SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

              ----------------------------------------------------

                                    FORM 10-K

(Mark One)

|X|  ANNUAL REPORT  PURSUANT TO SECTION 13 or 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005.

|_|  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 or  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM

                           COMMISSION FILE NO. 0-32333

                             WINSTED HOLDINGS, INC.
                -------------------------------------------------
               (Exact name of issuer as specified in its charter)

                     FLORIDA                               65-0972865
       ---------------------------------              ------------------
         (State or other jurisdiction                  (I.R.S. Employer
       of incorporation or organization)              Identification No.)

          100 CRESCENT COURT, SUITE 700
                 DALLAS, TEXAS                                 75201
    ----------------------------------------                ----------
    (Address of principal executive offices)                (Zip Code)

       Registrant's telephone number, including area code: (214) 459-8245

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

 Securities registered under Section 12(g) of the Exchange Act:    COMMON STOCK,
                                                                   NO PAR VALUE
                                                                   PER SHARE
                                                                ----------------
                                                                (Title of class)

         Indicate  by check  mark if the  registrant  is a  well-known  seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes |_| No |X|

         Indicate  by  check  mark if the  registrant  is not  required  to file
reports pursuant to Section 13 or Section 15(d) of the Act. Yes |X| No |_|

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during the  preceding  twelve  months  (or 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-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. |X|

         Indicate by check mark whether the  registrant  is a large  accelerated
filer, an accelerated  filer, or a  non-accelerated  filer.  See definition of a
"accelerated  filer and large  accelerated  filer" in Rule 12b-2 of the Exchange
Act. (Check One):

Large accelerated filer |_|    Accelerated filer |_|   Non-accelerated filer |X|

         Indicate by check mark whether the  registrant  is a shell  company (as
defined in Rule 12b-2 of the Act). Yes |_| No |X|

<PAGE>

         State the aggregate  market value of the voting and  non-voting  common
equity held by  non-affiliates  computed by  reference to the price at which the
common  equity was last sold,  or the average bid and asked price of such common
equity, as of the last business day of the registrant's most recently  completed
second fiscal quarter: $2,721,640.

         Indicate the number of shares  outstanding of each of the  registrant's
classes of common stock as of March 31, 2006: 18,442,722 (post reverse-splits).

         Documents incorporated by reference:  None.

                                       2

<PAGE>

                                TABLE OF CONTENTS

Item 1.       Business.........................................................4
Item 1A.      Risk Factors.....................................................7
Item 2.       Properties......................................................13
Item 3.       Legal Proceedings...............................................13
Item 4.       Submission of Matters to a Vote of Security Holders.............13
Item 5.       Market for Registrant's Common Equity, Related Stockholder
                 Matters and Issuer Purchases of Equity Securities............13
Item 6.       Selected Financial Data.........................................14
Item 7.       Management's Discussion and Analysis or Plan of Operation.......15
Item 7A.      Quantitative and Qualitative Disclosure about Market Risk.......21
Item 8.       Financial Statements and Supplementary Data.....................22
Item 9.       Changes in and Disagreements With Accountants on Accounting
                 and Financial Disclosure.....................................22
Item 9A.      Controls and Procedures.........................................22
Item 10.      Directors and Executive Officers of the Registrant..............22
Item 11.      Executive Compensation..........................................24
Item 12.      Security Ownership of Certain Beneficial Owners and
                 Management and Related Stockholder Matters...................25
Item 13.      Certain Relationships and Related Transactions..................26
Item 14.      Principal Accountant Fees and Services..........................26
Item 15.      Exhibits........................................................27

                                       3

<PAGE>

                                     PART I

ITEM 1. BUSINESS.

         Statements  in this Form 10-K  Annual  Report  may be  "forward-looking
statements."  Forward-looking  statements  include,  but  are  not  limited  to,
statements  that  express our  intentions,  beliefs,  expectations,  strategies,
predictions or any other statements  relating to our future  activities or other
future events or conditions. These statements are based on current expectations,
estimates and projections about our business based, in part, on assumptions made
by our management. These statements are not guarantees of future performance and
involve  risks,  uncertainties  and  assumptions  that are difficult to predict.
Therefore, actual outcomes and results may, and probably will, differ materially
from what is expressed or forecasted in the  forward-looking  statements  due to
numerous factors, including those described above and those risks discussed from
time to time in this Form 10-K  Annual  Report,  including  the risks  described
under "Risk  Factors"  and  "Management's  Discussion  and Analysis of Financial
Condition and Results of Operations"  and in other  documents which we file with
the Securities and Exchange Commission.

         In  addition,   such   statements   could  be  affected  by  risks  and
uncertainties  related  to our  financial  condition,  factors  that  affect our
industry,  market and customer acceptance,  competition,  government regulations
and requirements and pricing,  as well as general industry and market conditions
and  growth  rates,  and  general  economic   conditions.   Any  forward-looking
statements  speak  only as of the date on which  they  are  made,  and we do not
undertake  any  obligation  to update any  forward-looking  statement to reflect
events or circumstances after the date of this Form 10-K Annual Report.

COMPANY OVERVIEW

         Effective November 22, 2004, we became a "business development company"
by filing a Form N-54 with the Securities  and Exchange  Commission and electing
to be governed by sections 54 through 65 of the Investment  Company Act of 1940,
as  amended.   We  will  continue  to  be  subject  to  the  periodic  reporting
requirements  of the Exchange  Act and the proxy  solicitation  requirements  of
Section 14 of the Exchange Act. Our management personnel will continue to report
trading in our stock.

         Effective  December 6, 2004, we entered into a stock purchase agreement
with Medspa  Solutions,  Inc., a Nevada  corporation  ("Medspa  Solutions"),  to
purchase all of the issued and outstanding capital stock of Medspa. Medspa is in
the business of skincare  services.  The total  consideration paid by us for the
shares of Medspa  consisted  of 5 shares  (post  reverse-splits)  of our  common
stock, no par value per share. The 5 shares (post  reverse-splits) of our common
stock  were  automatically  converted  into  1,000,000  shares  of our  Series B
preferred  stock, no par value per share,  upon the filing of the certificate of
designation  for the Series B  preferred  stock with the  Secretary  of State of
Florida on January 12, 2005. As a result of the  acquisition,  Medspa  Solutions
became our wholly-owned subsidiary.

         MedSpa Solutions is in the business of providing high-quality skin care
and non-surgical cosmetic procedures in a spa-like environment. MedSpa Solutions
offers  procedures  such as botox,  laser hair removal,  IPL-skin  rejuvenation,
microdermabrasion,  chemical  peels,  collagen,  and leg  vein  treatment.  More
information is available at  www.medspasolutions.com/index.  With the completion
of the MedSpa Solutions acquisition, we plan to enter the rapidly growing market
of aesthetic skin care treatments.

         During the year ended December 31, 2005,  the Company  purchased 90% of
the outstanding common stock of GaeaCare Syndicate Partners, Inc. ("GaeCare")for
$3,000  cash.  GaeaCare  is a  proactive  environmental  products  and  services
corporation that intends to become a leading  environmental  cleanup,  emergency
response,  and  environmental  remediation  company  by the use of new  computer
systems  technology,  sensor  technology,   communications  technology,  systems
concepts and microbial  environmental  cleanup treatment.  At December 31, 2005,
the Company determined that the fair value of its investment in GaeaCare was $0.
The amount of $3,000 was charged to  operations  during the year ended  December
31, 2005.

                                       4

<PAGE>

         As of December 31, 2005, the Company has purchased 2% of the issued and
outstanding  capital stock of Nu Image Medspa,  Inc., a Nevada  corporation ("Nu
Image").  The  Company  has  purchased  2,576,000  shares  of Nu Image  for cash
payments of $270,300 from the Company's chief executive  officer,  who continues
to own the  remaining  98% of Nu Image  Medspa.  Nu Image is in the  business of
franchising medical spa facilities, which provide skincare services. At December
31,  2005,  the Company  determined  that the  fairvalue of Nu Image was $0, and
charged the amounts of $270,300 to operations during the year ended December 31,
2005.

CURRENT BUSINESS PLAN

         Our current purpose is to seek,  investigate and, if such investigation
warrants,  acquire an  interest  in business  opportunities  presented  to us by
persons  or firms who or which  desire  to seek the  perceived  advantages  of a
corporation  which is registered  under the Exchange Act. We do not restrict our
search to any specific  business,  industry or geographical  location and we may
participate in a business venture of virtually any kind or nature.

         We may seek a business  opportunity  with entities  which have recently
commenced  operations,  or which wish to utilize the public marketplace in order
to raise additional capital in order to expand into new products or markets,  to
develop a new product or service or for other corporate purposes. We may acquire
assets and establish wholly owned  subsidiaries in various businesses or acquire
existing businesses as subsidiaries.

         As  part of our  investigation  of  potential  merger  candidates,  our
officers and directors will meet  personally  with management and key personnel,
may visit and  inspect  material  facilities,  obtain  independent  analysis  or
verification of certain information provided, check references of management and
key personnel and take other reasonable investigative measures, to the extent of
our  financial  resources  and  management  expertise.  The  manner  in which we
participate in an opportunity will depend on the nature of the opportunity,  the
respective  needs and desires of us and other  parties,  the  management  of the
opportunity, our relative negotiation strength and that of the other management.

         We  intend  to  concentrate  on  identifying   preliminary  prospective
business  opportunities  that may be brought to our  attention  through  present
associations of our officers and directors, or by our shareholders. In analyzing
prospective  business  opportunities,  we  will  consider  such  matters  as the
available  technical,  financial and managerial  resources;  working capital and
other financial requirements;  history of operations,  if any; prospects for the
future; nature of present and expected  competition;  the quality and experience
of management  services which may be available and the depth of that management;
the potential for further  research,  development or exploration;  specific risk
factors  not now  foreseeable  but which then may be  anticipated  to impact our
proposed  activities;  the potential for growth or expansion;  the potential for
profit; the perceived public recognition or acceptance of products,  services or
trades; name identification; and other relevant factors.

         Our officers and directors will meet personally with management and key
personnel of the business  opportunity as part of their  investigation.  We will
not  acquire or merge with any company for which  audited  financial  statements
cannot be  obtained  within a  reasonable  period of time  after  closing of the
proposed transaction, as required by the Exchange Act.

         We will not restrict our search to any specific kind of firms,  but may
acquire a venture which is in its  preliminary  or development  stage,  which is
already in  operation,  or which is in  essentially  any stage of its  corporate
life.  It is  impossible  to predict at this time the status of any  business in
which we may become  engaged,  in that such business may need to seek additional
capital,  may  desire  to have its  shares  publicly  traded  or may seek  other
perceived advantages which we may offer.

                                       5

<PAGE>

REVERSE SPLITS

The Board of Directors  approved the following  reserve  splits of the Company's
common stock:

Effective Date          Reverse split ratio
--------------          -------------------
August 17, 2003         1 for 250
August 16, 2004         1 for 250
November 29, 2004       1 for 1,000
March 7, 2005           1 for 1,000
June 23, 2005           1 for 1,500
January 26, 2006        1 for 1,250

         All of these reverse splits of the Company's common stock are reflected
in the  Company's  financial  statements  at December 31, 2005.  The  cumulative
effect  of these  reverse  splits  at  December  31,  2005 is the  result of the
multiplication of each stock split ratio, or 250 x 250 x 1,000 x 1,000 x 1,000 x
1,500 x 1,250.  The  product  of this  equation  equals  the number of shares of
common  stock at August 16, 2003 that would be worth 1 share of common  stock at
December 31, 2005.  This large dilution factor renders all items based in shares
or per share  amounts  essentially  not  comparable  over  different  accounting
periods.  Many of the share  amounts in prior  periods,  when  adjusted  for the
cumulative effects of the reverse splits, are a small fraction of one share. Per
share  amounts which yield less than one share of common stock when adjusted for
the  effects  of the  reverse  splits are  indicated  by the symbol *, or by the
phrase  "less  than one  share".  Similarly,  some items  measured  in per share
amounts,  such as  earnings  per  share,  are too large to have any  significant
meaning to the reader of the financial statements.

         All share and per share amounts  presented in our financial  statements
which  are  part  of  this  Annual  Report  on  Form  10-K  have  been  restated
retroactively to reflect these reverse splits.  However, all share and per share
amounts have not been restated  retroactively  to reflect the reverse  splits in
the  narrative  portion of this Annual  Report on Form 10-K.  Consequently,  the
retroactive  restatement  may cause some  apparent  inconsistencies  between the
narrative  portion of this Annual Report on Form 10-K and other filings with the
Securities and Exchange Commission on one hand, and the financial statements and
accompanying  notes forming part of this Annual Report on Form 10-K on the other
hand.

KEY PERSONNEL

         Our future financial success depends to a large degree upon the efforts
of Mark Ellis, our officer and one of our directors.  Mr. Ellis has played major
roles in developing and executing our business  strategy.  The loss of Mr. Ellis
could have an adverse  effect on our  business  and our chances  for  profitable
operations.  While we intend  to  employ  additional  management  and  marketing
personnel  in order to minimize  the  critical  dependency  upon any one person,
there can be no assurance that we will be successful in attracting and retaining
the persons needed. If we do not succeed in retaining and motivating our current
employees  and  attracting  new high quality  employees,  our business  could be
adversely affected. We do not maintain key man life insurance on the life of Mr.
Ellis.

OUR FINANCIAL RESULTS MAY BE AFFECTED BY FACTORS OUTSIDE OF OUR CONTROL

         Our future  operating  results may vary  significantly  from quarter to
quarter due to a variety of factors,  many of which are outside our control. Our
anticipated  expense  levels  are based,  in part,  on our  estimates  of future
revenues and may vary from our projections.  We may be unable to adjust spending
rapidly enough to compensate for any unexpected revenues shortfall. Accordingly,
any  significant  shortfall in revenues in relation to our planned  expenditures
would materially adversely affect our business, operating results, and financial
condition.

         We cannot  predict with  certainty our revenues and operating  results.
Further, we believe that  period-to-period  comparisons of our operating results
are not necessarily a meaningful indication of future performance.

CORPORATE OFFICES

         Our  executive  office is located  at 100  Crescent  Court,  Suite 700,
Dallas, Texas 75201, telephone number (214) 459-8245..

CHANGES IN OUR CORPORATE STRUCTURE

         Effective  January 12, 2005, we filed a certificate of designation  for
the Series B preferred stock with the Secretary of State of Florida.  50,000,000
shares  have been  designated  as Series B  preferred  stock.  Each share of the
Series B preferred  stock is  convertible  into 10 shares of our common stock on
all matters  submitted to a vote of the holders of the common stock,  including,
without limitation,  the election of directors, a holder of shares of the Series
B preferred stock shall be entitled to the number of votes on such matters equal
to the number of shares of the  Series

                                       6
<PAGE>

B preferred stock held by such holder  multiplied by the number of shares of the
common  stock  each such  share of the Series B  preferred  stock  shall then be
convertible.

         Effective  March 7, 2005,  we changed  our name to  "Winsted  Holdings,
Inc." and  implemented  a 1-1,000  reverse  split of our issued and  outstanding
common shares.  In addition,  we have signed a Letter of Intent to merge with Nu
Image MedSpa, Inc.

CHANGE OF CONTROL

         On February 24, 2003, we entered into a share  purchase  agreement with
Mark Ellis and Jeffrey  Black  providing  for the purchase by Mr. Ellis from Mr.
Black of  271,000,000  shares of our common  stock,  no par  value,  for a total
purchase price of $20,000.  As a result of this transaction,  Mr. Ellis acquired
at 71.99 percent  beneficial  ownership in us. On February 27, 2003,  Mark Ellis
was elected as our chief executive officer and sole director.  Simultaneous with
Mr.  Ellis'  election as our officer and  director,  Jeffrey  Black and Jonathan
Miller resigned as our officers and directors.

         We  are   looking  to  merge  or  acquire  an   interest   in  business
opportunities.

         Effective  November  22,  2004,  we  became  a  "business   development
company," as described more fully in "Company Overview," supra.

EMPLOYEES

         We have 3 full-time employees and no part-time employees as of December
31, 2005.  As we grow,  we will need to attract an unknown  number of additional
qualified employees.  Although we have experienced no work stoppages and believe
our  relationships  with our  employees are good,  we could be  unsuccessful  in
attracting and retaining the persons needed. None of our employees are currently
represented  by a labor  union.  We expect to have a ready  source of  available
labor to support our growth.

ITEM 1A.      RISK FACTORS.

NEED FOR ONGOING FINANCING.

         We will need  additional  capital to continue our  operations  and will
endeavor to raise  funds  through the sale of equity  shares and  revenues  from
operations.

         There  can  be  no  assurance  that  we  will  generate  revenues  from
operations or obtain sufficient  capital on acceptable terms, if at all. Failure
to obtain such capital or generate such operating revenues would have an adverse
impact on our  financial  position  and  results of  operations  and  ability to
continue as a going concern.  Our operating and capital  requirements during the
next  fiscal  year and  thereafter  will  vary  based on a  number  of  factors,
including  the level of sales and  marketing  activities  for our  services  and
products. There can be no assurance that additional private or public financing,
including  debt or  equity  financing,  will be  available  as  needed,  or,  if
available,  on terms  favorable to us. Any  additional  equity  financing may be
dilutive to stockholders and such additional  equity securities may have rights,
preferences or privileges that are senior to those of our existing common stock.

         Furthermore,  debt  financing,  if available,  will require  payment of
interest and may involve restrictive  covenants that could impose limitations on
our operating flexibility.  Our failure to successfully obtain additional future
funding may jeopardize our ability to continue our business and operations.

         If we raise  additional  funds by issuing equity  securities,  existing
stockholders  may experience a dilution in their  ownership.  In addition,  as a
condition to giving additional funds to us, future investors may demand, and may
be granted, rights superior to those of existing stockholders.

                                       7

<PAGE>

BUSINESS CONCENTRATION.

         While  we  consider  our   relationships   with  our  customers  to  be
satisfactory,  given the concentration of our sales to a few key customers,  our
continued  relationships  may be subject to the  policies  and  practices of the
customers. We continue to concentrate our efforts on expanding our customer base
in order to reduce our reliance on our current customers.  During the year ended
December 31, 2005, 100% of our revenue was obtained from one customer.

INFLATION.

         In  our  opinion,  inflation  has  not  had a  material  effect  on our
financial condition or results of our operations.

TRENDS, RISKS AND UNCERTAINTIES.

         We have sought to identify  what we believe to be the most  significant
risks to our business,  but we cannot predict whether, or to what extent, any of
such risks may be realized  nor can we  guarantee  that we have  identified  all
possible risks that might arise. Investors should carefully consider all of such
risk factors  before  making an  investment  decision with respect to our common
stock.

CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS.

         We provide the following cautionary discussion of risks,  uncertainties
and possible inaccurate  assumptions  relevant to our business and our products.
These are  factors  that we think  could  cause  our  actual  results  to differ
materially from expected results.  Other factors besides those listed here could
adversely affect us.

POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS.

         Our  quarterly  operating  results may fluctuate  significantly  in the
future as a result of a  variety  of  factors,  most of which  are  outside  our
control,  including the demand for our services,  seasonal trends in purchasing,
the  amount and timing of capital  expenditures;  price  competition  or pricing
changes in the industry;  technical  difficulties  or system  downtime;  general
economic  conditions,  and economic  conditions  specific to our  industry.  Our
quarterly  results  may also be  significantly  impacted  by the  impact  of the
accounting treatment of acquisitions,  financing  transactions or other matters.
Particularly at our early stage of development,  occurrences  such as accounting
treatment can have a material impact on the results for any quarter.  Due to the
foregoing  factors,  among others,  it is likely that our operating results will
fall below our expectations or those of investors in some future quarter.

LACK OF INDEPENDENT DIRECTORS.

         We cannot guarantee that our board of directors will have a majority of
independent directors in the future. In the absence of a majority of independent
directors,  our  executive  officers,  could  establish  policies and enter into
transactions without independent review and approval thereof. This could present
the  potential  for a  conflict  of  interest  between  us and our  stockholders
generally and the controlling officers, stockholders or directors.

LIMITATION OF LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS.

         Our officers and directors are required to exercise good faith and high
integrity in our  management  affairs.  Our articles of  incorporation  provide,
however,  that  our  officers  and  directors  shall  have no  liability  to our
stockholders for losses  sustained or liabilities  incurred which arise from any
transaction in their respective managerial capacities unless they violated their
duty of loyalty, did not act in good faith, engaged in intentional misconduct or
knowingly  violated the law,  approved an improper dividend or stock repurchase,
or derived an improper  benefit  from the  transaction.  Our articles and bylaws
also provide for the indemnification by us of the officers and directors against
any losses or liabilities they may incur as a result of the manner in which they
operate  our  business  or  conduct  the  internal  affairs,  provided  that  in
connection  with these  activities  they act in good faith and in a manner  that
they  reasonably  believe to be in, or not opposed to, our best  interests,  and
their  conduct does not  constitute  gross  negligence,  misconduct or breach of
fiduciary obligations.

                                       8

<PAGE>

MANAGEMENT OF POTENTIAL GROWTH.

         We may experience rapid growth which will place a significant strain on
our managerial, operational, and financial systems resources. To accommodate our
current size and manage  growth,  we must  continue to implement and improve our
financial strength and our operational systems, and expand, train and manage our
sales  and  distribution  base.  There is no  guarantee  that we will be able to
effectively  manage the  expansion of our  operations,  or that our  facilities,
systems,  procedures  or  controls  will be  adequate  to support  our  expanded
operations.  Our inability to effectively  manage our future growth would have a
material adverse effect on us.

WE PAY NO DIVIDENDS.

         We have never declared nor paid cash dividends on our capital stock. We
currently  intend to retain any earnings for funding  growth however these plans
may change depending upon capital raising requirements.

