |       |  |                            |  |
| Cash flows from operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                         |                                                                                                                                                              |  |  |  |  |  |
| Net loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $                       | (7,910,925                                                                                                                                                   | ) |  | $ | (2,200,854 | ) |
| Adjustments to reconcile net loss to net cash used in operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                         |                                                                                                                                                              |  |  |  |  |  |
|       Depreciation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                         | 291,549                                                                                                                                                      |  |  |  | 54,052 |  |
|       Allowance for doubtful accounts and sales returns                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                         | 76,272                                                                                                                                                       |  |  |  | - |  |
|       Amortization of stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                         | 65,931                                                                                                                                                       |  |  |  | 4,426 |  |
|       Amortization of stock-based interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                         | 19,944                                                                                                                                                       |  |  |  | 32,381 |  |
|       Impairment of purchased intangibles                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                         | 4,616,038                                                                                                                                                    |  |  |  | 794,938 |  |
|       Stock based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                         | 948,163                                                                                                                                                      |  |  |  | 950,081 |  |
|       Interest accrual                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                         | (1,446                                                                                                                                                       | ) |  |  | 14,347 |  |
|       (Gain) on sale of marketable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                         | (15,761                                                                                                                                                      | ) |  |  | (13,173 | ) |
|       Changes in assets and liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                         |                                                                                                                                                              |  |  |  |  |  |
|              Accounts receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                         | (52,736                                                                                                                                                      | ) |  |  | (42,993 | ) |
|              Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                         | (72,020                                                                                                                                                      | ) |  |  | - |  |
|              Prepaid expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                         | 739                                                                                                                                                          |  |  |  | (17,941 | ) |
|              Other current assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                         | (35,039                                                                                                                                                      | ) |  |  | (1,750 | ) |
|              Accounts payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                         | 240,061                                                                                                                                                      |  |  |  | 18,458 |  |
|              Accrued liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                         | 22,268                                                                                                                                                       |  |  |  | 2,047 |  |
|              Accounts payable related party                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                         | -                                                                                                                                                            |  |  |  | (58,618 | ) |
|              Taxes payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                         | (885                                                                                                                                                         | ) |  |  | 1,746 |  |
|              Deferred revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                         | 79,625                                                                                                                                                       |  |  |  | - |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                         |                                                                                                                                                              |  |  |  |  |  |
|              Net cash used in operating activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                         | (1,728,222                                                                                                                                                   | ) |  |  | (462,853 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                         |                                                                                                                                                              |  |  |  |  |  |
| Cash flows from investing activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                         |                                                                                                                                                              |  |  |  |  |  |
|       Acquisitions, net of cash acquired                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                         | (757,091                                                                                                                                                     | ) |  |  | 15,436 |  |
|       Purchases of property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                         | (182,594                                                                                                                                                     | ) |  |  | (13,931 | ) |
|       Proceeds from sale of property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                         | 5,056                                                                                                                                                        |  |  |  |  |  |
|       Purchases of marketable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                         | -                                                                                                                                                            |  |  |  | (43,515 | ) |
|       Sales of marketable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                         | -                                                                                                                                                            |  |  |  | 13,595 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                         |                                                                                                                                                              |  |  |  |  |  |
|              Net cash used in investing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                         | (935,629)                                                                                                                                                    |  |  |  | (28,415 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                         |                                                                                                                                                              |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                         |                                                                                                                                                              |  |  |  |  |  |

The accompanying notes are an integral part of these consolidated financial statements.F-6

----

| **VIPER NETWORKS, INC. AND SUBSIDIARIES** Consolidated Statements of Cash Flows (Continued) |
|---------------------------------------------------------------------------------------------|

| Cash flows from financing activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                                                                              |   |                                |   |                                                                                                                                                              |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------|---|--------------------------------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------|---|
|       Proceeds from issuance of common stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | 2,355,398                                                                                                                                                    |   |                                |   | 463,215                                                                                                                                                      |   |
|       Net borrowing (repayments) under revolving credit lines                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | (107,661                                                                                                                                                     | ) |                                |   | (72                                                                                                                                                          | ) |
|       Repayment of debt from acquisition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | (269,500                                                                                                                                                     | ) |                                |   | -                                                                                                                                                            |   |
|       Proceeds from short term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | 143                                                                                                                                                          |   |                                |   | 40,850                                                                                                                                                       |   |
|       Repayments of short term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | (15,000                                                                                                                                                      | ) |                                |   | (27,000                                                                                                                                                      | ) |
|       Proceeds from shareholder loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 595,298                                                                                                                                                      |   |                                |   | 136,158                                                                                                                                                      |   |
|       Repayments of shareholder loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (70,560                                                                                                                                                      | ) |                                |   | (107,960                                                                                                                                                     | ) |
|       Proceeds from convertible loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 150,000                                                                                                                                                      |   |                                |   | 175,000                                                                                                                                                      |   |
|       Repayments of convertible loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (75,000                                                                                                                                                      | ) |                                |   | (75,000                                                                                                                                                      | ) |
|       Payments on capital lease obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | (35,086                                                                                                                                                      | ) |                                |   | (9,695                                                                                                                                                       | ) |
|       Stock subscription deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | 11,435                                                                                                                                                       |   |                                |   | 61,415                                                                                                                                                       |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                                              |   |                                |   |                                                                                                                                                              |   |
|              Net cash provided by financing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 2,539,467                                                                                                                                                    |   |                                |   | 656,911                                                                                                                                                      |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                                              |   |                                |   |                                                                                                                                                              |   |
| Net increase in cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | (123,384                                                                                                                                                     | ) |                                |   | 165,643                                                                                                                                                      |   |
| Cash at the beginning of the year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 170,340                                                                                                                                                      |   |                                |   | 4,697                                                                                                                                                        |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                                              |   |                                |   |                                                                                                                                                              |   |
| Cash at the end of the year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | $ | 46,956                                                                                                                                                       |   |                                | $ | 170,340                                                                                                                                                      |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                                              |   |                                |   |                                                                                                                                                              |   |
| Supplemental schedule of cash flow activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                                                                                                                              |   |                                |   |                                                                                                                                                              |   |
|       Cash paid for:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                                                                                                                              |   |                                |   |                                                                                                                                                              |   |
|              Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | $ | 20,839                                                                                                                                                       |   |                                | $ | 12,6465                                                                                                                                                      |   |
|              Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | $ | 800                                                                                                                                                          |   |                                | $ | 800                                                                                                                                                          |   |
| Non-cash investing and financial activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                                                                                                                              |   |                                |   |                                                                                                                                                              |   |
|       Common stock issued for business acquisition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | $ | 4,094,500                                                                                                                                                    |   |                                | $ | 1,118,330                                                                                                                                                    |   |
|       Common stock issued in payment of services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | $ | 920,161                                                                                                                                                      |   |                                | $ | 958,225                                                                                                                                                      |   |
|       Common stock issued in payment of convertible loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | $ | 201,973                                                                                                                                                      |   |                                | $ | -                                                                                                                                                            |   |
|       Common stock issued in payment of convertible loan interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | $ | -                                                                                                                                                            |   |                                | $ | 52,325                                                                                                                                                       |   |
|                                                                                                      |   |                            |   |       |   |                            |   |

The accompanying notes are an integral part of these consolidated financial statements.F-7

----

**VIPER NETWORKS, INC. AND SUBSIDIARIES**Notes to the Consolidated Financial Statements
| NOTE 1 -                                                                                                | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                              | a.  Organization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                              | The consolidated financial statements presented are those of Viper Networks, Inc. and its wholly-owned Subsidiaries (the “Company”).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                              | We are a leading provider of Voice over Internet Protocol, or VoIP, communications products and services.  The company has evolved from a pioneer in selling VIPER CONNECT, a “push to talk” technology developedby ITXC, to a next generation provider of high-quality telecommunication services and technology for internet protocol, or IP telephony applications. We utilize our VoIP technology to transmit digital voice communications over data networks and theInternet.                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                              | Viper Networks, Inc. (“Viper-CA”) was incorporated on September 14, 2000 under the laws of the State of California. Taig Ventures, Inc. (“Taig”) was incorporated under the laws of the State of Utah onFebruary 28, 1983.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                              | On November 15, 2000, Taig and Viper-CA completed a Securities Purchase Agreement and Plan of Reorganization whereby Taig issued 36,000,000 pre-split or 3,000,000 post-split shares of its common stock in exchange for all ofthe outstanding common stock of Viper-CA. Immediately prior to the Securities Purchase Agreement and Plan of Reorganization, Taig had 6,788,507 pre-split or 565,786 post-split shares of common stock and 3,000,000 shares of non-voting preferred stock issued andoutstanding. For accounting purposes, the acquisition has been treated as a recapitalization of Viper-CA with Viper-CA as the acquirer (reverse acquisition). Viper-CA was treated as the acquirer for accounting purposes because the shareholders of Viper-CA controlledTaig after the acquisition. The historical financial statements prior to November 15, 2000 are those of Viper-CA. |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                              | On December 29, 2000, Taig changed its name to Viper Networks, Inc. (“Viper-UT”) and authorized a reverse split of the Company’s common stock on a 1-for-12 basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                              | b.  Basis of presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                              | The Company’s consolidated financial statements are prepared using the accrual method of accounting and include Viper-CA and its wholly-owned subsidiaries.  All significant intercompany accounts and transactionshave been eliminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                              | c.  Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                              | Inventories are stated at the lower of cost or market using the first-in first-out method.  Inventory costs include international inbound freight, duty and custom fees.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                              | d.  Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                              | The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                            |

F-8

----

**VIPER NETWORKS, INC. AND SUBSIDIARIES**Notes to the Consolidated Financial Statements
| NOTE 1 -                                                                                                     | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                              | e.  Property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                              | Property and equipment are stated at cost and are depreciated over their estimated useful lives using the straight-line method.  Useful lives range from three to five years for office furniture and equipment. Additions to property and equipment together with major renewals and betterments are capitalized.  Maintenance, repairs and minor renewals and betterments are charged to expense as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                              | f.  Long lived assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                              | All long lived assets are evaluated yearly for impairment per Statement of Financial Accounting Standards, No.121 (“SFAS 121”), “Accounting for the Impairment of Long-Lived Assets”. Any impairment invalue is recognized as an expense in the period when the impairment occurs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                              | g.  Revenue recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                              | The Company recognizes revenues and the related costs for voice, data and other services along with product sales when persuasive evidence of an arrangement exists, delivery has occurred or service has been rendered, the feeis fixed or determinable, and collection of the resulting receivable is probable.  Support and maintenance sales will be recognized over the contract term.  Amounts invoiced and collected in advance of product or services provided will be recorded asdeferred revenue.  The Company accrues for warranty costs, sales returns, and other allowances based on its experience.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                              | h.  Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                              | Statement of Financial Accounting Standards No. 123 (“SFAS 123”), “Accounting for Stock-Based Compensation”, provides for the use of a fair value based method of accounting for stock-basedcompensation.  However, SFAS 123 allows the measurement of compensation cost for stock options granted to employees using the intrinsic value method of accounting prescribed by Accounting Principles Board Opinion No. 25 (“APB 25”), “Accountingfor Stock Issued to Employees”, which only requires charges to compensation expense for the excess, if any, of the fair value of the underlying stock at the date a stock option is granted (or at an appropriate subsequent measurement date) over the amount theemployee must pay to acquire the stock.  The Company has elected to account for employee stock options using the intrinsic value method under APB 25.  By making that election, the Company is required by SFAS 123 to provide pro forma disclosures of net lossas if a fair value based method of accounting had been applied. |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                              | In accordance with the provisions of SFAS 13, all other issuances of stock, stock options or other equity instruments to employees and non-employees as the consideration for goods or services received by the Company areaccounted for based on the fair value of the equity instrument issued (unless the fair value of the consideration received can be more reliably measured).  During the year ended December 31, 2004 and 2003, the Company recognized $323,005 and $549,557 and$468,856 and $495,750 of expense relating to the grant of common stock to non-employees and employees, respectively, for services which are included in the accompanying consolidated statements of operations.  The value of these shares was determined based uponover the counter closing prices.                                                                                                                                                                                                                                                                                                         |