                                       9

<PAGE>

RISKS RELATING TO OUR BUSINESS

WE ARE NOT LIKELY TO SUCCEED UNLESS WE CAN OVERCOME THE MANY OBSTACLES WE FACE.

         As an  investor,  you should be aware of the  difficulties,  delays and
expenses  we  encounter,  many  of  which  are  beyond  our  control,  including
unanticipated market trends,  employment costs, and administrative  expenses. We
cannot assure our  investors  that our proposed  business  plans as described in
this report will materialize or prove  successful,  or that we will ever be able
to finalize development of our products or services or operate profitably. If we
cannot operate profitably, you could lose your entire investment. As a result of
the nature of our business, initially we expect to sustain substantial operating
expenses without generating significant revenues.

OUR AUDITORS HAVE STATED WE MAY NOT BE ABLE TO STAY IN BUSINESS.

         Our  auditors  have issued a going  concern  opinion,  which means that
there is doubt  that we can  continue  as an  ongoing  business  for the next 12
months.  Unless we can raise additional  capital,  we may not be able to achieve
our objectives and may have to suspend or cease  operations.  See  "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

OUR ACQUISITION STRATEGY INVOLVES A NUMBER OF RISKS.

         We intend to pursue growth  through the  opportunistic  acquisition  of
companies  or assets that will enable us to expand our service  lines to provide
more   cost-effective   customer   solutions.   We  routinely  review  potential
acquisitions.  This strategy involves certain risks,  including  difficulties in
the  integration  of operations and systems,  the diversion of our  management's
attention from other business concerns,  and the potential loss of key employees
of  acquired  companies.  We may  not be able to  successfully  acquire,  and/or
integrate acquired businesses into our operations.

RISKS RELATING TO OUR STOCK

WE MAY NEED TO RAISE  ADDITIONAL  CAPITAL.  IF WE ARE UNABLE TO RAISE  NECESSARY
ADDITIONAL CAPITAL, OUR BUSINESS MAY FAIL OR OUR OPERATING RESULTS AND OUR STOCK
PRICE MAY BE MATERIALLY ADVERSELY AFFECTED.

         Due to the lack of revenue  and  expenses,  we need to secure  adequate
funding.  If we are  unable to obtain  adequate  funding,  we may not be able to
successfully  develop and market our products and services and our business will
most likely fail. We do not have commitments for additional financing. To secure
additional financing, we may need to borrow money or sell more securities, which
may reduce the value of our outstanding  securities.  Under these circumstances,
we may be unable to secure additional financing on favorable terms or at all.

         Selling  additional stock,  either privately or publicly,  would dilute
the equity interests of our stockholders.  If we borrow more money, we will have
to pay  interest  and may also  have to agree to  restrictions  that  limit  our
operating  flexibility.  If we are unable to obtain adequate  financing,  we may
have to curtail business  operations which would have a material negative effect
on operating results and most likely result in a lower stock price.

OUR COMMON STOCK HAS  EXPERIENCED  IN THE PAST, AND IS EXPECTED TO EXPERIENCE IN
THE  FUTURE,  SIGNIFICANT  PRICE  AND  VOLUME  VOLATILITY,  WHICH  SUBSTANTIALLY
INCREASES  THE RISK THAT YOU MAY NOT BE ABLE TO SELL YOUR SHARES AT OR ABOVE THE
PRICE THAT YOU PAY FOR THE SHARES.

         Because of the limited trading market for our common stock, and because
of the  possible  price  volatility,  you may not be able to sell your shares of
common  stock when you desire to do so.  During 2004 and 2005,  our common stock
was sold and  purchased  at prices  that  ranged from a high of $1.80to a low of
$0.0009  per share.  These  prices  have not been  adjusted  for the  cumulative
effects of the six reverse  splits which the Company has  undergone  from August
2003  through  January  2006.  The  inability  to sell your  shares in a rapidly
declining  market may  substantially  increase your risk of loss because of such
illiquidity  because the price for our common stock may suffer greater  declines
due to its price volatility.

                                       10

<PAGE>

         The price of our  common  stock that will  prevail in the market  after
this  offering may be higher or lower than the price you pay.  Certain  factors,
some of which  are  beyond  our  control,  that may  cause  our  share  price to
fluctuate significantly include, but are not limited to, the following:

o        Variations in our quarterly operating results;

o        The development of a market in general for our products and services;

o        Changes in market valuations of similar companies;

o        Announcement  by  us  or  our  competitors  of  significant  contracts,
         acquisitions,   strategic  partnerships,   joint  ventures  or  capital
         commitments;

o        Loss  of  a  major   customer  or  failure  to   complete   significant
         transactions;

o        Additions or departures of key personnel; and

o        Fluctuations in stock market price and volume.

         Additionally,  in recent years the stock market in general, and the OTC
Bulletin Board and technology  stocks in particular,  have  experienced  extreme
price and volume  fluctuations.  In some cases, these fluctuations are unrelated
or  disproportionate  to the operating  performance of the  underlying  company.
These market and industry  factors may materially and adversely affect our stock
price, regardless of our operating performance.

         Over the past few  months,  there  have  been  periods  of  significant
increases  in trading  volume of our common  stock during which the price of our
stock has both  increased and decreased.  The  historical  trading of our common
stock is not necessarily an indicator of how it will trade in the future and our
trading  price as of the date of this report does not  necessarily  portend what
the trading price of our common stock might be in the future.

         In the past,  class action  litigation  has often been brought  against
companies  following  periods of  volatility  in the market  price of the common
stock of those  companies.  If we become  involved in this type of litigation in
the future,  it could result in  substantial  costs and  diversion of management
attention  and  resources,  which could have a further  negative  effect on your
investment in our stock.

OUR DIRECTORS  HAVE THE RIGHT TO AUTHORIZE  THE ISSUANCE OF PREFERRED  STOCK AND
ADDITIONAL SHARES OF OUR COMMON STOCK.

         Our directors, within the limitations and restrictions contained in our
articles of incorporation and without further action by our  stockholders,  have
the  authority to issue  shares of  preferred  stock from time to time in one or
more series and to fix the number of shares and the relative rights,  conversion
rights, voting rights, and terms of redemption,  liquidation preferences and any
other preferences, special rights and qualifications of any such series. We have
no intention of issuing  preferred  stock at the present  time.  Any issuance of
preferred  stock  could  adversely  affect  the  rights of holders of our common
stock.

         Should we issue additional  shares of our common stock at a later time,
each  investor's   ownership  interest  in  Winsted  Holdings,   Inc.  would  be
proportionally  reduced.  No investor will have any preemptive  right to acquire
additional shares of our common stock, or any of our other securities.

THE  ISSUANCE OF SHARES  UPON THE  EXERCISE OF  OUTSTANDING  WARRANTS  MAY CAUSE
IMMEDIATE AND SUBSTANTIAL DILUTION TO OUR EXISTING STOCKHOLDERS.

         The  issuance  of shares upon the  exercise  of warrants  may result in
substantial  dilution to the interests of other  stockholders  since the selling
stockholders  may  ultimately  convert  and  sell the full  amount  issuable  on
conversion.  There is no upper  limit on the number of shares that may be issued
which will have the effect of further

                                       11

<PAGE>

diluting the  proportionate  equity  interest and voting power of holders of our
common stock, including investors in this offering.

IF WE FAIL TO REMAIN CURRENT ON OUR REPORTING REQUIREMENTS,  WE COULD BE REMOVED
FROM THE OTC BULLETIN BOARD WHICH WOULD LIMIT THE ABILITY OF  BROKER-DEALERS  TO
SELL OUR SECURITIES AND THE ABILITY OF STOCKHOLDERS TO SELL THEIR  SECURITIES IN
THE SECONDARY MARKET.

         Companies  trading on the OTC Bulletin Board, such as Winsted Holdings,
Inc.,  must be reporting  issuers under Section 12 of the Exchange Act, and must
be  current  in their  reports  under  Section  13, in order to  maintain  price
quotation  privileges on the OTC Bulletin Board. If we fail to remain current on
our reporting requirements,  we could be removed from the OTC Bulletin Board. As
a result,  the market liquidity for our securities  could be severely  adversely
affected by limiting the ability of  broker-dealers  to sell our  securities and
the ability of stockholders to sell their securities in the secondary market.

OUR  COMMON  STOCK IS  SUBJECT  TO THE  "PENNY  STOCK"  RULES OF THE SEC AND THE
TRADING MARKET IN OUR  SECURITIES IS LIMITED,  WHICH MAKES  TRANSACTIONS  IN OUR
STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR STOCK.

         The  Securities  and Exchange  Commission  has adopted Rule 15g-9 which
establishes the definition of a "penny stock," for the purposes  relevant to us,
as any equity  security  that has a market price of less than $5.00 per share or
with an  exercise  price of less  than  $5.00  per  share,  subject  to  certain
exceptions.  Inasmuch as that the  current bid and ask price of common  stock is
less than $5.00 per share,  our shares are classified as "penny stock" under the
rules of the SEC. For any  transaction  involving a penny stock,  unless exempt,
the rules require:

o        That a broker or dealer approve a person's  account for transactions in
         penny stocks; and

o        The broker or dealer receives from the investor a written  agreement to
         the  transaction,  setting forth the identity and quantity of the penny
         stock to be purchased.

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

o        Obtain financial  information and investment  experience  objectives of
         the person; and

o        Make a reasonable  determination  that the transactions in penny stocks
         are  suitable for that person and the person has  sufficient  knowledge
         and  experience in financial  matters to be capable of  evaluating  the
         risks of transactions in penny stocks.

         The broker or dealer must also deliver,  prior to any  transaction in a
penny stock, a disclosure  schedule prescribed by the Commission relating to the
penny stock market, which, in highlight form:

o        Sets forth the basis on which the broker or dealer made the suitability
         determination; and

o        That the broker or dealer received a signed, written agreement from the
         investor prior to the transaction.

         Generally,  brokers  may be less  willing  to execute  transactions  in
securities  subject to the "penny stock" rules.  This may make it more difficult
for  investors  to dispose of our common stock and cause a decline in the market
value of our stock.

         Disclosure  also has to be made about the risks of  investing  in penny
stocks  in  both  public  offerings  and in  secondary  trading  and  about  the
commissions payable to both the broker-dealer and the registered representative,
current  quotations for the securities and the rights and remedies  available to
an  investor  in cases of fraud in penny stock  transactions.  Finally,  monthly
statements  have to be sent  disclosing  recent price  information for the penny
stock held in the account and information on the limited market in penny stocks.

                                       12

<PAGE>

ITEM 2. PROPERTIES.

         We lease 1,100 square feet of office space at 100 Crescent Court, Suite
700, Dallas,  Texas 75201. Our Crescent Court lease is month to month at a price
of $950 per month.

ITEM 3. LEGAL PROCEEDINGS.

         None.

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

         None.

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S  COMMON EQUITY,  RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.

         Our common stock is quoted on the OTC  Bulletin  Board under the symbol
"WNSH.OB."  These  quotations  reflect  inter-dealer  prices,  without  mark-up,
mark-down or commission, and may not represent actual transactions.

         CALENDAR YEAR 2004       HIGH                 LOW
                           -----------------------------------------
              First Quarter     $ 0.01             $ 0.01
             Second Quarter       0.10               0.0006
              Third Quarter       0.06               0.0009
             Fourth Quarter       0.45               0.0006

         CALENDAR YEAR 2005       High                 Low
                           -----------------------------------------
              First Quarter     $ 0.10               0.0009
             Second Quarter       1.80               0.0009
              Third Quarter       0.018              0.0009
             Fourth Quarter       0.001              0.0009

         The above closing prices have NOT been adjusted for the effect of the 5
reverse  splits which were  effected  from August 16, 2004  through  January 26,
2006.  Also, on certain days the price of the  Company's  common stock was below
$0.001, which is the lowest price quoted by the NASD OTC BB. At these dates, the
Company has deemed the price of its stock to be $0.0009 per share.

         At December 31, 2005, we had 2,408,957 (post reverse-splits)  shares of
our  common  stock  outstanding.   Our  shares  of  common  stock  are  held  by
approximately  419  stockholders  of record.  The number of record  holders  was
determined  from  the  records  of our  transfer  agent  and  does  not  include
beneficial  owners of common stock whose shares are held in the names of various
security brokers, dealers, and registered clearing agencies.

SECTION 15(G) OF THE EXCHANGE ACT

         The shares of our  common  stock are  covered  by Section  15(g) of the
Exchange Act, and Rules 15g-1 through 15g-6 promulgated thereunder, which impose
additional sales practice requirements on broker-dealers who sell our securities
to persons other than established customers and accredited investors.

         Rule 15g-2 declares unlawful any  broker-dealer  transactions in "penny
stocks"  unless  the   broker-dealer  has  first  provided  to  the  customer  a
standardized disclosure document.

                                       13

<PAGE>

         Rule 15g-3 provides that it is unlawful for a  broker-dealer  to engage
in a "penny stock"  transaction  unless the  broker-dealer  first  discloses and
subsequently  confirms to the customer the current  quotation  prices or similar
market information concerning the penny stock in question.

         Rule 15g-4  prohibits  broker-dealers  from  completing  "penny  stock"
transactions  for a customer  unless the  broker-dealer  first  discloses to the
customer the amount of compensation or other  remuneration  received as a result
of the penny stock transaction.

         Rule 15g-5  requires  that a  broker-dealer  executing a "penny  stock"
transaction,  other than one exempt under Rule 15g-1,  disclose to its customer,
at the time of or prior to the transaction, information about the sales person's
compensation.

         Our common stock may be subject to the foregoing rules. The application
of the "penny  stock" rules may affect our  stockholders'  ability to sell their
shares  because some  broker-dealers  may not be willing to make a market in our
common  stock  because of the  burdens  imposed  upon them by the "penny  stock"
rules.

         The following table provides  information about purchases by us and our
affiliated  purchasers  during the  quarter  ended  December  31, 2005 of equity
securities that are registered by us pursuant to Section 12 of the Exchange Act:

<TABLE>
<CAPTION>
                         PURCHASES OF EQUITY SECURITIES

                                                     (a)              (b)              (c)               (d)
                                                 -------------    -------------    -------------    --------------
                                                                                                       Maximum
                                                                                                     number (or
                                                                                      Total          approximate
                                                                                    number of          dollar
                                                                                    shares (or        value) of
                                                                                      units)         shares (or
                                                                                    purchased        units) that
                                                    Total           Average         as part of       may yet be
                                                  number of          price           publicly         purchased
                                                  shares (or        paid per        announced         under the
                                                    units)         share (or         plans or         plans or
                   Period                         purchased          unit)           programs         programs
                   ------                        -------------    -------------    -------------    --------------
<S>                                              <C>              <C>              <C>              <C>
October 2004............................                  -0-              -0-              -0-               -0-
November 2004...........................                  -0-              -0-              -0-               -0-
December 2004...........................                  -0-              -0-              -0-               -0-
                                                 -------------    -------------    -------------    --------------
Total...................................                  -0-              -0-              -0-               -0-
                                                 =============    =============    =============    =============
</TABLE>

ITEM 6.       SELECTED FINANCIAL DATA.

<TABLE>
<CAPTION>
Years ended December 31                        2005            2004            2003
                                          ---------------------------------------------
<S>                                       <C>             <C>             <C>
      Total revenue                       $    300,000    $     23,691    $         --

      Net loss                              (3,538,300)    (62,591,443)     (3,308,609)

      Cash used in operating activities       (622,345)     (1,287,693)     (1,006,282)

      Total assets                             139,757         269,236         691,614

      Total liabilities                        665,430         346,958         299,505

      Stockholders' equity (deficit)          (525,673)        (77,722)        392,109
</TABLE>

                                       14

<PAGE>

ITEM 7.       MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

FORWARD-LOOKING  INFORMATION

         During the calendar  year 2004, we were a  telecommunications  provider
specializing in website design, web hosting and VOIP catering to small to medium
size businesses. With prospects within the industry diminishing,  management had
elected for us to become a Business  Development Company (a "BDC") in late 2004.
Effective November 22, 2004, we became a "business development company" or "BDC"
by filing a Form N-54 with the Securities  and Exchange  Commission and electing
to be governed by Sections 54 through 65 of the Investment  Company Act of 1940.
We will  continue to be subject to the periodic  reporting  requirements  of the
Exchange  Act and the  proxy  solicitation  requirements  of  Section  14 of the
Exchange Act. Our  management  personnel  will continue to report trading in our
stock. With a name change that was effective in March of 2005, we became Winsted
Holdings, Inc.

         Our current  plan is to seek,  investigate  and, if such  investigation
warrants,  acquire an  interest  in business  opportunities  presented  to us by
persons  or firms who or which  desire  to seek the  perceived  advantages  of a
corporation  which is registered  under the Exchange Act. We do not restrict our
search to any specific  business,  industry or geographical  location and we may
participate in a business venture of virtually any kind or nature.

         We may seek a business  opportunity  with entities  which have recently
commenced  operations,  or which wish to utilize the public marketplace in order
to raise additional capital in order to expand into new products or markets,  to
develop a new product or service or for other corporate purposes. We may acquire
assets and establish wholly owned  subsidiaries in various businesses or acquire
existing businesses as subsidiaries or as investments.

         In late 2004, we entered the business of  non-surgical  aesthetic  skin
care procedures and services.  During the year ended December 31, 2005, we added
a second  business  to our  portfolio  in this same  industry.  Over the  coming
months, we plan to outline our changing portfolio holdings and our plans for the
long-term Medspa expansion.

         We plan to operate as a  franchisor  of our network of Nu Image  MedSpa
facilities.  We will collect an initial  Franchise fee from each  Franchisee and
ongoing royalties from operational Franchisees.  We plan to sell franchise units
primarily in California,  Nevada,  Texas, New York and Arizona.  We also plan to
expand to other  states as the  demand  arises.  We will  market  our  Franchise
network primarily through  franchised-based  Internet marketing sites, Franchise
Trade  Magazines  and Journals and Medical  Journals and  Magazines,  as well as
other mediums.

         We will  provide  initial  assistance  to our  franchisees,  which will
include  various   franchisee   training  programs,   operational   support  and
consulting.

RESULTS OF OPERATIONS

TWELVE  MONTHS  ENDED  DECEMBER  31, 2005  COMPARED TO THE TWELVE  MONTHS  ENDED
DECEMBER 31, 2004

REVENUE

         During the twelve  months ended  December  31, 2005,  we had revenue of
$300,000,  an increase  of $276,309 or 1166%  compared to revenue of $23,691 for
the twelve months ended  December 31, 2004.  During the year ended  December 31,
2005, the Company recorded revenue of $300,000 from a consulting contract with a
portfolio  company.  The Company expects  consulting  revenue to increase in the
coming twelve months as we add to our portfolio of companies.

SALES, GENERAL AND ADMINISTRATIVE EXPENSES

         Sales,  general and  administrative  expenses were  $3,363,235  for the
twelve  months ended  December 31, 2005, a decrease of  $55,657,261  compared to
sales,  general,  and  administrative  expenses of $59,020,496 during the twelve
months ended December 31, 2004. The decrease is due primarily to the issuance of
convertible preferred

                                       15

<PAGE>

stock valued at $56,092,000 to the Company's President and CEO during the twelve
months  ended  December  31,  2004.  This  high  valuation  was the  result of a
preferred stock  distribution soon after a 1-1000 reverse stock split. We expect
to continue to utilize stock  compensation  in the coming twelve months in order
to  conserve  the  Company's  cash;  however,  we  anticipate  that the level of
non-cash  compensation will decrease  substantially.  Other components of sales,
general,  and  administrative  expense for the twelve months ended  December 31,
2005  compared  to the  twelve  months  ended  December  31,  2004  include  the
following:  administrative  salaries  decreased  by  $75,287  to  $43,809,  from
$119,096 in the previous  period;  legal and accounting  decreased by $10,080 to
$127,920,  from $138,000 in the previous  period;  consulting  fees decreased by
$245,106 to $1,492,327, from $1,737,433 in the previous period; public relations
expense  decreased by $42,270 to $0, from $42,270 in the previous  period;  rent
expense  decreased by $23,662 to $13,653,  from $37,315 in the previous  period;
officer compensation decreased by $55,666,001 to $1,118,334, from $56,784,335 in
the previous period;  travel,  meals,  and  entertainment  expense  decreased by
$13,573 to $12,964, from  $26,537  in the  previous  period;  and  write-off  of
subscriptions  receivable increased by $154,530 to $154,530 from $0 in the prior
period.  Also during the year ended December 31, 2005,  the Company  charged the
amount of $27,440 to operations for the amount of a reserve taken against a loan
to an affiliate, compared to $0 for the prior year.

IMPAIRMENT OF GOODWILL

         During  the year  ended  December  31,  2005,  the  Company  charged to
operations  the  amount  of $0 as an  impairment  of  goodwill,  a  decrease  of
$3,428,001 compared to $3,428,001 of goodwill  written-off during the year ended
December 31, 2004.  During the current year, the Company  operated as a business
development  company,  and  there  is no  goodwill  created  in  its  investment
transactions.  Any charges to operations  relating to the valuation of portfolio
companies will be in the form of impairment of investments, not as impairment of
goodwill.

DEPRECIATION AND AMORTIZATION

         During the twelve months ended December 31, 2005, the Company  recorded
depreciation and amortization expense in the amount of $188,893,  an increase of
$2,121 compared to depreciation  and  amortization of $186,772 during the twelve
months  ended  December  31,  2004.  The  increase  is  due  to an  increase  in
depreciable assets in the current period.

IMPAIRMENT OF INVESTMENTS

         During the year ended December 31, 2005, the Company  recorded a charge
of $273,300 representing  impairment to the value of its portfolio  investments,
an  increase of  $273,300  compared to $0 in the prior year.  During the current
year,  the  Company  operated  as a business  development  company,  and charges
relating  to  the  valuation  of  its  portfolio  investments  were  charged  to
Impairment of  Investments.  During the prior period,  any charges to related to
the fair value of  companies  in which  Winsted had made  investments  were made
against  Goodwill;  accordingly,  in prior  periods any such  charges  appear as
Impairment of Goodwill.

         During the coming twelve months, the Company expects to continue making
investments  in  portfolio  companies,  and will also  continue  to value  these
investments  conservatively,  which may result in further charges to operations.
As the  Company  is now a business  development  company,  there is no  goodwill
created in these transactions, and the charges to operations will be in the form
of impairment of investments, not as impairment of goodwill.

INVESTMENT EXPENSE

         During the twelve months ended December 31, 2005, the Company  recorded
$0 investment  expense,  compared to investment  expense in the amount of $6,000
during the prior year.

                                       16

<PAGE>

INTEREST INCOME (EXPENSE)

         During the twelve months ended December 31, 2005, the Company  recorded
interest  expense in the  amount of  $12,872  compared  to  interest  expense of
$12,988  during the twelve months ended December 31, 2004, a decrease of $116 or
1%. The decrease is due to a decrease in the amount of notes payable.

GAIN ON SETTLEMENT

         During the twelve months ended December 31, 2005, the Company  recorded
$0 gain on settlement of liabilities compared to $39,123 for the prior year.

NET LOSS

         For the reasons stated above,  the Company had a net loss of $3,538,300
for the year ended December 31, 2005,  compared to a net loss of $62,591,443 for
the year ended December 31, 2004, a decrease of $59,380,910 or 95%.

TWELVE  MONTHS  ENDED  DECEMBER  31, 2004  COMPARED TO THE TWELVE  MONTHS  ENDED
DECEMBER 31, 2003

REVENUE

         During the twelve months ended December 31, 2004, we generated  minimal
revenue via our acquisition of the assets and customer base of The Site Doctors,
which we completed on April 30, 2004. We had no revenue during the twelve months
ended December 31, 2003.

SALES, GENERAL AND ADMINISTRATIVE EXPENSES

         Sales,  general and  administrative  expenses were  $59,020,496 for the
twelve months ended  December 31, 2004, an increase of  $56,177,984  compared to
sales,  general,  and  administrative  expenses of $2,842,512  during the twelve
months ended December 31, 2003. The increase is due primarily to the issuance of
convertible preferred stock valued at $56,092,000 to the Company's President and
CEO. This high valuation was the result of a preferred stock  distribution  soon
after a 1-1000  reverse stock split.  Other  components of sales,  general,  and
administrative expense for the twelve months ended December 31, 2004 compared to
the twelve months ended  December 31, 2003 include the  following:  Depreciation
expense  increased by $186,772,  from $0 in the previous period;  administrative
salaries  increased by $91,012 to $95,548,  from $4,536 in the previous  period;
legal and  accounting  increased  by $81,853 to  $138,000,  from  $56,147 in the
previous period;  consulting fees increased by $77,293 to $144,200, from $66,907
in the previous period;  public relations increased by $31,871 to $42,270,  from
$10,399 in the previous  period;  rent expense  increased by $25,370 to $37,315,
from  $11,945 in the previous  period;  officer  salary  increased by $25,368 to
$692,355,  from  $666,967 in the  previous  period;  and  entertainment  expense
increased by $17,700 from $0 in the previous period.

IMPAIRMENT OF GOODWILL

         During the twelve months ended December 31, 2004,  the Company  charged
to operations  the amount of  $3,428,001  as an  impairment  to goodwill,  which
consisted of the  intangible  portion of the  following:  $3,400,000  related to
Medspa  Solutions,  Inc.; and $28,001  related to The Site Doctors.  This was an
increase of  $2,953,498 or 622% compared to impairment of goodwill in the amount
of $474,053 during the three months ended December 31, 2003,  which consisted of
100% of the following  This amount  consisted of the  intangible  portion of the
following  investments:  $300,000  related to C2C Exchange,  Inc.;  and $174,503
related to UBC, Inc.

         During the coming twelve months, the Company expects to continue making
investments  in  portfolio  companies,  and will also  continue  to value  these
investments  conservatively,  which may result in further charges to operations.
As the  Company  is now a business  development  company,  there is no  goodwill
created in these

                                       17

<PAGE>

transactions, and the charges to operations will be in the form of impairment of
investments, not as impairment of goodwill.

DEPRECIATION AND AMORTIZATION

         During the twelve months ended December 31, 2004, the Company  recorded
depreciation and amortization  expense in the amount of $186,772  compared to $0
during the twelve months ended  December 31, 2003, an increase of $186,772.  The
Company acquired its first depreciable assets on December 31, 2003.

INVESTMENT EXPENSE

         During the twelve months ended December 31, 2004, the Company  recorded
investment expense in the amount of $6,000  representing the cost of a potential
investment which was abandoned. The amount of investment expense during the year
ended December 31, 2003 was $0.

INTEREST INCOME (EXPENSE)

         During the twelve months ended December 31, 2004, the Company  recorded
interest  expense in the  amount of  $12,988  compared  to  interest  expense of
$21,056  during the twelve months ended  December 31, 2003, a decrease of $8,068
or 38%. The decrease is due to a decrease in the amount of notes payable.

GAIN ON SETTLEMENT

         During the twelve months ended December 31, 2004, the Company  recorded
a gain on settlement of liabilities in the amount of $39,123, compared to a gain
on settlement of  liabilities  of $29,462 for the year ended  December 31, 2003.
This represents an increase of $9,661 or approximately 33%.

NET LOSS

         For the reasons stated above, the Company had a net loss of $62,591,443
for the year ended  December 31, 2004,  compared to a net loss of $3,308,609 for
the year ended December 31, 2003, an increase of $59,282,834 or 1792%.

LIQUIDITY AND CAPITAL RESOURCES

         Our revenue is currently  insufficient to cover our costs and expenses.
During  the  twelve  months  ended  December  31,  2005,  we  incurred a loss of
$3,538,300.  At December 31, 2005, we have negative working capital of $620,430,
and our accumulated deficit is $70,401,034.

         For the year ended  December  31,  2005,  we  generated a net cash flow
deficit from operating  activities of $622,345,  consisting primarily of year to
date losses of  $3,538,300,  adjusted  for non cash  expenses  of  $188,893  for
depreciation,  $14,500 for bad debt reserve, $27,440 for loan reserve,  $167,030
for write-off of subscriptions receivable, $273,300 for impairment of investment
in portfolio companies, and $1,922,604 for non-cash compensation.

         Cash  used in  investing  activities  totaled  $347,740  consisting  of
$273,300  for the  acquisition  of  portfolio  companies  and  $74,440  for cash
advances to portfolio companies.

         Cash provided by financing  activities  totaled $944,044  consisting of
$63,974  proceeds from exercised  stock  options,  and $880,070 from the sale of
common stock.

         During 2005, the net amount of $472,334,  or  approximately  50% of the
funds provided by the Company's financing activities,  were paid directly to the
Company's  Chief  Executive  Officer and  Director as  compensation.  A total of
$205,000 was accrued for  withholding  taxes  payable on this amount,  and gross
cash compensation to the Company's Chief Executive Officer was $677,334.

                                       18

<PAGE>

         By  adjusting  our   operations   and   development  to  the  level  of
capitalization,  we  believe  we  have  sufficient  capital  resources  to  meet
projected cash flow deficits.  However, if during that period or thereafter,  we
are not  successful in generating  sufficient  liquidity  from  operations or in
raising sufficient capital resources, on terms acceptable to us, this could have
a material adverse effect on our business,  results of operations  liquidity and
financial condition.

         A critical  component of our  operating  plan  impacting  our continued
existence is the ability to obtain additional  capital through additional equity
and/or debt financing.  We do not anticipate enough positive internal  operating
cash flow until such time as we can  generate  substantial  additional  revenues
from  direct  sales of our  product,  which may take the next few years to fully
realize.  In the event we cannot  obtain  the  necessary  capital  to pursue our
strategic  plan, we may have to cease or  significantly  curtail our operations.
This would  materially  impact our ability to generate  revenues.  Our near term
cash requirements are anticipated to be offset through the receipt of funds from
private  placement  offerings and loans obtained through private sources.  Since
inception, we have financed cash flow requirements through debt financing. As we
expand operational  activities,  we may continue to experience net negative cash
flows from operations,  pending receipt of sales revenues,  and will be required
to obtain additional financing to fund operations through common stock offerings
and bank borrowings to the extent necessary to provide working capital.

         Over the next twelve months we intend to develop revenues by developing
specific target markets.  We believe that existing capital and anticipated funds
from  operations  will not be  sufficient  to  sustain  operations  and  planned
expansion in the next twelve months.  Consequently,  we will be required to seek
additional capital in the future to fund growth and expansion through additional
equity or debt  financing or credit  facilities.  No assurance  can be made that
such financing would be available,  and if available it may take either the form
of debt or equity. In either case, the financing could have a negative impact on
our financial condition and our stockholders.

         We anticipate  incurring  operating losses over the next twelve months.
Our lack of operating  history makes  predictions  of future  operating  results
difficult to ascertain.  Our prospects must be considered in light of the risks,
expenses and  difficulties  frequently  encountered  by companies in their early
stage of development, particularly companies in new and rapidly evolving markets
such as technology  related companies.  Such risks include,  but are not limited
to, an evolving and  unpredictable  business model and the management of growth.
To address  these risks we must,  among other  things,  obtain a customer  base,
implement and successfully execute our business and marketing strategy, continue
to develop  and upgrade  technology  and  products,  provide  superior  customer
services  and  order  fulfillment,  respond  to  competitive  developments,  and
attract, retain and motivate qualified personnel. There can be no assurance that
we will be  successful in  addressing  such risks,  and the failure to do so can
have a material adverse effect on our business  prospects,  financial  condition
and results of operations.

GOING CONCERN

         The Company's  independent  certified public accountants have stated in
their report  included in the  Company's  December 31, 2005 Form 10-K,  that the
Company has incurred  operating  losses and that the Company is  dependent  upon
management's  ability to develop  profitable  operations.  These  factors  among
others may raise  substantial doubt about the Company's ability to continue as a
going concern

         The Company has  experienced  losses from operations as a result of its
investment  necessary to achieve its  operating  plan,  which is  long-range  in
nature.  For the years ended  December 31,  2005,  2004,  and 2003,  the Company
incurred net losses from continuing operations of $3,538,300,  $62,591,443,  and
$3,308,609,  respectively.  At  December  31,  2005,  the  Company had a working
capital  deficit of ($320,430) and a  stockholders'  deficit of ($225,673).  The
Company's  ability to continue as a going concern is contingent upon its ability
to secure financing and attain profitable operations.

         THE CONSOLIDATED FINANCIAL STATEMENTS DO NOT INCLUDE ANY ADJUSTMENTS TO
REFLECT THE POSSIBLE FUTURE EFFECTS ON THE  RECOVERABILITY AND CLASSIFICATION OF
ASSETS OR THE AMOUNTS AND CLASSIFICATION OF LIABILITIES THAT MAY RESULT FROM OUR
POSSIBLE INABILITY TO CONTINUE AS A GOING CONCERN.

                                       19

<PAGE>

CRITICAL ACCOUNTING POLICIES

         The preparation of our consolidated  financial statements in conformity
with accounting  principles  generally accepted in the United States requires us
to make  estimates and judgments that affect our reported  assets,  liabilities,
revenues, and expenses, and the disclosure of contingent assets and liabilities.
We base our  estimates and  judgments on  historical  experience  and on various
other  assumptions we believe to be reasonable under the  circumstances.  Future
events,   however,  may  differ  markedly  from  our  current  expectations  and
assumptions.  While  there  are a  number  of  significant  accounting  policies
affecting  our  consolidated  financial  statements,  we believe  the  following
critical  accounting  policy involve the most complex,  difficult and subjective
estimates and judgments.

STOCK-BASED COMPENSATION

         In  December  2002,  the FASB  issued  SFAS No.  148 -  Accounting  for
Stock-Based Compensation - Transition and Disclosure. This statement amends SFAS
No. 123 - Accounting for Stock-Based Compensation, providing alternative methods
of voluntarily transitioning to the fair market value based method of accounting
for stock based employee  compensation.  FAS 148 also requires disclosure of the
method used to account for stock-based  employee  compensation and the effect of
the method in both the annual and interim financial  statements.  The provisions
of this statement  related to transition  methods are effective for fiscal years
ending  after  December  15,  2002,  while  provisions   related  to  disclosure
requirements  are effective in financial  reports for interim periods  beginning
after December 31, 2002.

         We elected to continue to account for  stock-based  compensation  plans
using the intrinsic  value-based method of accounting  prescribed by APB No. 25,
"Accounting for Stock Issued to Employees," and related  interpretations.  Under
the provisions of APB No. 25, compensation expense is measured at the grant date
for the difference between the fair value of the stock and the exercise price.

RECENT ACCOUNTING PRONOUNCEMENTS

         In May 2005,  the FASB issued FASB  Statement  No.  154,  ("FAS  154"),
"Accounting  Changes and Error  Corrections." FAS 154 establishes  retrospective
application  as the  required  method  for  reporting  a  change  in  accounting
principle  in the absence of explicit  transition  requirements  specific to the
newly  adopted  accounting  principle.   FAS  154  also  provides  guidance  for
determining  whether  retrospective   application  of  a  change  in  accounting
principle  is  impracticable  and for  reporting  a  change  when  retrospective
application is  impracticable.  FAS 154 became effective for accounting  changes
and  corrections  of errors made in fiscal years  beginning  after  December 15,
2005. We do not expect the adoption of FAS 154 to have a material  impact on our
financial position, cash flows or results of operations.

         In December  2004,  the FASB issued FASB  Statement No.  123(R),  ("FAS
123(R)"),  "Share-Based  Payment," which is a revision of FASB Statement No. 123
("FAS 123"),  "Accounting for Stock-Based  Compensation."  FAS 123(R) supersedes
APB Opinion No. 25, (APB 25),  "Accounting  for Stock Issued to Employees,"  and
amends FASB Statement No. 95, "Statement of Cash Flows." FAS 123(R) requires all
share-based  payments to employees,  including grants of employee stock options,
to be recognized in the financial  statements  based on their fair values at the
date of grant and to record that cost as  compensation  expense  over the period
during  which the  employee is required to perform  service in exchange  for the
award (generally over the vesting period of the award).  Excess tax benefits, as
defined by FAS 123(R),  will be recognized  as an addition to common  stock.  In
April 2005, the SEC adopted a new rule that amends the compliance  dates for FAS
123(R). In accordance with the new rule, we are required to implement FAS 123(R)
at  the  beginning  of  our  fiscal  year  that  begins  January  1,  2006.  The
Commission's new rule does not change the accounting  required by FAS 123(R); it
changes only the dates of compliance.

         In November 2005, the FASB issued FASB Staff Position No. FAS 123(R)-3,
"Transition  Election  Related to  Accounting  for Tax  Effects  of  Share-Based
Payment Awards." The alternative  transition method includes  simplified methods
to establish the beginning balance of the additional paid-in capital pool ("APIC
pool") related to the tax effects of employee share-based  compensation,  and to
determine the subsequent impact on the APIC pool and consolidated  statements of
cash flows of the tax effects of employee  share-based  compensation awards that
are  outstanding  upon  adoption of SFAS  123(R).  An entity may make a one-time
election to adopt the transition  method

                                       20

<PAGE>

described  in this  guidance  and may take up to one year  from the later of its
initial  adoption of SFAS 123(R) or the effective date of this  guidance,  which
was November 11, 2005. We are in the process of determining whether to adopt the
alternative  transition  method provided in FAS 123(R)-3 for calculating the tax
effects of share-based compensation pursuant to SFAS 123(R).

         Effective  January 1, 2006, we will adopt FAS 123(R) using the modified
prospective  transition method, which provides for certain changes to the method
for valuing  share-based  compensation.  The valuation  provisions of FAS 123(R)
apply to new awards and to awards that are outstanding at the effective date and
subsequently  modified or cancelled.  Estimated  compensation expense for awards
outstanding  at January 1, 2006 will be recognized  over the  remaining  service
period using the compensation cost calculated for pro forma disclosure  purposes
under FAS 123. In accordance with the modified  prospective  transition  method,
our  statements of  operations  for periods prior to January 1, 2006 will not be
restated to reflect the impact of FAS 123(R).

         Our calculation of share-based  compensation  expense in future periods
will be  calculated  using the  Black-Scholes  option  valuation  model and will
include the portion of share-based payment awards that is ultimately expected to
vest  during the period and  therefore  will be  adjusted  to reflect  estimated
forfeitures.  SFAS 123(R)  requires  forfeitures  to be estimated at the time of
grant and revised,  if necessary,  in subsequent  periods if actual  forfeitures
differ from those estimates.  In our pro forma  information  required under SFAS
123 for the  periods  prior  to  2006,  we  accounted  for  forfeitures  as they
occurred.  For share awards  granted  after  January 1, 2006,  expenses  will be
amortized under the straight-line  attribution  method. For share awards granted
prior to 2006,  expenses are  amortized  under the  straight-line  single option
method prescribed by SFAS 123. We expect that our adoption of FAS 123(R) in 2006
will have a material impact on our results of operations and net loss per share.

         On February 16, 2006 the FASB issued SFAS 155,  "Accounting for Certain
Hybrid   Instruments,"  which  amends  SFAS  133,   "Accounting  for  Derivative
Instruments and Hedging Activities," and SFAS 140, "Accounting for Transfers and
Servicing of Financial  Assets and  Extinguishments  of  Liabilities."  SFAS 155
allows financial  instruments that have embedded derivatives to be accounted for
as a whole  (eliminating  the need to bifurcate the derivative from its host) if
the holder  elects to account for the whole  instrument  on a fair value  basis.
SFAS 155 also clarifies and amends certain other provisions of SFAS 133 and SFAS
140.  This  statement is effective  for all  financial  instruments  acquired or
issued in fiscal years  beginning after September 15, 2006. The Company does not
expect  its  adoption  of this new  standard  to have a  material  impact on its
financial position, results of operations or cash flows

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

         We believe  that we do not have any  material  exposure  to interest or
commodity  risks.  We are exposed to certain  economic and political  changes in
international  markets  where we compete,  such as inflation  rates,  recession,
foreign  ownership  restrictions,  and trade policies and other external factors
over which we have no control.

         Our financial  results are quantified in U.S. dollars and a majority of
our obligations and expenditures  with respect to our operations are incurred in
U.S.  dollars.  Although  we do not  believe we  currently  have any  materially
significant  market  risks  relating to our  operations  resulting  from foreign
exchange  rates,  if we enter  into  financing  or other  business  arrangements
denominated in currency other than the U.S. dollars,  variations in the exchange
rate may give rise to foreign exchange gains or losses that may be significant.

         We currently have no material long-term debt obligations. We do not use
financial  instruments  for  trading  purposes  and we are  not a  party  to any
leverage derivatives.

         As discussed by our  accountants  in the audited  financial  statements
included in Item 8 of our Annual  Report on Form 10-K,  our revenue is currently
insufficient  to cover  its  costs  and  expenses.  We  anticipate  raising  any
necessary capital from outside investors coupled with bank or mezzanine lenders.
As of the date of this report,  we have not entered into any  negotiations  with
any third parties to provide such capital.

         OUR  INDEPENDENT  CERTIFIED  PUBLIC  ACCOUNTANTS  HAVE  STATED IN THEIR
REPORT  INCLUDED  IN OUR  DECEMBER  31,  2005 FORM  10-K  THAT WE HAVE  INCURRED
OPERATING  LOSSES

                                       21

<PAGE>

IN THE LAST TWO YEARS,  AND THAT WE ARE DEPENDENT UPON  MANAGEMENT'S  ABILITY TO
DEVELOP PROFITABLE OPERATIONS.  THESE FACTORS AMONG OTHERS MAY RAISE SUBSTANTIAL
DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.

OFF-BALANCE SHEET ARRANGEMENT

         None.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The financial statements and related notes are included as part of this
report as indexed in the appendix on page F-1 through F-32.

ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE.

         None.

ITEM 9A. CONTROLS AND PROCEDURES.

         Disclosure  controls and procedures  are controls and other  procedures
that are designed to ensure that  information  required to be disclosed by us in
the  reports  that  we  file or  submit  under  the  Exchange  Act is  recorded,
processed,  summarized  and reported,  within the time periods  specified in the
Securities and Exchange  Commission's rules and forms.  Disclosure  controls and
procedures  include,  without  limitation,  controls and procedures  designed to
ensure that  information  required to be  disclosed by us in the reports that we
file under the Exchange Act is accumulated  and  communicated to our management,
including our principal  executive and financial  officers,  as  appropriate  to
allow timely decisions regarding required disclosure.

         EVALUATION OF DISCLOSURE AND CONTROLS AND PROCEDURES.  As of the end of
the period covered by this Annual report, we conducted an evaluation,  under the
supervision and with the  participation of our chief executive officer and chief
financial  officer,  of our  disclosure  controls and  procedures (as defined in
Rules  13a-15(e)  of the  Exchange  Act).  Based on this  evaluation,  our chief
executive  officer and chief  financial  officer  concluded  that our disclosure
controls and procedures are effective to ensure that information  required to be
disclosed  by us in reports  that we file or submit  under the  Exchange  Act is
recorded,  processed,  summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms.

         CHANGES IN INTERNAL  CONTROLS OVER  FINANCIAL  REPORTING.  There was no
change in our internal controls,  which are included within disclosure  controls
and  procedures,  during our most  recently  completed  fiscal  quarter that has
materially affected,  or is reasonably likely to materially affect, our internal
controls.