F-9

----

| ****
**VIPER NETWORKS, INC. AND SUBSIDIARIES** Notes to the Consolidated Financial Statements |
|-----------------------------------------------------------------------------------------------|

| NOTE 1 -                                                                                                     | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|--------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                              | i.  Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                              | Current income tax expense (benefit) is the amount of income taxes expected to be payable (receivable) for the current year.  A deferred tax asset and/or liability is computed for both the expected future impact ofdifferences between the financial statement and tax bases of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards.  Deferred income tax expense is generally the net change during the year in thedeferred income tax asset and liability.  Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be “more likely then not” realized in future tax returns.  Tax rate changes are reflected inincome in the period such changes are enacted. |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                              | j.  Net loss per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                              | Basic net loss per share is computed using the weighted average number of common shares outstanding during the periods presented.  Diluted loss per share has not been presented because the assumed exercise of theCompany’s outstanding options and warrants would have been antidilutive.  Options and/or warrants will have a dilutive effect only when the average market price of the common stock during the period exceeds the exercise price of the options and/orwarrants.  There were options to purchase 4,250,000 shares of common stock and 20,019,150 warrants potentially issuable at December 31, 2002 which were not included in the computation of net loss per share.                                                                                                               |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Year Ended December 31, |                                                                                                                                                              |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                         |                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 2004                    |                                                                                                                                                              |  | 2003 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                         |                                                                                                                                                              |  |  |  |
|                                                                                      |                         |                            |  |       |  |                            |  |
| Net loss (numerator)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | $                       | (7,910,925                                                                                                                                                   | ) |  | $ | (2,220,854 | ) |
| Weighted average shares outstanding for basic           net loss per share (denominator)                                                                                                                                                                                                                                                                                                                                                                                    |                         | 101,961,298                                                                                                                                                  |  |  |  | 37,243,157 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                         |                                                                                                                                                              |  |  |  |  |  |
| Per share amount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | $                       | (0.08                                                                                                                                                        | ) |  | $ | (0.06 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                         |                                                                                                                                                              |  |  |  |  |  |

F-10

----

| ****
**VIPER NETWORKS, INC. AND SUBSIDIARIES** Notes to the Consolidated Financial Statements |
|-----------------------------------------------------------------------------------------------|

| NOTE 1 -                                                                                                     | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                              | k.  Concentrations of Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                              | The Company owns 50 acres of real property where it plans to sell lots for residential development and build a communications facility.  The property is located in Mexico which has a developing economy. Hyperinflation, volatile exchange rates and rapid political and legal change, often accompanied by military insurrection, have been common in this and certain other emerging markets in which the Company may conduct operations.  The Company may be materiallyadversely affected by possible political or economic instability in Mexico.  The risks include, but are not limited to terrorism, military repression, expropriation, changing fiscal regimes, extreme fluctuations in currency exchange rates, high rates ofinflation and the absence of industrial and economic infrastructure.  Changes in land development or investment policies or shifts in the prevailing political climate in Mexico in which the Company plans to sell lots for residential development and build acommunications facility could adversely affect the Company’s business.  Operations may be affected in varying degrees by government regulations with respect to development restrictions, price controls, export controls, income and other taxes, expropriationof property, maintenance of claims, environmental legislation, labor, welfare, benefit policies, land use, land claims of local residents, water use and mine safety.  The effect of these factors cannot be accurately predicted. |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                              | l.  New Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                              | In November 2004, the Financial Accounting Standards Board (FASB) issued SFAS 151, Inventory Costs – an amendment of ARB No. 43, Chapter 4.  This Statement amends the guidance in ARB No. 43, Chapter 4,“Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage).  Paragraph 5 of ARB 43, Chapter 4, previously stated that “... under some circumstances,items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges...” This Statement requires that those items be recognized as current-period chargesregardless of whether they meet the criterion of “so abnormal.”  In addition, this Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities.  ThisStatement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005.  The adoption is not expected to have a material effect on the Company’s results of operations or financial conditions.                                                                                                                                                                                                                                                                   |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                              | In December 2004, the FASB issued SFAS No. 152, “Accounting for Real Estate Time-Sharing Transactions—an amendment of FASB Statements No. 66 and 67” (“SFAS 152). This Statement amends FASB Statement No.66, Accounting for Sales of Real Estate, to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position (SOP) 04-2, Accounting No. 67, Accounting for Costs and Initial RentalOperations of Real Estate Projects, to state that the guidance for (a) incidental operations and (b) costs incurred to sell real estate projects does not apply to real estate time-sharing transactions.  The accounting for those operations and costs is subject tothe guidance in SOP 04-2.  This Statement is effective for financial statements for fiscal years beginning after June 15, 2005, with earlier application encouraged.  The adoption is not expected to have a material effect on the Company’s results ofoperations or financial conditions.                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