                                    PART III

ITEM 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
         Our directors and executive officer are:

<TABLE>
<CAPTION>
     NAME                 AGE                            POSITION                         POSITION HELD SINCE
     ----                 ---                            --------                         -------------------
<S>                      <C>          <C>                                                     <C>
  Mark Ellis               40         President, Director, Chief Executive Officer,              2003
                                              and Chief Financial Officer
-------------------------------------------------------------------------------------------------------------
Brian Brittain             45                            Director                                2004
-------------------------------------------------------------------------------------------------------------
  John Ryan                47                            Director                                2005
-------------------------------------------------------------------------------------------------------------
</TABLE>

         Our executive  officers are elected annually by our board of directors.
There are no family relationships among our directors and executive officers.

                                       22

<PAGE>

         Mark Ellis has been our chief  executive  officer and a director  since
February, 2003. He has been president, chief executive officer and a director of
Universal Broadband  Communications  since August 2000. Mr. Ellis has over eight
years of experience  in the  telecommunications  industry,  serving in executive
management  positions with several  telecommunication  ventures.  Since December
2001,  Mr.  Ellis has served as the Chief  Executive  Officer,  president  and a
director of Qbe Technologies,  a wireless  telecomputing  company.  From 1997 to
1999, Mr. Ellis was chief executive officer of TelQuest Communications,  Inc., a
start-up   telecommunications   company.   He  served  as  staff  accountant  at
International  Aluminum  Corporation  from 1990 to 1992.  From 1983 to 1986, Mr.
Ellis was a statistical  analyst at Northrop Grumman  Corporation.  Mr. Ellis is
currently  enrolled  at DePaul  University  in order to  complete  his  Master's
degree.

         Brian  Brittain has served as our director  since 2004.  Since 2002, he
has been the president of UCG, a marketing company serving clients such as AT&T,
Global   Crossing,   and  Quest.   From   1999-2002,   Mr.  Brittain  served  as
vice-president  of  sales  for  ECP,  an  e-commerce  merchant  service  company
providing  credit card  processing,  web sites with  e-commerce  enablement  and
private label loyalty cards.

         John Ryan was executive  vice president of Simon  Marketing,  Inc. from
May 1990 through  September  2001.  From January 1989 through March 1990, he was
controller  of Southern  California  Title  Company.  From  October 1985 through
January 1989, he was  treasurer/controller  of Monolith Portland Cement Company.
From July 1977  through  October  1985,  he was senior  audit  manager at Arthur
Andersen & Co. Mr.  Ryan holds a master of business  administration  degree from
California  State  University,  Northridge and a bachelor of science in business
administration from California State University, Northridge.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Under  Section  16(a) of the Exchange Act, our directors and certain of
our officers,  and persons  holding more than 10 percent of our common stock are
required to file forms reporting their beneficial  ownership of our common stock
and  subsequent  changes in that  ownership  with the  Securities  and  Exchange
Commission.  Such  persons  are also  required  to furnish us with copies of all
forms so filed.

CODE OF ETHICS

         We  have  adopted  a code  of  ethics  that  applies  to our  principal
executive officer,  principal financial officer, principal accounting officer or
controller,  or  persons  performing  similar  functions.  The code of ethics is
designed to deter wrongdoing and to promote:

o        Honest and ethical conduct, including the ethical handling of actual or
         apparent  conflicts  of  interest  between  personal  and  professional
         relationships;

o        Full, fair, accurate,  timely, and understandable disclosure in reports
         and  documents  that we file with,  or submits to, the SEC and in other
         public communications made by us;

o        Compliance with applicable governmental laws, rules and regulations;

o        The  prompt  internal  reporting  of  violations  of  the  code  to  an
         appropriate person or persons identified in the code; and

o        Accountability for adherence to the code.

         A copy of our code of ethics that  applies to our  principal  executive
officer,   principal   financial  officer,   principal   accounting  officer  or
controller,  or persons  performing similar functions was filed as an exhibit to
our Annual  report  for the year ended  December  31,  2003,  and filed with the
Commission on March 30, 2004. We have posted a copy of the code of ethics on our
website at www.winstedholdings.com.

                                       23

<PAGE>

         We will provide to any person without charge,  upon request,  a copy of
our code of  ethics.  Any such  request  should  be  directed  to our  corporate
secretary at 100  Crescent  Court,  Suite 700,  Dallas,  Texas 75201,  telephone
number (214) 459-8245.

ITEM 11.      EXECUTIVE COMPENSATION.

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION

SUMMARY COMPENSATION TABLE

         The following table provides certain summary information concerning the
compensation earned by the named executive officers (determined as of the end of
the last  fiscal  year) for  services  rendered  in all  capacities  to  Winsted
Holdings, Inc. and our subsidiaries:

<TABLE>
<CAPTION>
-------------------------- ------- ----------------------------------- ------------------------------------ ---------------
                                                                                                              ALL OTHER
   NAME AND PRINCIPAL                                                                                        COMPENSATION
        POSITION            YEAR          ANNUAL COMPENSATION                LONG TERM COMPENSATION              ($)
-------------------------- ------- -------- --------- ---------------- -------------------------- --------- ---------------
                                   SALARY   BONUS      OTHER ANNUAL
                                                       COMPENSATION             AWARDS            PAYOUTS
                                     ($)      ($)           ($)
-------------------------- ------- -------- --------- ---------------- -------------------------- --------- ---------------
                                                                       RESTRICTED   SECURITIES
                                                                       STOCK        UNDERLYING    LTIP
                                                                       AWARD(S)    OPTIONS/SARS   PAYOUTS
                                                                          ($)           (#)         ($)
-------------------------- ------- -------- --------- ---------------- ----------- -------------- --------- ---------------
<S>                         <C>    <C>       <C>         <C>          <C>              <C>         <C>          <C>
       Mark Ellis           2003   350,000     0             0          740,000*         0           0            0
                            2004   692,335     0             0         56,092,000*       0           0            0
                            2005   677,334     0          441,000          0             0           0            0
-------------------------- ------- -------- --------- ---------------- ----------- -------------- --------- ---------------
</TABLE>

         * During the year ended December 31, 2003 the Company issued  2,600,000
shares of common  stock with a fair market  value of $740,000 to Mark Ellis as a
bonus and in lieu of cash compensation.  During the year ended December 31, 2004
the  Company  issued  shares  to Mark  Ellis as  follows:  7,000,000  shares  of
preferred stock convertible into 140,000,000  shares of common stock with a fair
value of $0.0066 per share or $924,000,  granted on March 30,  2004;  16,000,000
shares of preferred stock  convertible into  320,000,000  shares of common stock
with a fair value of $0.0024 per share,  or  $768,000,  granted on May 21, 2004;
and 16,000,000 shares of preferred stock convertible into 320,000,000  shares of
common  stock  with a fair value of $0.17 per share or  $54,400,000,  granted on
December 2, 2004.  During the year ended  December 31, 2005, the Company paid to
Mark Ellis the amount of $499,775 in cash.  The Company also issued to Mr. Ellis
49,000,000  shares of Series B Convertible  Preferred  stock,  convertible  into
490,000,000 shares of common stock with a fair market value of $441,000.

         The above  information has NOT been adjusted for the effects of the six
reverse stock splits which have  occurred  during the period August 2003 through
January 2006. The cumulative  effect of these reverse stock splits is the result
of the reverse split rations  multiplied in cumulative  fashion,  or 250 x 250 x
1,000 x 1,000 x 1,500 x 1,250. . The product of this equation  equals the number
of shares of common  stock at August 16, 2003 which  would have been  reduced to
one share of common stock at January 26, 2006.

EMPLOYMENT AGREEMENTS

         We have an employment agreement with one of our directors,  Mark Ellis.
Pursuant to Mr.  Ellis'  five-year  employment  contract  with us, as amended on
November  24,  2003,  we will pay Mr.  Ellis a base salary of Three  Hundred and
Fifty  Thousand  Dollars  ($350,000)  for  the  first  year  of  his  Employment
Agreement;  Four Hundred Thousand Dollars  ($400,000) for the second year of his
Employment Agreement; Four Hundred and Fifty Thousand Dollars ($450,000) for the
third year of his Employment Agreement; Five Hundred Thousand Dollars ($500,000)
for the fourth  year of his  Employment  Agreement;  and Five  Hundred and Fifty
Thousand Dollars ($550,000) for the fifth year of his Employment Agreement.

         In addition,  Mr. Ellis' employment agreement allows Mr. Ellis to elect
whether to receive his Revenue Bonus in the form of cash,  our preferred  stock,
or a combination of cash and preferred stock.  Finally, a new provision provides
for preferred  stock bonuses to be awarded to Mr. Ellis when certain  milestones
are accomplished.

         We do not have  employment  agreements  with any of our other employees
except Mr. Ellis.

CONFIDENTIALITY AGREEMENTS

         We  generally  require our  employees  to execute  confidentiality  and
nondisclosure  agreements  upon the  commencement  of  employment  with us.  The
agreements  generally provide that all inventions or discoveries by the

                                       24

<PAGE>

employee related to our business and all confidential  information  developed or
made known to the employee during the term of employment  shall be the exclusive
property of us and shall not be  disclosed  to third  parties  without our prior
approval.

ITEM 12.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

EQUITY COMPENSATION PLAN INFORMATION

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

         The  following  table  provides  information  as of the end of the most
recently  completed  fiscal year with respect to compensation  plans  (including
individual  compensation  arrangements)  under which  equity  securities  of the
registrant are authorized for issuance, aggregated as follows:

o        All compensation plans previously approved by security holders; and

o        All compensation plans not previously approved by security holders.

<TABLE>
<CAPTION>
                                                                                              NUMBER OF SECURITIES
                                                                                            REMAINING AVAILABLE FOR
                                NUMBER OF SECURITIES TO BE    WEIGHTED-AVERAGE EXERCISE      FUTURE ISSUANCE UNDER
                                  ISSUED UPON EXERCISE OF       PRICE OF OUTSTANDING       EQUITY COMPENSATION PLANS
                                   OUTSTANDING OPTIONS,         OPTIONS, WARRANTS AND        (EXCLUDING SECURITIES
                                   WARRANTS AND RIGHTS                RIGHTS               REFLECTED IN COLUMN (A))
      PLAN CATEGORY                         (a)                          (b)                          (c)
---------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                            <C>                             <C>
Equity compensation plans              1,212,000,000                                                  -0-
approved by security holders
Equity compensation plans not               -0-                          N/A                          N/A
approved by security holders
Total                                  1,212,000,000                   $0.002                         -0-
</TABLE>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following  table sets forth,  as of December 31, 2005,  information
concerning ownership of our securities by:

o        Each  person  who owns  beneficially  more  than  five  percent  of the
         outstanding shares of our common stock;

o        Each person who owns beneficially  outstanding  shares of our preferred
         stock;

o        Each director;

o        Each named executive officer; and

o        All directors and officers as a group.

                                       25

<PAGE>

<TABLE>
<CAPTION>
                                                                              Preferred Stock        Preferred Stock
                                                    Common Stock                 Series A                Series B
                                               Beneficially Owned (2)       Beneficially Owned      Beneficially Owned
                                            ------------------------------ ---------------------- -----------------------
Name and Address of Beneficial Owner (1)            Number       Percent      Number     Percent     Number     Percent
                                                    ------       -------      ------     -------     ------     -------
<S>                                             <C>              <C>      <C>           <C>        <C>          <C>
Mark Ellis (3)                                  1,500,000,000(8)   99.8%   50,000,000    100.0%     50,000,000   100.0%(11)
-------------------------------------------------------------------------------------------------------------------------
Brian Brittain (4)                                         --        0.0%          --       0.0%            --     0.0%
-------------------------------------------------------------------------------------------------------------------------
John Ryan (5)                                              --        0.0%          --       0.0%            --     0.0%
-------------------------------------------------------------------------------------------------------------------------
All officers and directors as a group (3
persons)                                        1,500,000,000      99.8%   50,000,000    100.0%     50,000,000   100.0%
-------------------------------------------------------------------------------------------------------------------------
Universal Broadband Exchange, Inc. (6)            120,000,000(9)   98.0%    6,000,000     12.0%             --     0.0%
-------------------------------------------------------------------------------------------------------------------------
C2C Exchange, Inc. (7)                            100,000,000(10)  97.6%    5,000,000     10.0%             --     0.0%
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

----------

*    Less than one percent.

(1)  Unless otherwise  indicated,  the address for each of these shareholders is
     c/o Winsted Holdings,  Inc., 100 Crescent Court,  Suite 700, Dallas,  Texas
     75201.  Also,  unless otherwise  indicated,  each person named in the table
     above has the sole voting and  investment  power with respect to the shares
     of our common and preferred stock which he beneficially owns.

(2)  Beneficial ownership is determined in accordance with the rules of the SEC.
     The total number of  outstanding  shares of the common stock on the date of
     this Report is  2,408,957,  the total number of  outstanding  shares of the
     Series A preferred  stock on the date of this Report is 50,000,000  and the
     total number of outstanding  shares of the Series B preferred  stock on the
     date of this Report is 50,000,000.

(3)  Mr.  Ellis  is our  chief  executive  officer,  chief  financials  officer,
     president and director.

(4)  Mr. Brittain is our director.

(5)  Mr. Ryan is our director.

(6)  Universal Broadband Communications, Inc. is a California corporation, whose
     address is 100 Crescent Court,  Suite 700, Dallas,  Texas 75201.  Universal
     Broadband  Communications,  Inc. is  controlled  by Mark  Ellis,  our chief
     executive officer, president and director.

(7)  C2C  Exchange,  Inc.  is a  California  Corporation,  whose  address is 100
     Crescent  Court,  Suite  700,  Dallas,  Texas  75201.  Universal  Broadband
     Communications,  Inc.  is  controlled  by Mark Ellis,  our chief  executive
     officer, president and director.

(8)  Includes  780,000,000  shares from the  conversion of 39,000,000  shares of
     Preferred  Stock  Series A held by Mr.  Ellis;  also  includes  120,000,000
     shares from the conversion of 6,000,000  shares of Preferred Stock Series A
     held by UBC,  Inc.  and  beneficially  owned by Mr.  Ellis;  also  includes
     100,000,000  shares from the  conversion  of 5,000,000  shares of Preferred
     Stock Series A held by C2C, Inc., and beneficially owned by Mr. Ellis; also
     includes  10,000,000  shares from the  conversion  of  1,000,000  shares of
     Series B Preferred stock held by Medspa  Solutions,  Inc., and beneficially
     owned by Mr. Ellis; also includes 490,000,000 shares from the conversion of
     49,000,000 shares of Series B Preferred stock held by Mr. Ellis.

(9)  Includes  120,000,000  shares from the  conversion  of 6,000,000  shares of
     Preferred Stock Series A.

(10) Includes  100,000,000  shares from the  conversion  of 5,000,000  shares of
     Preferred Stock Series A.

(11) Includes  39,000,000  shares held by Mr.  Ellis.  Also  includes  6,000,000
     shares held by Universal  Broadband  Communications,  Inc. and beneficially
     owned by Mr. Ellis;  Also includes  5,000,000  shares held by C2C Exchange,
     Inc. and beneficially owned by Mr. Ellis.

         There are no  arrangements,  known to us,  including  any pledge by any
person of our securities, the operation of which may at a subsequent date result
in a change in control of Winsted Holdings, Inc.

         There are no arrangements or  understandings  among members of both the
former and the new control groups and their  associates with respect to election
of directors or other matters.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         On December  6, 2004,  we  purchased  all of the  outstanding  stock of
Medspa Solutions,  Inc. for 20,000,000 shares of common stock. The closing price
of the stock on the acquisition  date was $0.17,  and the acquisition was valued
at  $3,400,000.  We have recorded an  impairment  to the carrying  value of this
asset in the amount of $3,400,000  and charged this amount to operations  during
the twelve months ended December 31, 2004. Medspa Solutions,  Inc. is controlled
by Mark Ellis, our chief executive officer, president and director.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

AUDIT FEES

         The aggregate fees billed by Russell Bedford  Stefanou  Mirchandani LLP
for  professional  services  rendered  for the  audit  of our  annual  financial
statements for fiscal year 2005 were $88,974.

         The aggregate fees billed by Russell Bedford  Stefanou  Mirchandani LLP
for  professional  services  rendered  for the  audit  of our  annual  financial
statements for fiscal year 2004 were $20,000.

                                       26

<PAGE>

         The aggregate fees billed by Russell Bedford  Stefanou  Mirchandani LLP
for  professional  services  rendered  for the  audit  of our  annual  financial
statements for fiscal year 2003 were $25,000.

AUDIT-RELATED FEES

         The aggregate fees billed by Russell Bedford  Stefanou  Mirchandani LLP
for  assurance  and  related  services  that  are  reasonably   related  to  the
performance  of the audit or review of our financial  statements for fiscal year
2005 were $0.

         The aggregate fees billed by Russell Bedford  Stefanou  Mirchandani LLP
for  assurance  and  related  services  that  are  reasonably   related  to  the
performance  of the audit or review of our financial  statements for fiscal year
2004 were $0.

         The aggregate fees billed by Russell Bedford  Stefanou  Mirchandani LLP
for  assurance  and  related  services  that  are  reasonably   related  to  the
performance  of the audit or review of our financial  statements for fiscal year
2003 were $0.

ALL OTHER FEES

         There were no other fees billed by Russell Bedford Stefanou Mirchandani
LLP for professional services rendered,  other than as stated under the captions
Audit Fees, Audit-Related Fees, and Tax Fees.

POLICY  ON AUDIT  COMMITTEE  PRE-APPROVAL  OF AUDIT  AND  PERMISSIBLE  NON-AUDIT
SERVICES OF INDEPENDENT AUDITORS

         The Company  currently does not have a designated Audit Committee,  and
accordingly,  the Company's  Board of Directors'  policy is to  pre-approve  all
audit and permissible  non-audit services provided by the independent  auditors.
These services may include audit services,  audit-related services, tax services
and other services.  Pre-approval  is generally  provided for up to one year and
any  pre-approval  is  detailed  as to the  particular  service or  category  of
services and is generally subject to a specific budget. The independent auditors
and management  are required to  periodically  report to the Company's  Board of
Directors regarding the extent of services provided by the independent  auditors
in accordance with this pre-approval, and the fees for the services performed to
date.  The Board of  Directors  may also  pre-approve  particular  services on a
case-by-case basis.

ITEM 15. EXHIBITS.

EXHIBIT NO.                          IDENTIFICATION OF EXHIBIT
-----------       --------------------------------------------------------------
3.1**             Articles of  Incorporation  (Exhibit  2(a) to  Company's  Form
                  10-SB, Commission File No. 0-32333)

3.2**             Articles of  Amendment to Articles of  Incorporation  (Exhibit
                  2(b) to Company's Form 10-SB, Commission File No. 0-32333)

3.3**             Articles of  Amendment to Articles of  Incorporation  (Exhibit
                  3(i)(b) to Company's  Form 10-K for fiscal year ended December
                  31, 2001, Commission File No. 0-32333)

3.4**             Articles of Amendment to the Articles of Incorporation

3.5**             Articles of Amendment to the Articles of Incorporation.

10.1**            Agreement to Purchase Assets of The Site Doctors.

10.2**            Agreement to Purchase Assets of C2C Exchange.

10.3**            Agreement   to   Purchase   Assets  of   Universal   Broadband
                  Communications, Inc.

10.4**            Stock Purchase  Agreement between  Indiginet,  Inc. and Medspa
                  Solutions, Inc.

10.5*             Form 1-E as filed with the Securities and Exchange  Commission
                  on February 8, 2005.

14**              Code of Ethics

21*               Subsidiaries.

                                       27

<PAGE>

EXHIBIT NO.                          IDENTIFICATION OF EXHIBIT
-----------       --------------------------------------------------------------
31.1*             Certification  of  Mark  Ellis,  Chief  Executive  Officer  of
                  Winsted  Holdings,  Inc.,  pursuant to 18 U.S.C.  ss.1350,  as
                  adopted pursuant to ss.302 of the Sarbanes-Oxley Act of 2002.

31.2*             Certification  of  Mark  Ellis,  Chief  Financial  Officer  of
                  Winsted  Holdings,  Inc.,  pursuant to 18 U.S.C.  ss.1350,  as
                  adopted pursuant to ss.302 of the Sarbanes-Oxley Act of 2002.

32.1*             Certification  of  Mark  Ellis,  Chief  Executive  Officer  of
                  Winsted  Holdings,  Inc.,  pursuant to 18 U.S.C.  ss.1350,  as
                  adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002.

32.2*             Certification  of  Mark  Ellis,  Chief  Financial  Officer  of
                  Winsted  Holdings,  Inc.,  pursuant to 18 U.S.C.  ss.1350,  as
                  adopted pursuant to ss.906 of the Sarbanes-Oxley Act of 2002.

----------
** Previously Filed
* Filed Herewith

                                       28

<PAGE>

                                   SIGNATURES

         In accordance  with Section 13 or 15(d) of the Securities  Exchange Act
of 1934,  as amended,  the  registrant  has duly caused this Annual report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                             Winsted Holdings, Inc.

Date: April 28, 2006.
                              By /s/ Mark Ellis
                                 -----------------------------------------------
                                     Mark Ellis,
                                     President, Chief Executive Officer and
                                     Chief Financial Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended,  this Annual report has been signed by the following  persons on behalf
of the registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
<S>                   <C>                                             <C>
    Signature                             Title                                 Date
    ---------                             -----                                 ----
  /s/ Mark Ellis      President, Director, Chief Executive Officer         April 28, 2006
------------------             and Chief Financial Officer
    Mark Ellis


/s/ Brian Brittain
------------------                      Director                           April 28, 2006
    Brian Brittain



/s/ John Ryan
------------------                      Director                           April 28, 2006
   John Ryan
</TABLE>

                                       29

<PAGE>

                             WINSTED HOLDINGS, INC.
                           (FORMERLY INDIGINET, INC.)

                          INDEX TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Report of Independent Registered Certified Public Accounting Firm    F-2

Consolidated Balance Sheets at December 31, 2005 and 2004            F-3

Consolidated Statements of Losses for the Years ended December
31, 2005, 2004, and 2003                                             F-4

Consolidated  Statement of Deficiency In Stockholders'  Equity
for the three years ended December 31, 2005                          F-5 - F-7

Consolidated  Statements  of Cash  Flows for the  Years  ended
December 31, 2005, 2004, and 2003                                    F-8 - F-10

Notes to Consolidated Financial Statements                           F-11 - F-31

                                      F-1

<PAGE>

                    RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP
                          CERTIFIED PUBLIC ACCOUNTANTS

        REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders
Winsted Holdings, Inc.

Newport Beach, CA

We  have  audited  the  accompanying  consolidated  balance  sheets  of  Winsted
Holdings,  Inc.  (formerly  Indiginet,  Inc.) (the "Company") as of December 31,
2005 and 2004 and the related consolidated  statements of losses,  deficiency in
stockholders'  equity, and cash flows for each of the three years ended December
31, 2005.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position of the Company at
December 31, 2005 and 2004 and the results of its  operations and its cash flows
for  each  of the  three  years  ended  December  31,  2005 in  conformity  with
accounting principles generally accepted in the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will  continue as a going  concern.  As shown in the  financial
statements, the Company has incurred net losses since its inception. This raises
substantial  doubt about the Company's  ability to continue as a going  concern.
Management's  plans  in  regard  to this  matter  are  described  in Note 1. The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.


                                    /s/ RUSSELL BEDFORD STEFANOU MIRCHANDANI LLP
                                    --------------------------------------------
                                        Russell Bedford Stefanou Mirchandani LLP
                                        Certified Public Accountants

New York, New York
March 21, 2006


                                      F-2

<PAGE>

<TABLE>
<CAPTION>
                             Winsted Holdings, Inc.
                           Consolidated Balance Sheet

                                                                                                          Prior to
                                                                                                         Becoming a
                                                                                                          Business
                                                                                                        Development
                                                                                                          Company
                                                                                        December 31,    December 31,
                                                                                           2005             2004
                                                                                         --------         --------
<S>                                                                                      <C>             <C>
                                                ASSETS

CURRENT ASSETS

   Cash and cash equivalents                                                             $     --         $ 20,812
   Trade accounts receivable, net of allowance for doubtful accounts
        of $0 and $2,665 at December 31, 2005 and 2004, respectively                           --            2,607
   Receivable from portfolio companies, net of reserve of $27,440  and
        $0 at December 31, 2005 and 2004, respectively (Note 4)                            45,000               --
   Other current assets                                                                        --            9,167
                                                                                         --------         --------

Total current assets                                                                       45,000           32,586

Investments and advances to affiliates (Note 5):
   Controlled companies, net of valuation allowance of $3,403,300
        at December 31, 2005 (Note 5)                                                          --               --
   Other affiliates, net of valuation allowance of $270,300 (Note 5)                       47,000               --
Property and equipment, net of accumulated depreciation of $373,025 and
     $185,892 at December 31, 2005 and 2004, respectively (Note 6)                         47,757          236,650
                                                                                         --------         --------

Total assets                                                                             $139,757         $269,236
                                                                                         ========         ========

                               LIABILITIES AND STOCKHOLDERS' (DEFICIT)

CURRENT LIABILITIES

   Cash overdraft                                                                        $  5,229         $     --
   Accounts payable and accrued expenses  (Note 7)                                        499,270          186,027
   Notes payable (Note 8)                                                                 160,931          160,931
                                                                                         --------         --------

      Total current liabilities                                                           665,430          346,958

Commitments and contingencies (Note 12)                                                         --              --

Stockholders' (deficit)
   Preferred stock, no par value, 500,000,000 shares authorized,
     100,000,000 shares  issued or outstanding (Note 9)                                         --              --
   Preferred stock, Series A, convertible, no par value, 50,000,000 shares
      authorized, 50,000,000  and 49,000,000 shares issued and outstanding
      at December 31, 2005 and 2004, respectively (Note 9)                              56,494,000      56,972,000
   Preferred stock, Series B, convertible, no par value, 50,000,000
      shares authorized, 50,000,000 and 0 shares issued and outstanding at
      December 31, 2005 and 2004, respectively (Note 9)                                  3,841,000              --
   Common stock, no par value, 5,000,000,000 and 2,000,000,000 shares
      authorized at December 31, 2005 and 2004, respectively; 2,408,957
      and * shares outstanding at December 31, 2005 and 2004, respectively (Note 9)      9,686,261       7,031,518
   Common stock subscribed                                                                      --       3,400,000
   Common stock subscriptions receivable                                                   (12,500)             --
   Stock Option Receivable                                                                      --        (125,756)
   Deferred compensation                                                                  (116,900)       (476,250)
   Treasury stock, * shares, at cost                                                       (16,500)        (16,500)
   Accumulated (deficit)                                                               (70,401,034)    (66,862,734)
                                                                                      ------------    ------------
      Total stockholder's (deficit)                                                       (525,673)        (77,722)
                                                                                      ------------    ------------
Total liabilities and stockholders' (deficit)                                         $    139,757         269,236
                                                                                      ============    ============

* indicates less than one share of common stock, post reverse-split

The accompanying notes are an integral part of these financial statements
</TABLE>

                                      F-3

<PAGE>

<TABLE>
<CAPTION>
              Winsted Holdings, Inc.                                         Prior to Becoming a
         Consolidated Statement of Losses                               Business Development Company
                                                                       -------------------------------
                                                        For the Twelve For the Twelve   For the Twelve
                                                         Months Ended   Months Ended     Months Ended
                                                         December 31,    December 31,     December 31,
                                                             2005            2004            2003
                                                        ------------    ------------    ------------
<S>                                                     <C>             <C>             <C>
REVENUES

   Sales                                                $         --    $     23,691    $         --
   Management fees - from 100% owned companies               300,000              --              --
                                                        ------------    ------------    ------------
Total revenue                                                300,000          23,691              --
COSTS AND EXPENSES
   General and administrative expenses                     3,363,235      59,020,496       2,842,512
   Impairment of goodwill                                         --       3,428,001         474,503
   Depreciation and amortization                             188,893         186,772              --
   Impairment of investments                                 273,300              --              --
   Investment expense                                             --           6,000              --
                                                        ------------    ------------    ------------
Loss from operations                                      (3,525,428)    (62,617,578)     (3,317,015)
                                                        ------------    ------------    ------------
Other income (expense):
   Interest income (expense)                                 (12,872)        (12,988)        (21,056)
   Gain on settlement of liabilities                              --          39,123          29,462
                                                        ------------    ------------    ------------
  Income (loss) before income taxes                       (3,538,300)    (62,591,443)     (3,308,609)

  Income tax benefit                                              --              --              --
                                                        ------------    ------------    ------------
Net loss                                                $ (3,538,300)   $(62,591,443)   $ (3,308,609)
                                                        ============    ============    ============
Loss per share information -
   Weighted average shares outstanding - basic               414,408         (A)             (A)
                                                        ============    ============    ============

Weighted average shares outstanding - fully diluted     967,318,517          (A)             (A)
                                                        ------------    ------------    ------------
Net loss per common share
   Net loss                                             $     (8.54)         (A)             (A)
                                                        ============    ============    ============


* indicates less than one share of common stock, post reverse-split

The accompanying notes are an integral part of these financial statements.

The Board of Directors  approved the following  reverse-splits of the Company's
common stock:

Effective Date          Reverse split ratio
--------------          -------------------
August 17, 2003         1 for 250
August 16, 2004         1 for 250
November 29, 2004       1 for 1,000
March 7, 2005           1 for 1,000
June 23, 2005           1 for 1,500
January 26, 2006        1 for 1,250

         All of these reverse splits of the Company's common stock are reflected
in the  Company's  financial  statements  at December 31, 2005.  The  cumulative
effect  of these  reverse  splits  at  December  31,  2005 is the  result of the
multiplication of each stock split ratio, or 250 x 250 x 1,000 x 1,000 x 1,000 x
1,500 x 1,250.  The  product  of this  equation  equals  the number of shares of
common  stock at August 16, 2003 that would be worth 1 share of common  stock at
December 31, 2005.  This large dilution factor renders all items based in shares
or per share  amounts  essentially  not  comparable  over  different  accounting
periods.  Many of the share  amounts in prior  periods,  when  adjusted  for the
cumulative effects of the reverse splits, are a small fraction of one share. Per
share  amounts which yield less than one share of common stock when adjusted for
the  effects  of the  reverse  splits are  indicated  by the symbol *, or by the
phrase  "less  than one  share".  Similarly,  some items  measured  in per share
amounts,  such as  earnings  per  share,  are too large to have any  significant
meaning to the reader of the financial statements.


</TABLE>

                                      F-4

<PAGE>

                              Winsted Holdings Inc.
          Consolidated Statement of Deficiency in Stockholders' Equity

<TABLE>
<CAPTION>

                                                                    Preferred Stock Series A      Preferred Stock Series B
                                                                     Shares          Amount          Shares      Amount
                                                               -----------------------------------------------------------
<S>                                                            <C>              <C>           <C>            <C>
Balance at December 31, 2002                                           --    $         --    $         --          --

Elimination of par value

Shares issued pursuant to  asset purchase
  agreement with C2C                                                   --              --              --          --

Shares issued pursuant to  asset purchase agreement with
  Universal Broadband Communications, Inc.                             --              --              --          --

Shares issued in exchange for note payable -
  related party                                                        --              --              --          --

Shares issued in exchange for note payable -
  related party                                                        --              --              --          --

Shares issued to consultants for services                              --              --              --          --

Shares issued under stock option plan                                  --              --              --

Shares issued for officer compensation                                 --              --              --          --

Amortization of deferred compensation                                  --              --              --          --

Net (loss)                                                             --              --              --          --

                                                             ------------    ------------    ------------   ---------
Balance at December 31, 2003                                           --     $        --              --   $      --
                                                             ============    ============    ============   =========

Shares issued to consultants for services                              --              --              --          --

Shares issued under option plan                                        --              --              --          --

Shares issued under option plans - options
  receivable                                                           --              --              --          --

Shares issued for investment                                           --              --              --          --

Issuance of preferred stock for acquisitions                   11,000,000         880,000              --          --

Issuance of preferred stock to CEO (March 2004)                 7,000,000         924,000              --          --

Issuance of preferred stock to CEO (May 2004)                  16,000,000         768,000              --          --

Issuance of preferred stock to CEO
  (December 2004)                                              16,000,000      54,400,000              --          --

Convert preferred shares to common                             (1,000,000)             --              --           *

Common stock issuable for Medspa  acquisition                          --              --              --

Amortization of deferred compensation                                  --              --              --          --

Rounding                                                               --              --              --          --

Net (loss)                                                             --              --              --          --
                                                             ------------    ------------    ------------   ---------
Balance at December 31, 2004                                   49,000,000    $ 56,972,000              --          --
                                                             ============    ============    ============   =========

Shares issued to consultants as compensation                           --              --              --          --

Shares issued under option plan                                        --              --              --          --

Shares issued under option plans - options
  receivable                                                           --              --              --          --

Shares issued under subscription agreements                            --              --              --          --

Shares issued for investment                                           --              --              --          --

Issuance of preferred stock for acquisitions                           --              --       1,000,000   3,400,000

Issuance of Series A  preferred stock to CEO                    5,000,000          50,000              --          --

Issuance of Series B preferred stock to CEO                                                    49,000,000     441,000

Conversion of  preferred stock to common stock                 (4,000,000)       (528,000)             43

Amortization of deferred compensation                                  --              --              --          --

Write-off stock options receivable                                     --              --              --          --

Write-off subscriptions receivable                                     --              --              --          --

Rounding                                                               --              --              --          --

Net (loss) for 12 months ended 12/31/2005                              --              --              --          --
                                                             ------------    ------------    ------------   ---------
                                                               50,000,000    $ 56,494,000      50,000,000  $3,841,000
                                                             ============    ============    ============   =========
</TABLE>

                                      F-5
<PAGE>

<TABLE>
<CAPTION>
                                                                                                                         Stock
                                                                   Common Stock        Additional        Stock        Subscription
                                                                 Shares     Amount   Paid-in Capital   Subscribed      Receivable
                                                            ---------   ------------   ------------   ------------    ------------
<S>                                                             <C>     <C>            <C>            <C>              <C>
Balance at December 31, 2002                                        *   $    367,026   $    112,000   $         --    $         --

Elimination of par value                                                     112,000       (112,000)            --              --

Shares issued pursuant to  asset purchase
  agreement with C2C                                                              --             --             --         400,000

Shares issued pursuant to  asset purchase agreement with
  Universal Broadband Communications, Inc.                                        --             --             --         480,000

Shares issued in exchange for note payable -
  related party                                                     *        105,000             --             --              --

Shares issued in exchange for note payable -
  related party                                                     *         15,000             --             --              --

Shares issued to consultants for services                           *      1,584,760             --             --              --

Shares issued under stock option plan                               *      1,510,801             --             --              --

Shares issued for officer compensation                              *        740,000             --             --              --

Amortization of deferred compensation                              --             --             --             --              --

Net (loss)                                                         --             --             --             --              --
                                                            ---------   ------------   ------------   ------------    ------------
Balance at December 31, 2003                                        *   $  4,434,587   $         --   $         --    $    880,000
                                                            =========   ============   ============   ============    ============

Shares issued to consultants for services                           *      1,164,089             --             --              --

Shares issued under option plan                                     *      1,278,883             --             --              --

Shares issued under option plans - options
  receivable                                                        *        147,959             --             --              --

Shares issued for investment                                        *          6,000             --             --              --

Issuance of preferred stock for acquisitions                       --             --             --             --        (880,000)

Issuance of preferred stock to CEO (March 2004)                    --             --             --             --              --

Issuance of preferred stock to CEO (May 2004)                      --             --             --             --              --

Issuance of preferred stock to CEO  (December 2004)                --             --             --             --              --

Convert preferred shares to common                                 --             --             --             --              --

Common stock issuable for Medspa acquisition                       --             --             --      3,400,000              --

Amortization of deferred compensation                              --             --             --             --              --

Rounding                                                           --             --             --             --              --

Net (loss)                                                         --             --             --             --              --
                                                            ---------   ------------   ------------   ------------    ------------
Balance at December 31, 2004                                        *   $  7,031,518   $         --   $  3,400,000    $         --
                                                            =========   ============   ============   ============    ============

Shares issued to consultants as compensation                  340,100        980,400             --             --              --

Shares issued under option plan                                     3         75,264             --             --              --

Shares issued under option plans - options
  receivable                                                        5          8,979             --             --              --

Shares issued under subscription agreements                 2,068,360        987,100             --             --        (156,530)

Shares issued for investment                                       21         75,000             --             --              --

Issuance of preferred stock for acquisitions                       --             --             --     (3,400,000)             --

Issuance of Series A  preferred stock to CEO                       --             --             --             --              --

Issuance of Series B preferred stock to CEO                        --             --             --             --              --

Conversion of  preferred stock to common stock                     43        528,000             --             --              --

Amortization of deferred compensation                              --             --             --             --              --

Write-off stock options receivable                                 --             --             --             --              --

Write-off subscriptions receivable                                 --             --             --             --         144,030

Rounding                                                          425             --             --             --              --

Net (loss) for 12 months ended 12/31/2005                          --             --             --             --              --
                                                            ---------   ------------   ------------   ------------    ------------
                                                            2,408,957      9,686,261             --             --         (12,500)
                                                            =========   ============   ============   ============    ============
</TABLE>

                                      F-6

<PAGE>

<TABLE>
<CAPTION>
                                                                           Stock
                                                         Deferred         Options         Treasury    Accumulated
                                                       Compensation      Receivable        Stock        (Deficit)         Total
                                                     -----------------------------------------------------------------------------
<S>                                                    <C>             <C>            <C>             <C>             <C>
Balance at December 31, 2002                          $         --    $         --    $    (16,500)   $   (962,682)   $   (500,156)

Elimination of par value                                        --              --              --              --              --

Shares issued pursuant to  asset purchase
  agreement with C2C                                            --              --              --              --         400,000

Shares issued pursuant to  asset purchase
  agreement with Universal Broadband
  Communications, Inc.                                          --              --              --              --         480,000

Shares issued in exchange for note payable -
  related party                                                 --              --              --              --         105,000

Shares issued in exchange for note payable -
  related party                                                 --              --              --              --          15,000

Shares issued to consultants for services               (1,584,760)             --              --              --              --

Shares issued under stock option plan                           --              --              --              --       1,510,801

Shares issued for officer compensation                    (740,000)             --              --              --              --

Amortization of deferred compensation                    1,690,073              --              --              --       1,690,073

Net (loss)                                                      --              --              --      (3,308,609)     (3,308,609)
                                                      ------------    ------------    ------------    ------------    ------------
Balance at December 31, 2003                          $   (634,687)             --    $    (16,500)   $ (4,271,291)   $    392,109
                                                      ============    ============    ============    ============    ============

Shares issued to consultants for services                 (360,000)             --              --              --         804,089


Shares issued under option plan                                 --              --              --              --       1,278,883

Shares issued under option plans - options
  receivable                                                    --        (125,756)             --              --          22,203

Shares issued for investment                                    --              --              --              --           6,000

Issuance of preferred stock for acquisitions                    --              --              --              --              --

Issuance of preferred stock to CEO (March 2004)                 --              --              --              --         924,000

Issuance of preferred stock to CEO (May 2004)                  --               --              --              --         768,000

Issuance of preferred stock to CEO
  (December 2004)                                               --              --              --              --      54,400,000

Convert preferred shares to common                              --              --              --              --              --

Common stock issuable for Medspa  acquisition                   --              --              --              --       3,400,000

Amortization of deferred compensation                      518,437              --              --              --         518,437

Rounding                                                        --              --              --              --              --

Net (loss)                                                      --              --              --     (62,591,443)    (62,591,443)
                                                      ------------    ------------    ------------    ------------    ------------
Balance at December 31, 2004                          $   (476,250)   $   (125,756)   $    (16,500)    (66,862,734)        (77,722)
                                                      ============    ============    ============    ============    ============

 Shares issued to consultants as compensation             (837,329)             --              --              --         143,071

 Shares issued under option plan                                --              --              --              --          75,264

 Shares issued under option plans - options
receivable                                                      --          (7,632)             --              --           1,347

 Shares issued under subscription agreements                    --              --              --              --         830,570

 Shares issued for investment                                   --              --              --              --          75,000

 Issuance of preferred stock for acquisitions                   --              --              --              --              --

 Issuance of Series A  preferred stock to CEO                   --              --              --              --          50,000

 Issuance of Series B preferred stock to CEO                    --              --              --              --         441,000

 Conversion of  preferred stock to common stock                 --              --              --              --              --

 Amortization of deferred compensation                   1,196,679              --              --              --       1,196,679

 Write-off stock options receivable                             --         133,388              --              --         133,388

 Write-off subscriptions receivable                             --              --              --              --         144,030

    Rounding                                                    --              --              --              --              --

   Net (loss) for 12 months ended 12/31/2005                                                            (3,538,300)     (3,538,300)
                                                      ------------    ------------    ------------    ------------    ------------
                                                          (116,900)             --         (16,500)    (70,401,034)       (525,673)
                                                      ============    ============    ============    ============    ============
</TABLE>

*        indicates less than one share as adjusted for all reverse splits.

         The  accompanying  notes  are  an  integral  part  of  these  financial
         statements.