F-11

----

| ****
**VIPER NETWORKS, INC. AND SUBSIDIARIES** Notes to the Consolidated Financial Statements |
|-----------------------------------------------------------------------------------------------|

| NOTE 1 -                                                                                                     | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                              | l.  New Accounting Pronouncements (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                              | On December 16, 2004, the Financial Accounting Standards Board (“FASB”) published Statement of Financial Accounting Standards No. 123 (Revised 2004), Shared-Based Payment (“SFAS 123R).  SFAS 123Rrequires that compensation cost related to share-based payment transactions be recognized in the financial statements.  Share-based payment transactions within the scope of SFAS 123R include stock options, restricted stock plans, performance-based awards, stockappreciation rights, and employee share purchase plans.  The provisions of SFAS 123R are effective as of the first interim period that begins after June 15, 2005.  Accordingly, the Company will implement the revised standard in the third quarter of fiscalyear 2005.  Currently, the Company accounts for its share-based payment transactions under the provisions of APB 25, which does not necessarily require the recognition of compensation cost in the financial statements.  Management is assessing theimplications of this revised standard, which may materially impact the Company’s results of operations in the third quarter of fiscal year 2005 and thereafter. |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                         | On December 16, 2004, FASB issued Statement of Financial Accounting Standards No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29, Accounting for Nonmonetary transactions (“SFAS153”).  This statement amends APB Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception of exchanges of nonmonetary assets that do not have commercial substance.  UnderSFAS 153, if a nonmonetary exchange of similar productive assets meets a commercial-substance criterion and fair value is determinable, the transaction must be accounted for at fair value resulting in recognition of any gain or loss.  SFAS 153 is effective fornonmonetary transactions in fiscal periods that begin after June 15, 2005.  The adoption is not expected to have a material effect on the Company’s results of operations or financial conditions.                                                                                                                                                                                                                                     |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| NOTE 2 -                                                                                                     | GOING CONCERN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                              | The Company’s consolidated financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in thenormal course of business. The Company has incurred a loss from inception on September 14, 2000 through December 31, 2004, which has resulted in an accumulated deficit of $11,071,677 at December 31, 2004 which raises doubt about the Company’s ability tocontinue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from theoutcome of this uncertainty.                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                              | It is the intent of management to continue to develop its voice and data services to Web-based customers and expand its Voice-over-Internet Protocol networks for businesses, institutions, and Internet Service Providers(ISP).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                              | Company management will seek additional financing through new stock issuances and lines of credit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

F-12

----

| ****
**VIPER NETWORKS, INC. AND SUBSIDIARIES** Notes to the Consolidated Financial Statements |
|-----------------------------------------------------------------------------------------------|

| NOTE 3 -                                                                                                     | ACQUISTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                              | During June and July 2003, the Company purchased 100% of the stock in Worldlink-C.com, Inc. doing business as Coliance Communications, Inc. (“Coliance”), a seller of VoIP hardware.  As consideration for thepurchase, the Company issued to Coliance shareholder’s an aggregate of 17,000,000 shares of the Company’s Common Stock and 200,000 shares of the Company’s Preferred Stock for an aggregate purchase price of $750,005. All of the Preferred Stock waslater converted into two notes payable aggregating $200,000.  As part of the transaction, Mr. Stephen Young and Mr. Ronald Weaver joined the Company’s management team and Board of Directors as Chairman and President and as Chief Executive Officer,respectively.  Management intends to add Coliance’s VoIP products to the Company’s existing VoIP business strategy.                                                                                                                                                                                                                                                       |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                              | During October 2003, the Company purchased 100% of the stock in Mid-Atlantic International, Inc. (“Mid-Atlantic) from Mr. Farid Shouekani.  Mid-Atlantic owns and operates a global VoIP network and billing servers inRochester Hills, Michigan.  As consideration for the purchase, the Company issued 5,102,000 shares of the Company’s Common Stock and $269,500 payable in cash for an aggregate purchase price of $779,700. Mr. Shouekani became Chief Technical Officer and aDirector of the Company.  Management intends to deploy its VoIP products over the Mid-Atlantic network to capture recurring monthly revenue.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                              | During January 2004, the Company acquired 100% of the membership interest in Adoria Communications, LLC (“Adoria”) from Mr. James Balestraci, the sole member.  Adoria owns and operates a global VoIP networkwith operations in Boston, Mass.  As consideration for the purchase, the Company issued an aggregate of 2,500,000 shares of the Company’s Common Stock, with 500,000 of these shares (the “Performance Shares”) subject to the condition thatAdoria’s financial results in 2004 must equal or exceed its financial results in 2003, and $500,000 payable in cash for an aggregate purchase price of $3,574,500.  In the event that Adoria’s financial results in 2004 do not equal or exceed its 2003results, the Performance Shares are to be cancelled and returned as treasury stock.  Mr. Balestraci joined the Company as Chief of International Wholesale Operations and a Director.  Management intends to consolidate the wholesale VoIP operations ofMid-Atlantic and Adoria and expand the Company’s global network into India and Europe through this investment. |
|                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                              | During May 2004, the Company acquired an aggregate 50% of the membership interests of Brasil Communications, LLC (“Brasil LLC”) in two concurrent transactions with Software Innovations, Inc. (“SII”) andBrasil LLC.  Brasil LLC owns and operates a VoIP network with licenses and operations in Brazil and El Salvador.  As consideration for the purchase, the Company issued 2,000,000 shares of the Company’s Common Stock to SII and $350,000 payable in cashto Brasil LLC.  Management intends to expand the Company’s global VoIP network and hardware sales into Latin America through this investment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

F-13

----

| ****
**VIPER NETWORKS, INC. AND SUBSIDIARIES** Notes to the Consolidated Financial Statements |
|-----------------------------------------------------------------------------------------------|

| NOTE 4 -                                                                                               | COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS |
|--------------------------------------------------------------------------------------------------------|-----------------------------------------------------|
|                   |                                                     |