                                      F-7

<PAGE>

                             Winsted Holdings, Inc.
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                               For the Year       For the Year     For the Year
                                                                                  Ended              Ended            Ended
                                                                               December 31,       December 31,     December 31,
                                                                                   2005               2004             2003
                                                                              --------------     --------------   --------------
<S>                                                                           <C>                <C>              <C>
OPERATING ACTIVITIES
Net (loss)                                                                    $   (3,538,300)    $  (62,591,443)  $   (3,308,609)
Adjustments to reconcile net (loss) to net cash
   (used in) operating activities:
Reserve for bad debts                                                                 14,500
Gain on settlement of notes payable and accrued expenses                                  --                 --          (26,676)
Gain on settlement accounts payable and accrued expenses                                  --            (39,123)          (2,786)
Write-off stock subscriptions receivable                                             167,030                 --               --
Impairment of goodwill                                                                    --          3,428,001          474,503
Impairment of investment in portfolio companies                                      273,300                 --               --
Impairment of cash advance to portfolio company                                       27,440                 --               --
Increase in reserve for bad debt                                                          --              2,665               --
Depreciation                                                                         188,893            186,772               --
Non-cash compensation                                                              1,922,604         57,685,233        1,911,680
Stock issued to prospective acquisition                                                   --              6,000               --
Changes in:
   Accounts receivable                                                                 2,607              2,727               --
   Accounts receivable - portfolio companies                                         (59,500)                --               --
   Other assets                                                                        9,167                 70               --
   Prepaid expenses                                                                       --                 --           (9,237)
   Accounts payable                                                                  369,914             22,852             (343)
   Accounts payable  and accrued liabilities - related parties                            --              8,553          (44,814)
                                                                              --------------     --------------   --------------
   Net cash (used in) operating activities                                          (622,345)        (1,287,693)      (1,006,282)
                                                                              --------------     --------------   --------------

INVESTING ACTIVITIES
   Cash investment in portfolio companies                                           (270,300)                --               --
   Loan to portfolio companies                                                       (74,440)
   Acquisition of Site Drs                                                                --            (40,000)              --
   Acquisition of property and equipment                                                  --            (13,925)              --
                                                                              --------------     --------------   --------------
   Net cash (used in) investing activities                                          (344,740)           (53,925)              --
                                                                              --------------     --------------   --------------

FINANCING ACTIVITIES
   Proceeds from exercise of stock options                                            63,974          1,087,050        1,283,162
   Sale of stock for cash                                                            880,070                 --               --
   Proceeds from notes payable                                                            --             (1,500)              --
                                                                              --------------     --------------   --------------
      Net cash provided by financing activities                                      944,044          1,085,550        1,283,162
                                                                              --------------     --------------   --------------

         Net increase (decrease) in cash                                             (26,041)          (256,068)         276,880
</TABLE>

                                      F-8

<PAGE>

<TABLE>
<CAPTION>
                                                                               For the Year       For the Year     For the Year
                                                                                  Ended              Ended            Ended
                                                                               December 31,       December 31,     December 31,
                                                                                   2005               2004             2003
                                                                              --------------     --------------   --------------
<S>                                                                           <C>                <C>              <C>
   CASH AT BEGINNING OF YEAR                                                  $       20,812            276,880               --
                                                                              --------------     --------------   --------------
   CASH AT END OF YEAR                                                        $       (5,229)    $       20,812   $      276,880
                                                                              ==============     ==============   ==============

   SUPPLEMENTAL CASH FLOWS INFORMATION:
   Cash for paid for:
                                                                              --------------     --------------   --------------
Income taxes                                                                  $           --     $           --   $           --
                                                                              ==============     ==============   ==============

Interest                                                                      $           --     $           --   $           --
                                                                              ==============     ==============   ==============

SUPPLEMENTAL DISCLOSURE OF
  NON-CASH INVESTING AND FINANCING ACTIVITIES

   Conversion of note payable -related party into common stock                $           --     $           --   $      105,000
                                                                              ==============     ==============   ==============

   Conversion of accounts payable and accrued expenses - related
   parties into notes payable - related parties                               $           --     $           --   $       15,000
                                                                              ==============     ==============   ==============

   Shares of common stock issued to consultants for services                  $       60,400     $    1,164,100   $    1,911,680
                                                                              ==============     ==============   ==============

   Shares issued to prospective acquisition company                           $           --     $        6,000   $           --
                                                                              ==============     ==============   ==============

   Subscription due of Series A Convertible Preferred Stock for equipment     $           --     $           --   $      880,000
                                                                              ==============     ==============   ==============

   Issuance of Series A Preferred Stock in satisfaction of subscription due   $           --     $      880,000   $           --
                                                                              ==============     ==============   ==============

   Issuance of Series A Preferred Stock as officer compensation               $           --     $   56,092,000   $           --
                                                                              ==============     ==============   ==============

   Conversion of 4,000,000 shares of preferred stock to 80,000,000
   shares of common stock by officer                                          $      528,000     $           --   $           --
                                                                              ==============     ==============   ==============

   Issuance of 5,000,000 shares of preferred stock as officer compensation    $       50,000     $           --   $           --
                                                                              ==============     ==============   ==============

   Issuance of 49,000,000 shares of preferred stock as officer compensation   $      441,000     $           --   $           --
                                                                              ==============     ==============   ==============

   Issuance of common stock for subscriptions receivable                      $       12,500     $           --   $           --
                                                                              ==============     ==============   ==============

   Issuance of common stock for options receivable                            $        7,632     $           --   $           --
                                                                              ==============     ==============   ==============

   Non-cash compensation related to issuance of options receivable            $        1,347     $           --   $           --
                                                                              ==============     ==============   ==============

   Issuance of common stock in satisfaction of accrued liability              $       56,671     $           --   $           --
                                                                              ==============     ==============   ==============
</TABLE>

                                      F-9

<PAGE>

<TABLE>
<CAPTION>
                                                                               For the Year       For the Year     For the Year
                                                                                  Ended              Ended            Ended
                                                                               December 31,       December 31,     December 31,
                                                                                   2005               2004             2003
                                                                              --------------     --------------   --------------
<S>                                                                           <C>                <C>              <C>
   Issuance of common stock as deferred compensation                          $      837,329     $          -     $           -
                                                                              ==============     ==============   ==============

   Issuance of common stock for cashless conversion of options                $       11,291     $          -     $           -
                                                                              ==============     ==============   ==============

   Conversion of 20,000,000 shares common stock subscribed to
   1,000,000 shares Series B preferred stock subscribed                       $    3,400,000     $          -     $           -
                                                                              ==============     ==============   ==============

   Impairment of investment in portfolio companies                            $      273,300     $          -     $           -
                                                                              ==============     ==============   ==============

   Amortization of deferred compensation                                      $    1,196,679     $          -     $           -
                                                                              ==============     ==============   ==============

   Write-off of stock options receivable                                      $      133,388     $          -     $           -
                                                                              ==============     ==============   ==============

   Write-off of subscriptions receivable                                      $      167,030     $          -     $           -
                                                                              ==============     ==============   ==============

   Accrual of withholding taxes on officer salary                             $      205,000     $          -     $           -
                                                                              ==============     ==============   ==============
</TABLE>


       The accompanying notes are an integral part of these
       financial statements.

                                                                       Total
                                Ownership    Estimated    Cash       Carrying
                                 Interest      Value     Advance       Value
                                ---------------------------------------------
Medspa Solutions, Inc.                100%        -     $    --    $    --
Gaeacare                               90%        -                     --
Nu Image Medspa                         2%        -      47,000     47,000
                                                  -      ------     ------
Total value at December 31, 2005                  -     $47,000    $47,000
                                                  =      ======     ======

   The accompanying notes are an integral part of these financial statements.

                                      F-10
<PAGE>

                             WINSTED HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2005, 2004,  AND 2003

1. GOING CONCERN BASIS OF ACCOUNTING

As shown in the  accompanying  financial  statements,  the Company has  incurred
significant  losses.  The Company has  experienced  losses from  operations as a
result of its  investment  necessary  to achieve its  operating  plan,  which is
long-range in nature. For the years ended December 31, 2005, 2004, and 2003, the
Company   incurred  net  losses  of  $3,210,533   $62,591,443   and   $3,308,609
respectively.  At December 31, 2005 and 2004,  the Company had negative  working
capital of $320,430 and $314,372,  respectively. These factors raise substantial
doubt about the Company's ability to continue as a going concern.

The  Company's  ability to continue as a going  concern is  contingent  upon its
ability to secure financing and attain  profitable  operations.  The Company has
experienced a change of control  effective  February 24, 2003. In addition,  the
Company's  ability to continue as a going concern must be considered in light of
the problems, expenses and complications frequently encountered by entrance into
established  markets  and the  competitive  environment  in  which  the  Company
operates.  During 2005,  the Company  financed its  operations  with $880,070 of
proceeds from the stock and with $63,974 from the exercise of options to acquire
its common stock.

The  Company's  existence  is  dependent  upon  management's  ability to develop
profitable operations and resolve its liquidity problems. Management anticipates
the  Company  will attain  additional  equity  investment  in the  Company.  The
accompanying  consolidated  financial  statements do not include any adjustments
that might result  should the Company be unable to continue as a going  concern.
The  accompanying  financial  statements do not include any  adjustments  to the
amounts and  classification  of assets and liabilities  that would result if the
Company were unable to continue as a going concern.

2. COMPANY BACKGROUND AND BASIS OF PRESENTATION

Winsted  Holdings,   Inc.,  formerly  Indiginet,   Inc.  (the  "Company"),   was
incorporated  under the laws of the State of Florida on September 24, 1997.  The
Company was  seeking to merge or acquire an interest in business  opportunities.
Effective  March 7, 2005,  the Company  changed  its name to "Winsted  Holdings,
Inc."

The financial statements include the accounts of the Company. The investments in
Medspa  Solutions  and Nu Image Medspa are not  consolidated  into the financial
statements of Winsted,  but are shown as investments at their fair market value.
Intercompany  transactions  are not  eliminated.  At December 31 2005,  the fair
market value of the Company's investments is $0.

Under  business  development  company  accounting,  all equity  investments  are
carried  at fair  value  with  any  adjustments  recorded  in the  statement  of
operations.

In accordance  with Article 6 of Regulation S-X under the Securities Act of 1933
and Securities Exchange Act of 1934, the Company does not consolidate  portfolio
company investments, including those in which it has a controlling interest.

ACQUISITIONS

The following acquisitions were consummated before the Company became a Business
Development Company and accordingly these acquisitions are consolidated into the
financial statements of the Company:

Acquisitions completed prior to November 22, 2004:

C2C Exchange
------------

On December 30, 2003, the Company entered into an Asset Purchase  Agreement with
C2C Exchange,  Inc.  ("C2C",  the "C2C Asset  Acquisition")  whereby the Company
purchased  substantially  all of the  assets of C2C in  exchange  for  5,000,000
shares of Series-A Preferred Stock. C2C is controlled by the President and Chief
Executive  Officer of the Company.  The Series-A  Preferred  Stock was deemed to
have a fair  market  value  of  $400,000  based  upon  the  market  price of the
underlying common stock for the ten

                                      F-11

<PAGE>

days immediately  preceding the transaction.  The assets acquired were estimated
to  have a fair  market  value  at the  time  of the C2C  Asset  Acquisition  of
$100,000.

The  assets  acquired,  including  costs in excess of net assets  acquired,  and
liabilities assumed in the acquisition of C2C are as follows:

                  Tangible assets acquired at fair value       $  100,000

                  Costs in excess of net assets assumed           300,000

                  Liabilities assumed at fair value                    --
                                                               ----------
                           Total purchase price                $  400,000
                                                               ==========

Universal Broadband Communications, Inc.
----------------------------------------

On December 30, 2003, the Company entered into an Asset Purchase  Agreement with
Universal  Broadband  Communications,  Inc., ("UBC" or "UBC Asset  Acquisition")
whereby the Company purchased the assets of UBC in exchange for 6,000,000 shares
of  Series-A  Preferred  Stock  with a fair  market  value of  $480,000.  UBC is
controlled by the President and Chief Executive  Officer of Winsted.  The assets
acquired  were  deemed  to  have a fair  market  value  at the  time  of the UBC
Acquisition equal to their carrying value on the books of UBC at the time of the
UBC Asset Acquisition, or $305,497.

The  assets  acquired,  including  costs in excess of net assets  acquired,  and
liabilities assumed in the acquisition of UBC are as follows:

Tangible assets acquired at fair value       $  305,497

Costs in excess of net assets assumed           174,503

Liabilities assumed at fair value                    --
                                             ----------
         Total purchase price                $  480,000
                                             ==========

As  a result of the Company's lack of resources, the Company is unable to market
its telecommunications products and services acquired in connection with the C2C
and UBC acquisitions.  Management  performed an evaluation of the recoverability
of the C2C and UBC assets and concluded from the results of this evaluation that
a significant  impairment charge was required because the estimated market value
of the  assets  was less than the  carrying  value of the  assets.  Considerable
management judgment is necessary to estimate fair value and actual results could
vary  significantly  from  managements'  estimates   Accordingly,   the  Company
recognized  an asset  impairment  loss of $474,503 or $0.00 per share during the
year ended December 31, 2003.

The Site Doctors
----------------

On  April 30, 2004, the Company purchased substantially all of the assets of The
Site Doctors, a partnership located in Orange County, California in the business
of web hosting and web site  development.  The Company  purchased  the following
assets for $40,000 in cash:

Accounts receivable
2 Computers
Design software
Hosting customer list

The Company also received an agreement  not to compete from the principal  owner
of The Site  Doctors,  and  hire the  principal  owner  as a web  developer  and
consultant.

The Company assigned the value of $7,999 to the accounts  receivable,  $4,000 to
the  computer  hardware  and  software,  and  $28,001 to the  customer  list and
agreement

                                      F-12
<PAGE>

not to compete.  The $28,001  was  charged to  operations  during the year ended
December 31, 2004.

3. SIGNIFICANT ACCOUNTING POLICIES

Cash And Cash Equivalents
-------------------------

The  Company  considers  cash  on  hand,   deposits  in  banks,  and  short-term
investments  purchased with an original maturity date of three months or less to
be cash and cash  equivalents.  The  carrying  amounts  reflected in the balance
sheets for cash and cash  equivalents  approximate  the fair values due to short
maturities of these instruments.

Property And Equipment
----------------------

Property and  equipment  are stated at cost less  accumulated  depreciation  and
amortization.  Depreciation and  amortization  are computed using  straight-line
methods over the estimated useful lives of the assets, principally three to five
years,  or the term of the lease,  if shorter,  for leasehold  improvements.  On
December 30, 2003,  the Company  completed the  acquisition  of certain items of
property and equipment in transactions with two companies  controlled by Winsted
Holdings  President  and Chief  Executive  Officer  (the "Asset  Acquisitions").
Pursuant to the Asset  Acquisitions,  Winsted  acquired  property and  equipment
valued at approximately $405,497 in exchange for a total of 11,000,000 shares of
the company's Series-A Convertible  Preferred Stock. These assets were valued at
their  historical  net  book  value  at  the  time  of  the  acquisition,  which
approximates their fair value. During the twelve months ended December 31, 2004,
the Company acquired an additional $14,406 of fixed assets for cash. The Company
made no asset  acquisition  during the twelve  months  ended  December 31, 2005.
During  the years  ended  December  31,  2005 and  2004,  the  Company  recorded
depreciation  and  amortization  expense in the amount of $188,893 and $186,772,
respectively.

Revenue Recognition And Deferred Revenue
----------------------------------------

The Company recognizes revenue in accordance with SEC Staff Accounting  Bulletin
No. 101,  "Revenue  Recognition in Financial  Statements"  ("SAB 101").  SAB 101
requires that four basic criteria must be met before revenue can be recognized:

(1) persuasive evidence of an arrangement exists;
(2) delivery has occurred;
(3) the  selling  price  is  fixed  and  determinable;  and
(4)  collectibility is reasonably assured.

Determination  of  criteria  (3) and (4) are  based  on  management's  judgments
regarding the fixed nature of the selling  prices of the products  delivered and
the  collectibility  of those  amounts.  Provisions for discounts and rebates to
customers,  estimated returns and allowances, and other adjustments are provided
for in the same period the related sales are recorded.  Internet connection fees
are billed in advance  and  recognized  over the period for which  services  are
provided. Technical services revenues are recognized when services, as described
in the contract, have been completed.  Equipment revenue is recognized when both
title and risk of loss  transfers to the customer,  provided that no significant
obligations remain.

On December 17, 2003, the SEC staff released Staff Accounting Bulletin (SAB) No.
104,  Revenue  Recognition.  The staff updated and revised the existing  revenue
recognition in Topic 13, Revenue Recognition,  to make its interpretive guidance
consistent with current accounting  guidance,  principally EITF Issue No. 00-21,
"Revenue  Arrangements with Multiple  Deliverables."  Also, SAB 104 incorporates
portions of the Revenue  Recognition in Financial  Statements - Frequently Asked
Questions  and  Answers  document  that the SEC staff  considered  relevant  and
rescinds  the  remainder.   The  company's  revenue  recognition   policies  are
consistent  with  this  guidance;  therefore,  this  guidance  will  not have an
immediate impact on the company's financial statements.

For the year ended December 31, 2005, the company recognized revenue of $300,000
from consulting  services  provided to a portfolio  company.  For the year ended
December 31,  2004,  the Company  generated  revenue of $23,691 from web hosting
fees and website

                                      F-13

<PAGE>

development  fees.  For the year ended  December  31,  2003,  the Company had no
revenue.

Consulting services:  The Company recognizes revenue from consulting services in
a pro-rata  basis over the term of the  contract.  During the three months ended
December 31, 2005, the Company's  consulting  contract with a portfolio  company
called for  revenue of $50,000  per month,  or  $150,000.  The  Company  did not
provide any such  services  to this  portfolio  company  during this three month
period,  and did not charge the portfolio  company for any such services and did
not recognize this revenue of $150,000.

Website  hosting:  The Company  recognizes  revenue from website  hosting as the
service is provided to its customers.

Website development: The Company recognizes revenues from website development on
the percentage-of-completion method, measured by the percentage of cost incurred
to date to estimated total cost for each contract.

The Company  recognizes  revenues  from  fixed-price  and  modified  fixed-price
construction contracts on the  percentage-of-completion  method, measured by the
percentage of cost incurred to date to estimated  total cost for each  contract.
That  method is used  because  management  considers  total  cost to be the best
available   measure  of   progress  on  the   contracts.   Because  of  inherent
uncertainties in estimating  costs, it is at least reasonably  possible that the
estimates used will change within the near term.

Contract  costs include all direct  material and labor costs and those  indirect
costs related to contract performance,  such as indirect labor, supplies, tools,
repairs,  and  depreciation.  Selling,  general,  and  administrative  costs are
charged to expense as incurred.  Provisions for estimated  losses on uncompleted
contracts are made in the period in which such losses are determined. Changes in
job  performance,  job  conditions,  and estimated  profitability  may result in
revisions to costs and income,  which are  recognized in the period in which the
revisions are determined.  Changes in estimated job profitability resulting from
job performance,  job conditions,  contract penalty provisions,  claims,  change
orders,  and  settlements,  are  accounted  for as changes in  estimates  in the
current period.

The asset,  "Costs and estimated  earnings in excess of billings on  uncompleted
contracts,"  represents  revenues  recognized in excess of amounts  billed.  The
liability,  "Billings in excess of costs and estimated  earnings on  uncompleted
contracts," represents billings in excess of revenues recognized. As of December
31,  2004,  revenues  recognized  were  equal to  amounts  billed.  The  Company
recognized neither an asset nor a liability from its website development.

Valuation of Investments
------------------------

Investments for which there is no ready market are initially valued at cost and,
thereafter,  at fair value  based upon the  financial  condition  and  operating
results of the issuer and other pertinent factors as determined in good faith by
the Board of Directors.  The financial condition and operating results have been
derived  utilizing  both audited and  unaudited  data. In the absence of a ready
market for an  investment,  numerous  assumptions  are inherent in the valuation
process.  Some or all of these  assumptions may not  materialize.  Unanticipated
events and  circumstances  may occur subsequent to the date of the valuation and
values may change due to future events. Therefore, the actual amounts eventually
realized  from  each  investment  may vary  from the  valuations  shown  and the
differences  may be material.  The Company  reports the unrealized  gain or loss
resulting from such valuation in the Statements of Losses.

Gains (losses) on Portfolio Of Investments
------------------------------------------

Amounts  reported as realized  gains  (losses)  are  measured by the  difference
between the  proceeds of sale or exchange  and the cost basis of the  investment
without regard to unrealized gains (losses) reported in the prior periods. Gains
(losses) are considered  realized when sales or  dissolution of investments  are
consummated.

Advertising
-----------

                                      F-14

<PAGE>

The Company  follows the policy of charging the costs of advertising to expenses
incurred.  The Company incurred no material  advertising  costs in 2005, 2004 or
2003.

Income Taxes
------------

Income taxes are provided based on the liability method for financial  reporting
purposes in accordance with the provisions of Statements of Financial  Standards
No. 109,  "Accounting  for Income Taxes".  Under this method deferred tax assets
and liabilities are recognized for the future tax  consequences  attributable to
differences  between the financial statement carrying amounts of existing assets
and  liabilities  are  measured  using  enacted  tax rates  expected to apply to
taxable income in the years in which those temporary differences are expected to
be removed or settled.  The effect on deferred tax assets and  liabilities  of a
change in tax rates is  recognized  in the statement of operations in the period
that includes the enactment date.

Segment Information
-------------------

The  Company  adopted  Statement  of  Financial  Accounting  Standards  No. 131,
Disclosures about Segments of an Enterprise and Related Information ("SFAS 131")
in the year  ended  December  31,  1998.  SFAS  131  establishes  standards  for
reporting   information   regarding   operating  segments  in  annual  financial
statements and requires selected  information for those segments to be presented
in interim financial  reports issued to stockholders.  SFAS 131 also establishes
standards for related  disclosures  about  products and services and  geographic
areas.  Operating  segments are identified as components of an enterprise  about
which separate discrete financial information is available for evaluation by the
chief operating  decision maker, or  decision-making  group, in making decisions
how to allocate  resources and assess  performance.  The  information  disclosed
herein,  materially  represents all of the financial  information related to the
Company's principal operating segment.

Impairment of Long-Lived Assets
-------------------------------

The Company has adopted  Statement of  Financial  Accounting  Standards  No. 144
(SFAS  144).  The  Statement   requires  that  long-lived   assets  and  certain
identifiable intangibles held and used by the Company be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable.  Events relating to recoverability  may include
significant  unfavorable changes in business conditions,  recurring losses, or a
forecasted  inability to achieve  break-even  operating results over an extended
period. The Company evaluates the recoverability of long-lived assets based upon
forecasted undercounted cash flows. Should impairment in value be indicated, the
carrying  value of  intangible  assets will be  adjusted,  based on estimates of
future discounted cash flows resulting from the use and ultimate  disposition of
the asset.  SFAS No. 144 also  requires  assets to be disposed of be reported at
the  lower of the  carrying  amount or the fair  value  less  costs to sell.  On
December 30, 2003, the Company completed the an asset  acquisitions  whereby the
Company  acquired  property  and  equipment  with a book  value of  $405,497  in
exchange for 11,000,000 shares of the Company's Series-A  Convertible  Preferred
Stock.  This stock was  valued at a total of  $880,000  based  upon the  average
closing price of the underlying shares of common stock for the ten business days
immediately preceding the acquisitions. The difference between the book value of
$405,497 and the $880,000 value assigned to the Series-A  Convertible  Preferred
Stock, or $474,503,  was charged to operations during the period ending December
31, 2003.

On April 30,  2004,  the Company  completed an asset  acquisition  from The Site
Doctors, a California general  partnership ("Site Doctors") pursuant to which we
purchased  for  $40,000  cash all of the assets of Site  Doctors.  These  assets
consisted  primarily  of two  computers  valued at a total of  $4,000,  accounts
receivable  of $7,999,  and goodwill of $28,001.  During the twelve months ended
December 31, 2004,  the Company  recorded an impairment to the carrying value of
this goodwill in the amount of $28,001, and charged this amount to operations.