|                                                                                                                                                                                                                                                                                                                 |                                                              | December 31, |                                                                                                                                      |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------|--------------|--------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                 |                                                              | 2004         |                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                 |                                                              |              |                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                 |                                                              |              |                                                                                                                                      |  |
| Accounts receivable, net of allowance for   doubtful accounts and sales returns:                                                                                                                                                                                                                      |            |              |                        |   |
|         Accounts receivable                                                                                                                                                                                                                                                  |                                                              | $            | 198,220                                                                                                                              |  |
|         Allowance for doubtful accounts                                                                                                                                                                                                                                      |                                                              |              | (73,245                                                                                                                              | ) |
|         Allowance for sales returns                                                                                                                                                                                                                                          |                                                              |              | (3,027                                                                                                                               | ) |
|                                                                                                                                                                                                                                                                                                                 |                                                              |              |                                                                                                                                      |  |  |
|                                                                                                                                                                                                                                                                                                                 |                                                              |              | $                                                                                                                                    | 121,948 |  |
|                                                                                                                                                                                                                                                                                                                 |                                                              |              |                                                                                                                                      |  |  |
|                                                                                                                                                                                                                                                                                                                 |                                                              |              |                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                 |                                                              |              |                                                                                                                                      |  |
| Other currentassets:                                                      |            |              |                        |   |
|         Prepaid expenses                                                                                                                                                                                                                                                     |                                                              | $            | 17,764                                                                                                                               |  |
|         Employee travel and payroll advances                                                                                                                                                                                                                                 |                                                              |              | 16,207                                                                                                                               |  |
|         Arbitration bond with the courts                                                                                                                                                                                                                                     |                                                              |              | 15,000                                                                                                                               |  |
|         Deposits                                                                                                                                                                                                                                                             |                                                              |              | 10,353                                                                                                                               |  |
|                                                                                                                                                                                                                                                                                                                 |                                                              |              |                                                                                                                                      |  |  |
|                                                                                                                                                                                                                                                                              |                                                              |              | $                                                                                                                                    | 59,324 |  |
|                                                                                                                                                                                                                                                                                                                 |                                                              |              |                                                                                                                                      |  |  |
|                                                                                                                                                                                                                                                                                                                 |                                                              |              |                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                            |                                                              |              |                                                                                                                                      |  |
| Property and equipment,net:                                               |            |              |                        |   |
|         Routing and networking systems                                                                                                                                                                                                                                       |                                                              | $            | 742,763                                                                                                                              |  |
|         Computers and office equipment                                                                                                                                                                                                                                       |                                                              |              | 111,786                                                                                                                              |  |
|                                                                                                                                                                                                                                                                                                                 |                                                              |              |                                                                                                                                      |  |
|                                                                                                                                                                                                                                                                                                            |                                                              |              | 854,549                                                                                                                              |  |
|         Less accumulated depreciation                                                                                                                                                                                                                                        |                                                              |              |                                                                                                                                      |  |
|           amortization                                                                                                                                                                                                                                                  |                                                              |              | (357,323                                                                                                                             | ) |
|                                                                                                                                                                                                                                                                                                                 |                                                              |              |                                                                                                                                      |  |  |
|                                                                                                                                                                                                                                                                              |                                                              |              | $                                                                                                                                    | 497,226 |  |
|                                                                                                                                                                                                                                                                                                                 |                                                              |              |                                                                                                                                      |  |  |
|                                                                                                                                                                                                                                                                                                                 |                                                              |              |                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                            |                                                              |              |                                                                                                                                      |  |
| AccruedLiabilities:                                                       |            |              |                        |   |
|         Wages and payroll tax                                                                                                                                                                                                                                                |                                                              | $            | 26,352                                                                                                                               |  |
|         Stock based bonuses                                                                                                                                                                                                                                                  |                                                              |              | 20,400                                                                                                                               |  |
|         Other accruals                                                                                                                                                                                                                                                       |                                                              |              | 15,163                                                                                                                               |  |
|                                                                                                                                                                                                                                                                                                                 |                                                              |              |                                                                                                                                      |  |  |
|                                                                                                                                                                                                                                                                              |                                                              |              | $                                                                                                                                    | 61,915 |  |
|                                                                                                                                                                                                                                                                                                                 |                                                              |              |                                                                                                                                      |  |  |

F-14

----

| ****
**VIPER NETWORKS, INC. AND SUBSIDIARIES** Notes to the Consolidated Financial Statements |
|-----------------------------------------------------------------------------------------------|

| NOTE 5 -                                                                                               | STOCK SUBSCRIPTION RECEIVABLE                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                        | During September 1998, the Company entered into an agreement with a related party to purchase 50 acres of real property known as the Hills of Bajamar, located in Ensenada, Mexico that is valued at predecessor cost of $125,000.The Company intended to sell lots for residential development and build a communications facility for residents in the surrounding area.                                                                                      |
|                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                        | As consideration for the land, the Company issued 3,000,000 shares of its series B Preferred Stock and stock warrants to purchase 1,000,000 shares of Common Stock.  During June 2003, the Company negotiated a settlementand release with the Class B preferred stockholder whereby the Preferred Stock and stock warrants were exchanged for 400,000 shares of the Company’s Common Stock and the cumulative undeclared dividend was not declared. |
|                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                        | As of the date of these financial statements, the Company had not received clear title to the land. Accordingly, the value of the land has been classified as a stock subscription receivable. The 400,000 share certificate isbeing held by the Company.                                                                                                                                                                                                       |
|                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| NOTE 6 -                                                                                               | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                        | During Fiscal 2004, the Company’s shareholders incurred expenses on behalf of the Company in the amount of $120,912, which will be repaid in the normal course of business.                                                                                                                                                                                                                                                                               |
|                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                        | During Fiscal 2003, the company’s shareholders incurred expenses on behalf of the Company in the amount of $89,094 which will be repaid in the normal course of business.  During Fiscal 2003, the company agreed toreimburse a stockholder $12,000 and $1,200 for office rental and utilities, respectively, as the use of the stockholder’s personal residence.                                                                              |
|                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                        | During Fiscal 2004, the Company’s shareholders advanced the company $753,041 under one and two year promissory notes.  At December 31, 2004, outstanding advances from shareholders were $607,094.                                                                                                                                                                                                                                              |
|                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| NOTE 7 –                                                                               | STOCK SUBSCRIPTION DEPOSIT                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                        | As of December 31, 2004, the company had received a total of $81,380 for the purchase of 904,000 shares of common stock. The shares were issued subsequent to December 31, 2004.  The $81,380 is recorded as a stocksubscription deposit at December 31, 2004.                                                                                                                                                                                        |

F-15

----

| ****
**VIPER NETWORKS, INC. AND SUBSIDIARIES** Notes to the Consolidated Financial Statements |
|-----------------------------------------------------------------------------------------------|

| NOTE 8 -                                                                                         | INCOME TAXES                                                                                                                                                                                                                                                                         |
|--------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                  |                                                                                                                                                                                                                                                                                      |
|                                                                                                  | Due to the Company’s net loss position from inception on September 14, 2000 to December 31, 2004, there was no provision for income taxes recorded.  The following is a reconciliation of the statutory federal incometax rate to the Company’s effective tax rate: |

|                                                                                                                                                                                                                                                                                                                    | Year ended December 31,                                                                                                         |   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|---|---|
|                                                                                                                                                                                                                                                                                                                    |                                                                                                                                      |   |   |
|                                                                                                                                                                                                                                                                                                                    | 2004                                                                                                                                 |   |   |  | 2003 |  |  |
|                                                                                                                                                                                                                                                                                                                    |                                                                                                                                      |   |   |  |  |  |  |
|                                                     |                        |   |   |  |                        |  |  |
| Tax provision (benefit) at statutory rate                                                                                                                                                                                                                                                                          | (35                                                                                                                                  | ) | % |       | (35 | ) | % |
| State tax, net of federal benefit                                                                                                                                                                                                                                                                                  | (4                                                                                                                                   | ) | % |  | (2 | ) | % |
| Permanent differences                                                                                                                                                                                                                                                                                              | 8                                                                                                                                    |   | % |  | 19 |  | % |
| Valuation allowance                                                                                                                                                                                                                                                                                                | 31                                                                                                                                   |   | % |  | 18 |  | % |
|                                                                                                                                                                                                                                                                                                                    |                                                                                                                                      |   |   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                    | -                                                                                                                                    |   | % |  | - |  | % |
|                                                                                                                                                                                                                                                                                                                    |                                                                                                                                      |   |   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                               |                                                                                                                                      |   |   |  |  |  |  |

|                  | The components of net deferred tax assets are as follows: |
|--------------------------------------------------------------------------------------------------|-----------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                              | December 31, |                                                                                                                                      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------|--------------|--------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                              | 2004         |                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                              |              |                                                                                                                                      |
|                                                                                           |            |              |                        |   |
| Deferred tax assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                              |              |                                                                                                                                      |  |
|         Net operating loss carryforward                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                              | $            | 3,396,678                                                                                                                            |  |
|         Other assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                              |              | 1,391                                                                                                                                |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                              |              |                                                                                                                                      |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                              |              | 3,398,069                                                                                                                            |  |
| Less valuation allowance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                              |              | (3,398,069                                                                                                                           | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                              |              |                                                                                                                                      |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                              | $            | -                                                                                                                                    |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                              |              |                                                                                                                                      |  |  |

|                                                                                                  | As a result of the Company’s losses to date, there exists doubt as to the ultimate realization of the deferred tax assets.  Accordingly, a valuation allowance equal to the total deferred tax assets has been recordedat December 31, 2004.                                                                                                                       |
|--------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                             |                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                  | At December 31, 2004, the Company had federal and state net operating loss carryforwards for tax purposes of approximately $8,336,000 and $7,599,000 which may be available to offset future taxable income and which, if notused, begin to expire in 2010 and 2012, respectively.                                                                                            |
|                                                                                             |                                                                                                                                                                                                                                                                                                                                                                               |
| NOTE 9 -                                                                               | COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                 |
|                  |                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                  | Operating Lease Obligation                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                             |                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                  | In October 2000, the Company entered into a month-to-month lease for its office space.  In July 2001, the company entered into a month-to-month agreement to reimburse a shareholder for office space utilized within theshareholder’s personal residence.  Rent expense for the year ended December 31, 2004 and 2003 was $43,328 and $44,483, respectively. |

F-16

----

| ****
**VIPER NETWORKS, INC. AND SUBSIDIARIES** Notes to the Consolidated Financial Statements |
|-----------------------------------------------------------------------------------------------|

|                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| NOTE 9 -                                                                               | COMMITMENTS AND CONTINGENCIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                  | Equity Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                  | In December 2000, the Company’s shareholders adopted the 2000 equity incentive plan (the “2000 Plan”) for the benefit of employees, directors, advisors and consultants of the Company. In December 2002, theCompany’s shareholders increased the shares authorized within the 2000 Plan by 10,500,000 shares. Under the plan, the Company may grant stock options or awards at a maximum of 12,000,000 shares. At December 31, 2004, there were 8,400,000 shares of theCompany’s Common Stock available for grant under the 2000 Plan. |
|                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| NOTE 10 -                                                                              | PREFERRED STOCK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                  | a.  Preferred Stock - Class A                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                  | The Company has authorized 100,000 shares of non-voting Class A preferred stock, at a par value of $1.00 per share.  These shares are convertible into common stock at a ratio of 500 shares of common stock for each shareof Class A preferred stock.  There were no shares issued and outstanding at December 31, 2004.                                                                                                                                                                                                                                   |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                  | b.  Preferred Stock - Class B                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                  | The Company has authorized 10,000,000 shares of non-voting Class B preferred stock, at a par value of $1.00 per share.  These shares accumulate dividends at a rate of 15% per annum and are convertible into common stock ata $1.00 per share or the market price for the 10 day average prior to the date of conversion, whichever is less, but in no event less than 75 cents per share.  There were no shares issued and outstanding at December 31, 2004.                                                                                              |
|                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| NOTE 11 -                                                                              | COMMON STOCK TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                  | On December 29, 2000, the Company approved a reverse-split of its Common Stock on a 1-for-12 basis leaving 3,565,786 shares issued and outstanding.  All references to common stock have been retroactivelyrestated.                                                                                                                                                                                                                                                                                                                                             |
|                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                  | During March 2002, the Company created the Viper Networks Compensation Fund to provide compensation to employees and consultants.  The Company authorized the issuance of up to 10,000,000 shares of Common Stock.                                                                                                                                                                                                                                                                                                                                               |
|                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                  | During Fiscal 2004, the Company issued 14,244,836, 12,113,382, 4,500,000, 646,322, and 10,632,213 shares for cash, in payment of services, for acquisitions, in conversion of notes and accrued interest, and a stock dividend,respectively.                                                                                                                                                                                                                                                                                                                          |
|                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| NOTE 12-                                                                                    | STOCK OPTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                  | During December 2000, the Company adopted the 2000 Plan which provides for the issuance of the Company’s Common Stock to employees and directors of the Company and its affiliates. The Company has reserved 12,000,000shares of Common Stock for which incentive stock options and non-statutory stock options to purchase shares of the Company’s Common Stock, limited rights, and stock awards may be granted.                                                                                                                                        |