Stock-based compensation
------------------------

The Company applies the intrinsic value-based method of accounting prescribed by
Accounting  Principles  Board  Opinion  25,  "Accounting  for  Stock  Issued  to
Employees",  and related  interpretations,  in  accounting  for its stock option
plans. As such, compensation expense would be recorded on the date of grant only
if the current

                                      F-15

<PAGE>

market price of the underlying  stock exceeded the exercise price.  Statement of
Financial  Accounting  Standards  (SFAS) No. 123,  "Accounting  for  Stock-Based
Compensation",  established accounting and disclosure  requirements using a fair
value-based method of accounting for stock-based employee compensation plans. As
allowed  by SFAS  No.123,  the  Company  has  elected to  continue  to apply the
intrinsic  value-based method of accounting described above, and has adopted the
disclosure  requirements  of SFAS No.  123 which are  included  in Note 10.  The
Company has also adopted the annual disclosure provisions of SFAS No. 148 in its
financial  reports for the year ended  December 31, 2003 and for the  subsequent
period.

In accordance with EITF 96-18 the  measurement  date to determine fair value was
the date at which a commitment for  performance by the counter party to earn the
equity  instrument  was  reached.  The  Company  valued  the  shares  issued for
consulting  services at the rate which represents the fair value of the services
received  which did not differ  materially  from the value of the stock  issued.
Basic And Diluted Loss Per Share

Basic and Diluted Loss per Share
--------------------------------

The Company has adopted  Statement  of  Financial  Accounting  Standard No. 128,
"Earnings Per Share,"  specifying the  computation,  presentation and disclosure
requirements  of earnings per share  information.  Basic earnings per share have
been  calculated  based  upon the  weighted  average  number  of  common  shares
outstanding.  Stock  options and  warrants  have been  excluded as common  stock
equivalents  in  the  diluted   earnings  per  share  because  they  are  either
anti-dilutive, or their effect is not material.

Use of Estimates
----------------

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

Concentrations of Credit Risks
------------------------------

Financial  instruments and related items, which potentially  subject the Company
to  concentrations  of credit risk,  consist primarily of cash, cash equivalents
and  trade  receivables.   The  Company  places  its  cash  and  temporary  cash
investments with credit quality institutions.  At times, such investments may be
in excess of the FDIC  insurance  limit.  The Company  periodically  reviews its
trade  receivables  in  determining  its  allowance for doubtful  accounts.  The
allowance for doubtful accounts was $2,665 at December 31, 2004.

Reclassification
----------------

Certain prior period  figures have been  reclassified  to conform to the current
year's presentation.

Fair Value of Financial Instruments
-----------------------------------

Statement of Financial  Accounting  Standards No. 107,  "Disclosures  About Fair
Value of  Financial  Instruments,"  requires  disclosure  of the  fair  value of
certain financial instruments.  The carrying value of cash and cash equivalents,
accounts receivable, accounts payable and short-term borrowings, as reflected in
the balance sheets, approximate fair value because of the short-term maturity of
these instruments.

Comprehensive Income
--------------------

Statement of Financial  Accounting  Standards No. 130 ("SFAS  130"),  "Reporting
Comprehensive  Income,"  establishes  standards for reporting and  displaying of
comprehensive  income,  its components and accumulated  balances.  Comprehensive
income is defined to include all changes in equity except those  resulting  from
investments by owners and distributions to owners. Among other disclosures, SFAS
130 requires  that all items that are required to be  recognized  under  current
accounting  standards as  components  of  comprehensive  income be reported in a
financial  statement  that is  displayed  with  the  same  prominence  as  other
financial  statements.  The  Company  does not have any  items of  comprehensive
income in any of the periods presented.

Reverse Stock Splits
--------------------

The Company has  undergone a total of six reverse  stock splits from August 2003
to January 2006. These reverse-splits are listed in the table below:

                                      F-16

<PAGE>

Effective Date          Reverse split ratio
--------------          -------------------
August 17, 2003         1 for 250
August 16, 2004         1 for 250
November 29, 2004       1 for 1,000
March 7, 2005           1 for 1,000
June 23, 2005           1 for 1,500
January 26, 2006        1 for 1,250

All of the above reverse  splits of the Company's  common stock are reflected in
the Company's  financial  statements at December 31, 2005. The cumulative effect
of these  reverse  splits at December  31, 2005 is computed by  multiplying  the
reverse split factor of each reverse split, or 250 x 250 x 1,000 x 1,000 x 1,000
x 1,500 x 1,250.  The  product of this  equation  equals the number of shares of
common  stock at August 16, 2003 that would be worth 1 share of common  stock at
December 31, 2005.  This large dilution factor renders all items based in shares
or per share  amounts  essentially  not  comparable  over  different  accounting
periods.  Many of the share  amounts in prior  periods,  when  adjusted  for the
cumulative  effects of the reverse  splits,  are a small  fraction of one share.
Similarly, some items measured in per share amounts, such as earnings per share,
are too large to have any  significant  meaning to the  reader of the  financial
statements.

New Accounting Pronouncements
-----------------------------

In May 2005, the FASB issued FASB  Statement No. 154,  ("FAS 154"),  "Accounting
Changes and Error Corrections." FAS 154 establishes retrospective application as
the  required  method for  reporting  a change in  accounting  principle  in the
absence  of  explicit  transition  requirements  specific  to the newly  adopted
accounting  principle.  FAS 154 also provides  guidance for determining  whether
retrospective  application of a change in accounting  principle is impracticable
and for reporting a change when retrospective application is impracticable.  FAS
154 becomes  effective for accounting  changes and corrections of errors made in
fiscal years beginning after December 15, 2005. We do not expect the adoption of
FAS 154 to have a  material  impact on our  financial  position,  cash  flows or
results of operations.

In December 2004, the FASB issued FASB  Statement No.  123(R),  ("FAS  123(R)"),
"Share-Based  Payment,"  which is a  revision  of FASB  Statement  No. 123 ("FAS
123"),  "Accounting for  Stock-Based  Compensation."  FAS 123(R)  supersedes APB
Opinion No. 25, (APB 25), "Accounting for Stock Issued to Employees," and amends
FASB  Statement  No. 95,  "Statement  of Cash  Flows." FAS 123(R)  requires  all
share-based  payments to employees,  including grants of employee stock options,
to be recognized in the financial  statements  based on their fair values at the
date of grant and to record that cost as  compensation  expense  over the period
during  which the  employee is required to perform  service in exchange  for the
award (generally over the vesting period of the award).  Excess tax benefits, as
defined by FAS 123(R),  will be recognized  as an addition to common  stock.  In
April 2005, the SEC adopted a new rule that amends the compliance  dates for FAS
123(R). In accordance with the new rule, we are required to implement FAS 123(R)
at  the  beginning  of  our  fiscal  year  that  begins  January  1,  2006.  The
Commission's new rule does not change the accounting  required by FAS 123(R); it
changes only the dates of compliance.

In  November  2005,  the FASB  issued  FASB Staff  Position  No.  FAS  123(R)-3,
"Transition  Election  Related to  Accounting  for Tax  Effects  of  Share-Based
Payment Awards." The alternative  transition method includes  simplified methods
to establish the beginning balance of the additional paid-in capital pool ("APIC
pool") related to the tax effects of employee share-based  compensation,  and to
determine the subsequent impact on the APIC pool and consolidated  statements of
cash flows of the tax effects of employee  share-based  compensation awards that
are  outstanding  upon  adoption of SFAS  123(R).  An entity may make a one-time
election to adopt the transition  method described in this guidance and may take
up to one year  from the later of its  initial  adoption  of SFAS  123(R) or the
effective  date of this  guidance,  which was November  11, 2005.  We are in the
process  of  determining  whether  to adopt the  alternative  transition  method
provided  in FAS  123(R)-3  for  calculating  the  tax  effects  of  share-based
compensation pursuant to SFAS 123(R).

Effective  January  1,  2006,  we will  adopt  FAS  123(R)  using  the  modified
prospective  transition method, which provides for certain changes to the method
for valuing  share-based  compensation.  The valuation  provisions of FAS 123(R)
apply to new awards and to awards that are outstanding at the effective date and
subsequently  modified or cancelled.  Estimated  compensation expense for awards
outstanding at

                                      F-17
<PAGE>

January 1, 2006 will be recognized  over the remaining  service period using the
compensation cost calculated for pro forma disclosure purposes under FAS 123. In
accordance with the modified  prospective  transition  method, our statements of
operations  for periods prior to January 1, 2006 will not be restated to reflect
the impact of FAS 123(R).

Our  calculation of share-based  compensation  expense in future periods will be
calculated using the  Black-Scholes  option valuation model and will include the
portion of share-based payment awards that is ultimately expected to vest during
the period and therefore will be adjusted to reflect estimated forfeitures. SFAS
123(R) requires forfeitures to be estimated at the time of grant and revised, if
necessary,  in  subsequent  periods  if actual  forfeitures  differ  from  those
estimates.  In our pro forma information required under SFAS 123 for the periods
prior to 2006, we accounted for  forfeitures as they occurred.  For share awards
granted   after  January  1,  2006,   expenses  will  be  amortized   under  the
straight-line  attribution  method.  For  share  awards  granted  prior to 2006,
expenses are amortized under the  straight-line  single option method prescribed
by SFAS  123.  We expect  that our  adoption  of FAS  123(R) in 2006 will have a
material impact on our results of operations and net loss per share.

On February 16, 2006 the FASB issued SFAS 155,  "Accounting  for Certain  Hybrid
Instruments," which amends SFAS 133, "Accounting for Derivative  Instruments and
Hedging  Activities,"  and SFAS 140,  "Accounting for Transfers and Servicing of
Financial Assets and  Extinguishments of Liabilities." SFAS 155 allows financial
instruments  that  have  embedded  derivatives  to be  accounted  for as a whole
(eliminating  the need to bifurcate the derivative  from its host) if the holder
elects to account for the whole instrument on a fair value basis.  SFAS 155 also
clarifies  and amends  certain  other  provisions of SFAS 133 and SFAS 140. This
statement  is  effective  for all  financial  instruments  acquired or issued in
fiscal years beginning after September 15, 2006. The Company does not expect its
adoption  of this  new  standard  to have a  material  impact  on its  financial
position, results of operations or cash flows

4. RECEIVABLE FROM PORTFOLIO COMPANY

On April 5, 2005,  the Company  entered into a consulting  agreement with Medspa
Solutions, a company which Winsted controls.  Under the terms of this consulting
agreement,  Winsted  receives a consulting  fee of $50,000 per month  payable in
cash.  Winsted  recognizes  consulting  revenue as services  are rendered in the
contractual  amount of  $50,000  per  month.  Winsted  recognized  the amount of
$300,000  as  revenue  from this  agreement  during  the  period  April  through
September  2005.  The Company has received cash payments of a total of $240,500,
and has  reserved  the  amount of  $27,440  as  uncollectible.  Winsted  has not
recognized  any  revenue  from this  agreement  for the period  October  through
December,  2005.  At December  31, 2005,  Winsted has a  receivable  from Medspa
Solutions in the amount of $45,000.

5. INVESTMENTS AND ADVANCES TO AFFILIATES

Business Development Company status
-----------------------------------

Effective  November  22, 2004,  the  Registrant  became a "business  development
company" by filing Form N-54 with the  Securities  and Exchange  Commission  and
electing to be governed by sections 54 through 65 of the Investment  Company Act
of 1940.  The Registrant  will continue to be subject to the periodic  reporting
requirements  of the Exchange  Act and the proxy  solicitation  requirements  of
Section 14 of the 1934 Act. The Registrant's  management personnel will continue
to report trading in the Registrant's stock.  Acquisitions  consummated previous
to November 22, 2004 are consolidated in the Company's financial  statements for
the years  ended  December  31,  2005 and  2004.  Acquisitions  completed  after
November 22, 2004 are presented as investments  on the Company's  balance sheet,
net of any impairment charges.

Valuation of Investments
------------------------

Investments for which there is no ready market are initially valued at cost and,
thereafter,  at fair value  based upon the  financial  condition  and  operating
results of the issuer and other pertinent factors as determined in good faith by
the Board of Directors.  The financial condition and operating results have been
derived  utilizing

                                      F-18

<PAGE>

both  audited  and  unaudited  data.  In the  absence  of a ready  market for an
investment,  numerous assumptions are inherent in the valuation process. Some or
all  of  these  assumptions  may  not  materialize.   Unanticipated  events  and
circumstances  may occur  subsequent to the date of the valuation and values may
change due to future events.  Therefore,  the actual amounts eventually realized
from each investment may vary from the valuations  shown and the differences may
be material. The Company reports the unrealized gain or loss resulting from such
valuation in the Consolidated Statements of Losses.

Value,  as defined in Section  2(a)(41) of 1940 Act, is (i) the market price for
those securities for which a market quotation is readily  available and (ii) for
all other  securities  and assets,  fair value is as determined in good faith by
the board of  directors.  Since there is typically no readily  available  market
value  for  the  Company's  privately  held  investments,   the  Company  values
substantially  all of its  investments at fair value as determined in good faith
by the board of  directors  pursuant  to a  valuation  policy  and a  consistent
valuation  process.  At December 31, 2005, the Company had 3 investments with an
aggregate  historical cost of $3,720,300.  A total of $3,673,300 was reserved at
December 31, 2005, and the net value on the Company's  balance sheet at December
31, 2005 is $47,000.  The amount charged to operations  during the twelve months
ended December 31, 2005 was $3,673,300.  Because of the inherent  uncertainty of
determining the fair value of investments  that do not have a readily  available
market  value,  the fair value of the Company's  investments  determined in good
faith by the board of directors  may differ  significantly  from the values that
would have been used had a ready  market  existed for the  investments,  and the
differences could be material.

There is no single  standard  for  determining  fair value in good  faith.  As a
result, determining fair value requires that judgment be applied to the specific
facts and circumstances of each portfolio investment. The Company must determine
the fair value of each individual  investment on a quarterly  basis. The Company
records  unrealized  depreciation  on  investments  when  it  believes  that  an
investment  has  decreased in value,  including  where  collection  of a loan or
realization of an equity security is doubtful.  Conversely,  the Company records
unrealized appreciation if it believes that the underlying portfolio company has
appreciated  in  value  and,  therefore,   the  Company's  investment  has  also
appreciated in value, where appropriate.

As a business  development  company,  the Company intends to invest primarily in
illiquid  securities  including debt and equity securities of private companies.
the Company's  investments are generally  subject to some restrictions on resale
and  generally  have no  established  trading  market.  Because  of the  type of
investments that the Company makes and the nature of its business, the Company's
valuation  process requires an analysis of various  factors.  the Company's fair
value  methodology   includes  the  examination  of,  among  other  things,  the
underlying  portfolio  company  performance,   financial  condition  and  market
changing events that impact  valuation.  With respect to private debt and equity
securities,  each investment is valued using industry valuation benchmarks, and,
where  appropriate,  the value is assigned a discount  reflecting  the  illiquid
nature of the investment and/or the Company's  minority,  non-control  position.
When an  external  event such as a purchase  transaction,  public  offering,  or
subsequent equity sale occurs,  the pricing indicated by the external event will
be used to corroborate the Company's private debt or equity valuation.

Investments in equity securities:

Under  business  development  company  accounting,  all equity  investments  are
carried  at fair  value  with  any  adjustments  recorded  in the  statement  of
operations, combined with adjustments in the fair value of investments in loans,
as investment gains (losses)--unrealized.

In accordance  with Article 6 of Regulation S-X under the Securities Act of 1933
and Securities Exchange Act of 1934, the Company does not consolidate  portfolio
company investments, including those in which it has a controlling interest.

CONTROLLED COMPANIES:

Medspa Solutions, Inc.
----------------------

Effective  December 6, 2004, the Company entered into a stock purchase agreement
with Medspa Solutions, Inc., a Nevada corporation ("Medspa"), to purchase all of
the issued and outstanding capital stock of Medspa for * restricted shares (post
reverse-splits)

                                      F-19

<PAGE>

of the Company's common stock with a fair value of $3,400,000.  Medspa is in the
business of skincare services,  and is controlled by the Company's president and
chief executive  officer.  At December 31, 2004 and 2005, the Company determined
that the fair value of Medspa was $0. The amount of  $3,400,000  was  charged to
operations during the year ended December 31, 2004.

GaeaCare Syndicate Partners
---------------------------

During the year ended  December  31,  2005,  the  Company  purchased  90% of the
outstanding common stock of GaeaCare  Syndicate  Partners,  Inc.  ("GaeCare")for
$3,000  cash.  GaeaCare  is a  proactive  environmental  products  and  services
corporation that intends to become a leading  environmental  cleanup,  emergency
response,  and  environmental  remediation  company  by the use of new  computer
systems  technology,  sensor  technology,   communications  technology,  systems
concepts and microbial  environmental  cleanup treatment.  At December 31, 2005,
the Company determined that the fair value of its investment in GaeaCare was $0.
The amount of $3,000 was charged to  operations  during the year ended  December
31, 2005.

OTHER AFFILIATES:

Nu Image Medspa
---------------

As of  December  31,  2005,  the  Company  has  purchased  2% of the  issued and
outstanding  capital stock of Nu Image Medspa,  Inc., a Nevada  corporation ("Nu
Image").  The  Company  has  purchased  2,576,000  shares  of Nu Image  for cash
payments of $270,300 from the Company's chief executive  officer,  who continues
to own the remaining 98% of Nu Image Medspa.

Nu Image is in the business of franchising medical spa facilities, which provide
skincare  services.  At  December  31,  2005,  the Company  determined  that the
fairvalue of Nu Image was $0, and charged the amounts of $270,300 to  operations
during the year ended December 31, 2005.

The Company has also made certain payments of operational  expenses on behalf of
Nu Image. These expenses consist primarily of rent expense, aggregate $47,000 at
December 31, 2005. This amount is included in the Company's consolidated balance
sheet at December 31, 2005 as  investments  and  advances to  affiliates - other
affiliates.

The Company offers consulting services to Nu Image Medspa,  Inc.  Contractually,
these  services  are paid for in shares of common stock of Nu Image  Medspa.  At
December 31, 2005, the Company determined that the fair value of Nu Image Medspa
stock was $0,  therefore  the Company has  recognized  zero  revenue  from these
consulting services.

Bareskin Medspa
---------------

As of December  31,  2005,  the Company has made a cash advance in the amount of
$27,440 to Bareskin  Medspa,  an entity in which Winsted has no equity interest.
At December 31, 2005,  the Chief  Executive  Office of Bareskin  Medspa was also
Winsted's Chief Executive  Officer.  Bareskin Medspa is controlled by the spouse
of  Winsted's  President  and Chief  Executive  Officer.  At December  31, 2005,
Winsted  has fully  reserved  this cash  advance  and has  charged the amount of
$27,440 to operations.

6. PROPERTY AND EQUIPMENT

Property and equipment at December 31, 2005 and 2004 consisted of the following:

                                               2005         2004
                                            ----------   ----------
Furniture and fixtures                       $ 235,960    $ 235,960
Office equipment and telephone equipment        94,543       94,543
Software                                        89,400       89,400
Leasehold improvements                             879        2,639
                                            ----------   ----------
                                               420,782      422,542
Less accumulated depreciation                 (373,025)    (185,892)
                                            ----------   ----------
                                             $  47,757    $ 236,650
                                            ==========   ==========

                                      F-20

<PAGE>

Depreciation  expense for the twelve months ended December 31, 2005 and 2004 was
$188,893 and $185,892,  respectively.  The Company neither recorded depreciation
expense nor accumulated  depreciation  for the year ended December 31, 2003. The
equipment was acquired December 30, 2003.

7.  ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following at December 31,

                                               2005        2004
                                            ----------   ----------
Accrued payroll taxes and penalties          $300,000     $     --
Accounts payable and accrued payables         151,521       94,625
Accrued interest                               47,533       34,661
Accrued payroll and related costs                 216       56,741
                                            ----------   ----------
                                             $499,270     $186,027
                                            ==========   ==========

8. NOTES PAYABLE

Notes payable at December 31, 2005 and 2004 are as follows:

                                                              2005       2004
                                                            --------   --------
8% unsecured 1-year note payable due June 16, 2003.
As of December 31, 2005 and 2004, the note payable is
in default.                                                $ 95,000   $ 95,000

8% unsecured 30-day note payable due February 28,
2002. As of December 31, 2005 and 2004, the note
Payable is in default                                        33,930     33,930

8% unsecured 30-day note payable due February 28,
2002. As of December 31, 2005 and 2004, the note
payable is in default                                        18,574     18,574

8% unsecured 5-month note payable due March 31, 2003.
As of December 31, 2004, the note payable is in default       7,057      7,057

8% unsecured 30-day note payable due February 28, 2002.
As of December 31, 2004, the note payable is in default       6,370      6,370
                                                            --------   --------
     Total                                                 $160,931    $160,931

     Less: notes payable-current portion                   (160,931)   (160,931)
                                                            --------   --------

     Note payable - long-term                              $      -    $     -
                                                            ========   ========

On April  30,  2004,  the  Company  paid a note  payable,  consisting  of unpaid
principal of $1,500 and accrued and unpaid interest of $300, for cash of $1,800.
These notes are unsecured,  short-term,  and bear interest at rates ranging from
8% to 12%. The entire  amounts  outstanding  are delinquent at December 31, 2005
and 2004. Accrued interest expense under these notes as of December 31, 2005 and
2004 were  $47,533 and  $44,312,  respectively.  These  amounts are  included in
accounts payable and accrued expenses.