F-17

----

| ****
**VIPER NETWORKS, INC. AND SUBSIDIARIES** Notes to the Consolidated Financial Statements |
|-----------------------------------------------------------------------------------------------|

| NOTE 12-                                                                                    | STOCK OPTIONS (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                  | Options and limited rights granted under the 2000 Plan shall be exercisable at such time or upon such events and subject to the terms, conditions, vesting, and restrictions as determined by the board of directorsor the compensation committee (the “Plan Committee”) of the Company provided however that no option shall be exercisable after the expiration of ten years from the date of grant.  The exercise price of options granted under the 2000 Plan will beequal to the fair market value of the Company’s Common Stock as determined by the Plan Committee on the date of grant.  If, at the time of grant, an incentive stock option is granted to a 10% beneficial owner, as defined, the exercise price will not beless than to 110% of the fair market value of the Company’s Common Stock and the option shall not be exercisable after the expiration of five years. |
|                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                  | Stock awards granted under the 2000 Plan shall be subject to the terms, conditions, vesting, and restrictions as determined by the Plan Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                  | At December 31, 2004, there were 8,400,000 shares of the Company’s Common Stock available for future grant under the 2000 Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                  | A summary of the Company’s stock options as of December 31, 2004 and 2003 and changes during the periods is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Year ended December 31,                                                                                |        |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                        |        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 2004                                                                                                   |        | 2003 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                        |        |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Options                                                                                                |        |  | Weighted average exercise price |  | Options |  | Weighted average exercise price |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                        |        |  |  |  |  |  |  |  |
|                                                                                            |                   |   |       |   |                   |       |                   |       |   |                   |   |
| Outstanding at the beginning of the period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 3,250,000                                                                                              |        |  | $ | 0.132 |  | 1,000,000 |  | $ | 0.074 |  |
|         Granted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 1,000,000                                                                                              |        |  |  | 0.488 |  | 2,250,000 |  |  | 0.158 |  |
|         Exercised                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | -                                                                                                      |        |  |  | - |  | - |  |  | - |  |
|         Cancelled                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | (650,000                                                                                               | )      |  |  | 0.116 |  | - |  |  | - |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                        |        |  |  |  |  |  |  |  |  |  |
| Outstanding at the end of the period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 3,600,000                                                                                              |        |  | $ | 0.234 |  | 3,250,000 |  | $ | 0.132 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                        |        |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                        |        |  |  |  |  |  |  |  |  |  |
| Vested at the end of the period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 990,000                                                                                                |        |  |  |  |  | 340,000 |  |  |  |  |
| Exercisable at the end of period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 3,600,000                                                                                              |        |  |  |  |  | 3,250,000 |  |  |  |  |
| Weighted average fair value per option of options         granted during the period                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                        |        |  | $ | 0.4880 |  |  |  | $ | 0.1514 |  |

****

F-18

----

| ****
**VIPER NETWORKS, INC. AND SUBSIDIARIES** Notes to the Consolidated Financial Statements |
|-----------------------------------------------------------------------------------------------|

| NOTE 12-                                                                                    | STOCK OPTIONS (continued)                                                                                          |
|--------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------|
|                  |                                                                                                                    |
|                                                                                                  | The following table summarizes information regarding employee stock options outstanding at December 31, 2004. |

|                 |                                                                                                                    |                                | Options Outstanding                                                                                                |                                                     | Options Exercisable                                                                                                |
|-----------------|--------------------------------------------------------------------------------------------------------------------|--------------------------------|--------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------|--------------------------------------------------------------------------------------------------------------------|
|                 |                                                                                                                    |                                |                                                                                                                    |                                                     |                                                                                                                    |
| Exercise prices |                                                                                                                    | Number Outstanding             |                                                                                                                    | Weighted average remaining contractual life (years) |                                                                                                                    | Weighted average exercise price |  | Number exercisable |  | Weighted average exercise price |
|                 |                                                                                                                    |                                |                                                                                                                    |                                                     |                                                                                                                    |  |  |  |  |  |  |  |
|                 |                     |       |                     |                            |                     |       |  |                     |       |                     |       |  |                     |
| $               | 0.034                                                                                                              |                                | 600,000                                                                                                            |                                                     | 3.6                                                                                                                |  | $ | 0.034 |  | 600,000 |  | $ | 0.034 |
| $               | 0.037                                                                                                              |                                | 500,000                                                                                                            |                                                     | 3.0                                                                                                                |  | $ | 0.037 |  | 500,000 |  | $ | 0.037 |
| $               | 0.110                                                                                                              |                                | 500,000                                                                                                            |                                                     | 1.7                                                                                                                |  | $ | 0.110 |  | 500,000 |  | $ | 0.110 |
| $               | 0.248 - 0.273                                                                                                      |                                | 1,000,000                                                                                                          |                                                     | 4.0                                                                                                                |  | $ | 0.261 |  | 1,000,000 |  | $ | 0.261 |
| $               | 0.450 - 0.526                                                                                                      |                                | 1,000,000                                                                                                          |                                                     | 4.6                                                                                                                |  | $ | 0.488 |  | 1,000,000 |  | $ | 0.488 |
|                 |                                                                                                                    |                                |                                                                                                                    |                                                     |                                                                                                                    |  |  |  |  |  |  |  |  |
|                 |                                                                                                                    |                                | 3,600,000                                                                                                          |                                                     | 6.5                                                                                                                |  | $ | 0.234 |  | 3,600,000 |  | $ | 0.234 |
|                 |                                                                                                                    |                                |                                                                                                                    |                                                     |                                                                                                                    |  |  |  |  |  |  |  |  |

|                  | Stock-based compensation is recognized using the intrinsic value method.  In connection with the grant of stock options to employees, the company recorded unearned stock-based compensation within stockholders’deficit of $50,000 during the year ended December 31, 2004 representing the difference between the estimated fair value of the common stock determined for financial reporting purposes and the exercise price of these options at the date of grant.  Amortization ofunearned stock-based compensation, net of any charges reversed during the period for the forfeiture of unvested options, was $65,931 and $4,426 for the years ended December 31, 2004 and 2003, respectively. |
|--------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                  | At December 31, 2004, the unearned stock-based compensation of $253,318 will be amortized as follows:   $62,448 in 2005, $62,448 in 2006, $62,448 in 2007, $58,891 in 2008, and $7,083 in 2009.  The amount ofstock-based compensation expense to be recorded in future periods could decrease if options for which accrued but unvested compensation has been recorded are forfeited.                                                                                                                                                                                                                                                                                                                |
|                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                  | The Company estimated the fair value of each option grant at the grant date by using the Black-Scholes option pricing model with the following weighted average assumptions used for grants during the years ended December 31,2004 and 2003; no dividend yield, expected volatility of 200.7% and 331.1%, risk-free interest rates of 4.43% and 3.43%, and expected lives of 10.0 and 6.7 years, respectively.                                                                                                                                                                                                                                                                                                      |
|                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

F-19

----

| ****
**VIPER NETWORKS, INC. AND SUBSIDIARIES** Notes to the Consolidated Financial Statements |
|-----------------------------------------------------------------------------------------------|

| NOTE 12 -                                                                              | STOCK OPTIONS (continued)                                                                                                                                                                                                                                                     |
|--------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                  |                                                                                                                                                                                                                                                                               |
|                                                                                                  | Had compensation cost for the Company’s stock-based compensation plan been determined based on the fair value at the grant dates for awards under those plans consistent with the method described in SFAS 123, theCompany’s net loss would have been as follows: |

|                                                        | Year Ended December 31, |                                                                                                                    |
|--------------------------------------------------------|------------------------------|--------------------------------------------------------------------------------------------------------------------|
|                                                        |                              |                                                                                                                    |
|                                                        | 2004                         |                                                                                                                    |  | 2003 |  |
|                                                        |                              |                                                                                                                    |  |  |  |
|                                                        |                              |                                                                                                                    |  |  |  |  |  |
| Net loss:                                              |                              |                     |  |       |  |                     |  |
|         As reported | $                            | (7,910,925                                                                                                         | ) |       | $ | (2,200,854 | ) |
|         Pro forma   | $                            | (8,027,429                                                                                                         | ) |  | $ | (2,211,813 | ) |
|                                                   |                              |                                                                                                                    |  |  |  |  |  |
| Basic loss per share:                                  |                              |                                                                                                                    |  |  |  |  |  |
|         As reported | $                            | (0.08                                                                                                              | ) |  | $ | (0.06 | ) |
|         Pro forma   | $                            | (0.08                                                                                                              | ) |  | $ | (0.06 | ) |

| NOTE 13 -                                                                              | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                  | On February 4, 2005, the Company entered into five stock subscription agreements for an aggregate of 33,333,335 shares of the Company’s Common Stock in exchange for $5,000,000 in US Treasury Bonds, with both theCompany’s shares and the $5,000,000 being placed into escrow.  Concurrent with the execution of the agreements, the Company purchased from Cogent Capital for $1 a call option to repurchase at the end of two years 80% of the shares of Common Stock sold atthe then current market price.  Also concurrent with the agreements, the Company entered into an equity swap arrangement with Cogent Capital for $50,000 and 3,333,333 shares of the Company’s Common Stock that entitles the Company to receive and obligatethe Company to pay the price return of 75% of the shares issued in two years, or sooner if the shares are registered for sale under the Securities Act of 1933.  The equity swap also provides for the exchange of certain cash flows, as defined in theagreement. |
|                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                  | On January 31, 2005, the Company granted stock options from the 2000 Plan to Officers for an aggregate of 5,150,000 shares and to an employee for 100,000 shares exercisable at $0.200; the options expire on January 31,2015                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                  | During February 2005, the Company closed an $180,000 private placement resulting in the issuance of an aggregate of 3,000,000 shares of the Company’s Common Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                  | Also during February 2005, the Company entered into a one year services agreement with Rhino Capital, Inc. (“Rhino”) to assist the Company in obtaining a listing on a national stock exchange, raising capitol, andinvestor relations.  The services are payable with an aggregate of 1,250,000 shares of the Company’s Common Stock and an aggregate of $30,000 in cash.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                  | On March 8, 2005, the Company granted stock options from the 2000 Plan to an officer for 3,000,000 shares exercisable at $0.230; the options expire on March 8, 2015.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

F-20

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| ****
**VIPER NETWORKS, INC. AND SUBSIDIARIES** Notes to the Consolidated Financial Statements |
|-----------------------------------------------------------------------------------------------|

| NOTE 13 -                                                                              | SUBSEQUENT EVENTS (continued)                                                                                                                                                                                                                   |
|--------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                  |                                                                                                                                                                                                                                                 |
|                                                                                                  | Also during March 2005, the Company closed a $271,000 private placement resulting in the issuance of an aggregate of 3,011,111 shares of the Company’s Common Stock.                                                                      |
|                                                                                             |                                                                                                                                                                                                                                                 |
|                                                                                                  | At various times during 2005, the Company borrowed an aggregate of $115,000 form Officers and Directors to fund operations; the amounts will be repaid from available cash flows.  During 2005, the Company repaid anaggregate of $60,000. |

F-21