9. CAPITAL STOCK

Reverse Stock-Splits
--------------------

                                      F-21

<PAGE>

The Board of Directors  approved the following  reserve  splits of the Company's
common stock:

Effective Date          Reverse split ratio

--------------          -------------------
August 17, 2003         1 for 250
August 16, 2004         1 for 250
November 29, 2004       1 for 1,000
March 7, 2005           1 for 1,000
June 23, 2005           1 for 1,500
January 26, 2006        1 for 1,250

All of the above reverse  splits of the Company's  common stock are reflected in
the Company's  financial  statements at December 31, 2005. The cumulative effect
of these  reverse  splits at December  31, 2005 is computed by  multiplying  the
reverse split factor of each reverse split, or 250 x 250 x 1,000 x 1,000 x 1,000
x 1,500 x 1,250.  The  product of this  equation  equals the number of shares of
common  stock at August 16, 2003 that would be worth 1 share of common  stock at
December 31, 2005.  This large dilution factor renders all items based in shares
or per share  amounts  essentially  not  comparable  over  different  accounting
periods.  Many of the share  amounts in prior  periods,  when  adjusted  for the
cumulative  effects of the reverse  splits,  are a small  fraction of one share.
Similarly, some items measured in per share amounts, such as earnings per share,
are too large to have any  significant  meaning to the  reader of the  financial
statements.

Common Stock
------------

 Effective  June 30,  2003 the Company  changed  the par value of its  preferred
stock and common  stock from  $0.0001 per share to no par value.  As of June 30,
2003,  the Company  reclassified  $112,000 from  additional  paid-in  capital to
common stock.

On February 23, 2005, the Company amended the Articles of Incorporation to issue
5,500,000,000 shares, of which 5,000,000,000 shares shall be common shares at no
par value per share, and 500,000,000  shares shall be preferred shares at no par
value per share.

Common stock transactions - twelve months ended December 31, 2003:

During  the  year ended December 31, 2003 the Company issued less than one share
(post  reverse-splits) of common stock with a fair market value of $1,584,760 to
consultants  in exchange for  services to be provided  through  March 2004.  The
Company  has  recorded  deferred  compensation  of $98,438  for  services  to be
received subsequent to December 31, 2003.

During the year ended  December 31, 2003 the Company  issued less than one share
(post  reverse-splits)  of common  stock with a fair market value of $740,000 to
its Chief  Executive  officer as a bonus and in lieu of cash  compensation.  The
Company  has  recorded  deferred  compensation  of $536,250  for  services to be
received subsequent to December 31, 2003.

During the year ended  December  31,  2003  holders of stock  options  exercised
options for less than one share (post  reverse-splits) of common stock under the
Company's  Employee  Stock  Incentive  Plan (see Note 11) The  Company  received
proceeds of $1,283,162 and recognized  compensation  expense of $227,639 related
to the exercise of these options for the year ended December 31, 2003.

During the year ended December 31, 2003, the Company converted a note payable in
the amount of $105,000 to less than one share  (post  reverse-splits)  of common
stock.

Also during the year ended  December  31,  2003,  the  Company  converted a note
payable in the amount of $15,000 to less than one share (post reveres-splits) of
common stock.

Common stock transactions - twelve months ended December 31, 2004:

                                      F-22

<PAGE>

During the year ended  December 31, 2004 the Company  issued less than one share
(post  reverse-splits) of common stock with a fair market value of $1,164,100 to
consultants  in exchange for services to be provided  through  August 2005.  The
Company has charged to expense the amount of $860,760  during the twelve  months
ended  December 31,  2004.  The balance of $360,000 has been charged to deferred
compensation  at December 31, 2004,  and will be amortized over the terms of the
related agreements.

During the year ended  December 31, 2004,  the Company  issued stock  options to
purchase less than one share shares (post reverse-splits) of common stock with a
fair market value of $1,278,883  under the Company's  Employee  Stock  Incentive
Plan (see Note 11). These options were all  immediately  exercised.  The Company
received proceeds of $1,087,050 and recognized  compensation expense of $191,833
related to the exercise of these  options for the twelve  months ended  December
31, 2004.

During the year ended  December 31, 2004,  the Company had not yet been paid for
the  exercise  of  stock   options  to  purchase   less  than  one  share  (post
reverse-splits) of the Company's common stock. The Company has recorded non-cash
compensation in the amount of $22,203 and also recorded a receivable of $125,756
representing the amount due under the terms of these options. The total value of
the stock sold pursuant to these options was $147,959.

During  the  twelve months ended December 31, 2004, the Company issued less than
one share (post  reverse-split)  of restricted stock with a fair value of $6,000
to a potential  acquisition  candidate as a non-refundable  negotiation fee. The
Company  charged the entire amount of this fee to  operations  during the twelve
months ended December 31, 2004.

During the twelve months ended  December 31, 2004,  the Company's  President and
Chief Executive Officer  converted  1,000,000 shares of Preferred Stock Series A
into less than one share (post reverse-splits) of common stock.

Common stock transactions - twelve months ended December 31, 2005:

During the three months ended March 31, 2005 the Company  issued 22 shares (post
reverse  splits)  of  common  stock  with a fair  market  value of  $390,300  to
consultants  in exchange  for  services to be provided  through  July 2005.  The
Company  has  charged  $41,400 of this  amount to  operations  and  $333,629  to
deferred compensation during the three months ended March 31, 2005.

Also during the three  months  ended March 31,  2005 the  Company  issued  stock
options to purchase 3 shares  (post  reverse  splits) of common  stock under the
Company's  Employee  Stock  Incentive  Plan (see Note E). These options were all
immediately  exercised.  The Company received proceeds of $63,973 and recognized
compensation expense of $11,291 related to the exercise of these options for the
three months ended March 31, 2005.

Also during the three  months  ended March 31,  2005,  the Company  issued stock
options to purchase 5 shares  (post  reverse-splits)  of common  stock under the
Company's  Employee  Stock  Incentive  Plan for  which the  Company  has not yet
received payment.  The Company charged the $7,632 amount due under these options
agreements to Stock Options Receivable.

During the three months ended June 30, 2005,  the Company  wrote-off to non-cash
compensation expense stock options receivable in the amount of $133,388
representing  the  exercise  price  of  options  on less  than one  share  (post
reverse-split) of the Company's common stock.

Also during the three months ended March 31, 2005, the Company sold 21 shares of
common  stock  (post  reverse-split)  for  aggregate  proceeds  of  $75,000.  An
additional  13 shares of common stock (post  reverse-split)  were sold for which
payment  has not yet been  received,  for which  Company  charged  the amount of
$44,200 to  subscriptions  receivable  during the three  months  ended March 31,
2005.

Also during the three months ended March 31, 2005,  the Company issued 43 shares
of its common stock (post  reverse-split)  for conversion of 4,000,000 shares of
convertible stock.

Also during the three months ended March 31, 2005,  the Company issued less than
one share (post  reverse-split)  of its common stock due to  rounding-up  in the
reverse-split process.

                                      F-23

<PAGE>

During the three months  ended June 30, 2005 the Company  issued 78 shares (post
reverse  split)  of  common  stock  with a fair  market  value  of  $106,700  to
consultants  in exchange for services to be provided  through June 30, 2005. The
Company has  charged  $106,700  of this  amount to  operations  during the three
months ended June 30, 2005.

Also during the three months ended June 30, 2005,  the Company sold 1,887 shares
of common stock (post  reverse-split)  for aggregate  proceeds of $111,525.  The
Company has received cash payment in the amount of $65,500,  and has charged the
balance  of $1,825 to common  stock  subscriptions  receivable  during the three
months ended June 30, 2005.

Also during the three months ended June 30, 2005, the Company  wrote-off  common
stock subscriptions receivable in the amount of $133,388.

During the three  months  ended  September  30, 2005 the Company  issued  48,000
shares  of  common  stock  (post  reverse-splits)  with a fair  market  value of
$107,000 to consultants in exchange for services to be provided through December
12, 2005.  The Company has charged  $36,333 of this amount to operations  during
the three months ended September 30, 2005.

Also  during the three  months  ended  September  30,  2005,  the  Company  sold
424,860 shares of common stock (post  reverse-splits)  for aggregate proceeds of
$531,675.  The Company has received cash payments in the amount of $374,375, and
has charged the balance of  $157,300 to common  stock  subscriptions  receivable
during the three months ended September 30, 2005.

During the three months ended  December  31,  2005,  the Company sold  1,557,000
shares of its common  stock  (post  reverse-splits)  for  aggregate  proceeds of
$289,200.

Also during the three months ended  December 31, 205, the Company issued 268,000
shares  of  common  stock  (post  reverse-splits)  with a fair  market  value of
$306,500 to  consultants  for services to be performed  through April 2006.  The
Company  charged the amount of $240,083 to operations  and the amount of $66,417
to deferred compensation during the year ended December 31, 2005.

Also during the three months ended  December 31, 2005, the Company issued 24,000
shares  of  its  common  stock  (post  reverse-split)  valued  at  $28,500  to a
consultant  in exchange for services  provided  through  December 31, 2005.  The
Company  charged  the  amount of  $28,500  to  operations  during the year ended
December 31, 2005.

All  valuations  of the above shares are based on the stock price at the date of
issue,  which did not differ materially from the value of the services that were
rendered by the consultants under the contracts.

S-8  Stock  Registrations
-------------------------

The Company has filed the Forms S-8 during the twelve months ended  December 31,
2005, 2004, and 2003, and registered shares as follows (all shares are presented
on a post reverse-splits basis):

Date of S-8 Filing        Number of Shares Registered
------------------        ---------------------------
April 17, 2003            Less than one share (post reverse-splits)
May 29, 2003              Less than one share (post reverse-splits)
June 20, 2003             Less than one share (post reverse-splits)
August 11, 2003           Less than one share (post reverse-splits)
April 2, 2004             Less than one share (post reverse-splits)
May 27, 2004              Less than one share (post reverse-splits)
July 12, 2004             Less than one share (post reverse-splits)(de-register)
July 26, 2004             Less than one share (post reverse-splits)
September 3, 2004         Less than one share (post reverse-splits)
October 18, 2004          Less than one share (post reverse-splits)
January 18, 2005          Less than one share (post reverse-splits)

E-1 Stock
---------
In February  2005,  Winsted  filed a Form E-1 with the  Securities  and Exchange
Commission  with regard to the  offering of up to  20,000,000,000  E-1 shares of
common  stock at prices

                                      F-24

<PAGE>

ranging from $0.00025 to $0.05 per share. The maximum amount of this offering is
$5,000,000.

Preferred  Stock
----------------

On February 23, 2005, the Company amended the Articles of Incorporation to issue
5,500,000,000 shares, of which 5,000,000,000 shares shall be common shares at no
par value per share, and 500,000,000  shares shall be preferred shares at no par
value per share.

Series A Preferred Stock
------------------------

On October 21, 2003, the Company  designated a series of the preferred  stock to
be called the "Series A Preferred Stock" to consist of 50,000,000  shares.  Each
shares of the  Series A  preferred  stock is  convertible  into 20 shares of our
common stock.

The Company, at the option of its directors,  and with the consent of a majority
of the  stockholders  of the Series A Preferred  Stock,  may at any time or from
time to time redeem the whole or any part of the outstanding  Series A Preferred
Stock.  Any such redemption shall be pro rata with respect to all of the holders
of the Series A Preferred Stock.  Upon redemption the Company shall pay for each
share redeemed the amount of $0.01 per share, payable in cash, plus a premium to
compensate the original purchaser(s) for the investment risk and cost of capital
equal to the greater of (a) $0.25 per share, or (b) an amount per share equal to
50 percent of the market  capitalization of the Company on the date of notice of
such  redemption  divided by the number of the shares of the Series A  Preferred
Stock then issued and outstanding  (the  "Redemption  Premium"),  the redemption
amount  and  the  Redemption  Premium  hereinafter  being  referred  to  as  the
"Redemption Price." Such redemption shall be on an all-or-nothing basis.

During the year ended December 31, 2004, the Company issued 50,000,000 shares of
Series A Preferred  stock with a fair value of  $56,092,000 to its President and
Chief Executive  Officer as  compensation.  The preferred shares are convertible
into shares of common stock at the rate of 1 preferred  share for each 20 common
shares.  The preferred  shares were valued at the market price of the underlying
common  shares.  Also during the year ended  December  31, 2004,  the  Company's
President  and Chief  Executive  Officer  converted  1,000,000 of these Series A
Preferred Shares to less than one share (post reverse-splits) of common stock.

During the three  months  ended March 31,  2005,  the Company  issued  5,000,000
shares of its Series A  Convertible  Preferred  Stock to its President and Chief
Executive  Officer as  compensation.  The Company  charged the fair value of the
shares  of  common  stock  underlying  this  preferred  stock,  or  $50,000,  to
operations during the three months ended March 31, 2005.

Also  during the three  months  ended  March 31,  2005,  the  Company  cancelled
4,000,000  shares of its preferred  stock  outstanding due to conversion of this
stock into 80,000,000  shares of common stock by the owner of these shares,  the
Company's President and Chief Executive Officer.

Series B Preferred Stock
------------------------

Effective January 12, 2005, we filed a certificate of designation for the Series
B preferred stock with the Secretary of State of Florida. 50,000,000 shares have
been  designated  as  Series B  preferred  stock.  Each  share  of the  Series B
preferred  stock is  convertible  into 10 shares  of our  common  stock.  On all
matters  submitted  to a vote of the  holders  of the common  stock,  including,
without imitation, the election of directors, a holder of shares of the Series B
preferred  stock shall be entitled to the number of votes on such matters  equal
to the number of shares of the  Series B  preferred  stock  held by such  holder
multiplied  by the  number of shares of the  common  stock  into which each such
share of the Series B preferred stock shall then be convertible.

The Series B Preferred stock is redeemable at our option.  Upon redemption,  the
Company  shall pay for each share  redeemed  the  amount of $0.01 per share,  in
cash, plus a premium to compensate the original  purchaser(s) for the investment
risk and cost of capital equal to the greater of (a) $0.25 per share,  or (b) an

                                      F-25

<PAGE>

amount  per  share  equal to 50 per  cent of the  market  capitalization  of the
Company  on the date of notice of such  redemption  divided by the number of the
shares of the Series B Preferred Stock then issued and outstanding.

In December 2004,  pursuant to the terms of the MedSpa  Solutions  acquisitions,
the  Company  issued less than one share of common  stock  (post  reverse-split)
which  was to be  automatically  converted  into  1,000,000  shares  of Series B
Convertible  Preferred  Stock upon the filing of the  certificate of designation
for the Series B Preferred stock with the Florida Secretary of State. The common
stock was not yet issued but was held as common stock  subscribed at the time of
the filing of the certificate of designation  for the Series B Preferred  stock.
The Common Stock  subscribed  then  immediately  converted to Series B Preferred
Stock subscribed.

The Company issued 1,000,000  shares of Series B Convertible  Preferred Stock in
June 2005.

10. STOCK OPTIONS

During the year ended  December 31, 2003, the Company  authorized  four Employee
Stock  Incentive  Plans  ("ESIP")  for 2003 and four  Non-Employee  Director and
Consultant's  Retainer Stock Plans  ("NDCRSP") for 2003. The purpose of the ESIP
is to provide stock incentive to employees of the Company. Under the ESIP plans,
employees  are  entitled to  purchase  shares for no less than 80% of the market
price of the company's common stock. The Compensation Committee of the Company's
Board of Directors approves shares issued under the plan.

The purpose of the NDRCSP is to attract  non-employee  directors and consultants
who  capable of  improving  the  success of the  Company by  providing  a direct
economic  interest  to  Company  performance.  Under  the  terms  of this  plan,
non-employee directors or consultants may be compensated through the issuance of
Company stock at a deemed value of $0.0009 per share. The Compensation Committee
of the Company's Board of Directors administers the plan.

The  following  table  summarizes  the  changes in options  outstanding  and the
related  prices  for  the  shares  of  the  Company's  common  stock  issued  to
shareholders and employees at December 31, 2004.

                       (All prices and option amounts are
                       presented post reverse-splits. The
                      symbol * denotes less than one share
                         on a post reverse-split basis)

                                       Number of      Weighted-average
                                        Shares         exercise price
                                     ---------------  ----------------
Outstanding at December 31, 2002              --         $         --

           Granted                            *           483,032,500

           Exercised                          *           483.032.500

           Cancelled                          --                   --
                                     ---------------  ----------------
Outstanding at December 31, 2003              --         $         --

           Granted                            *            72,194,102

           Exercised                          *            72.194,102

           Cancelled                          --                   --
                                     ---------------  ----------------
Outstanding at December 31, 2004

                                              --         $         --

           Granted                            *                65,309

           Exercised                          *                65,309

           Cancelled                          --                   --
                                     ---------------  ----------------
Outstanding at December 31, 2005

                                              --         $         --
                                     ===============  ================

(A) The  exercise  price  is 85% of  market  value at the  time  the  option  is
exercised;  thus it is not possible to determine the  weighted-average  exercise
price of stock options not yet exercised.

                                      F-26

<PAGE>

The weighted-average fair value of stock options granted to employees during the
years  ended  December  31,  2005,  2004  and  2003  and  the   weighted-average
significant   assumptions   used  to  determine  those  fair  values,   using  a
Black-Scholes option pricing model are as follows:

                                                       2005    2004    2003
                                                       ----    ----    ----
Significant assumptions (weighted average)

  Risk-free interest rate at grant date                2.85%  3.75%   2.65%

  Expected stock price volatility                       248%   328%    189%

  Expected dividend payout                                0      0       0

  Expected option life-years based on contractual
    expiration dates                                    .02    .02      .02

In  nearly  every  case,  options  are  exercised  via  a  cashless  transaction
immediately upon issuance. For this reason, the life of the options is deemed to
be one week, or .02 years.

If the Company recognized compensation cost for the non-qualified employee stock
option plan in  accordance  with SFAS No. 123, the  Company's pro forma net loss
and net loss per share would have been  $(62,718,607)  and  $(33,114.36) for the
year ended December 31, 2004 and $(3,369,743) and  $(22,464,953.33) for the year
ended December 31, 2003, respectively.

                                         2005         2004           2003
                                     -----------   -----------    -----------
Net loss, as reported               $(3,538,300)  $(62,591,443)   $(3,308,609)

Add: Compensation recognized

under APB 25                             63,627        191,832        226,400
Less:  Compensation recognized

under SFAS 123                          (78,492)      (318,996)      (287,534)
                                      ----------   -----------    -----------
Pro forma net loss                  $(3,553,165)  $(62,718,607)   $(3,369,743)
                                      ==========   ===========    ===========
Earnings per share:
Basic and diluted loss per share:
     As reported                    $    (8.54)    Note A          Note A
     Pro forma                      $    (8.57)


Note A:  Stating  the loss per share for the years  ended  2004 and 2003 for the
cumulative  effect of the reverse  stock splits which the Company has  undergone
would render the earnings per share number meaningless as it would be multiplied
by a  factor  of  468,750,000,000,000.  There  was no  change  in the pro  forms
earnings per share amounts under SFAS 123 for the years ended  December 31, 2004
or 2003 compared to the earnings per share amounts originally stated.

11. RELATED PARTY TRANSACTIONS

UBC  and  C2C  Acquisitions
---------------------------

In December 2003, the Company  entered into two asset purchase  agreements  with
companies controlled by the Company's President and Chief Executive Officer (See
Note 5). In  accordance  with STAFF  ACCOUNTING  BULLETIN  NO. 48:  TRANSFERS OF
NONMONETARY ASSETS BY PROMOTERS OR SHAREHOLDERS, the Company recorded the assets
at the historical cost of the seller,  which did not differ  materially from the
assets' fair value.  These  transactions  resulted in the  acquisition of assets
with a  historical  cost of $405,497 in exchange  for  11,000,000  shares of the
Company's  Series-A  Convertible  Preferred  Stock  with an  assigned  value  of
$880,000.  The  difference of $474,503 was charged to expense  during the twelve
months ended December 31, 2003.

                                      F-27

<PAGE>

The   acquisitions  of  UBC  and  C2C  should  not  be  considered   arms-length
transactions as they were 100% controlled by Winsted's  President and CEO at the
time of the acquisition.

Medspa  Solutions,  Inc.  Acquisition
--------------------------------------

In December 2004, the Company  purchased all of the outstanding  common stock of
Medspa  Solutions,  Inc. for less than one share (post  reverse-split) of common
stock with a fair value of $3,400,000.  Prior to the acquisition by Winsted, the
common stock of Medspa Solutions, Inc. was held as follows:

Winsted Holdings President and CEO:                        64.8%
Spouse of Winsted Holdings President and CEO:               8.8%
Employee of Winsted Holdings:                               8.8%
Consultant to Winsted Holdings:                             8.8%
Consultant to Winsted Holdings:                             8.8%
                                                          ------
 Total                                                    100.0%

The  acquisition  of  Medspa  Solutions,   Inc.  should  not  be  considered  an
arms-length  transaction as none of the shareholders of Medspa  Solutions,  Inc.
were unaffiliated with the Company prior to the acquisition of Medspa Solutions,
Inc. by the Company.

GaeaCare Syndicate Partners, Inc.
---------------------------------

During the year ended  December  31,  2005,  the  Company  purchased  90% of the
outstanding  common stock of GaeaCare Syndicate  Partners,  Inc. for $3,000 cash
from an  individual  who is a  consultant  to the  Company.  The  investment  in
GaeaCare should not be considered an arms-length transaction.

Nu Image Medspa, Inc. Investment
--------------------------------

As of  December  31,  2005,  the  Company  has  purchased  2% of the  issued and
outstanding  capital stock of Nu Image Medspa,  Inc., a Nevada  corporation ("Nu
Image").  The  Company  has  purchased  2,576,000  shares  of Nu Image  for cash
payments of $270,300 from the Company's chief executive  officer,  who continues
to own the remaining 98% of Nu Image Medspa.

The  investment in Nu Image Medspa,  Inc.  should not be considered  arms-length
transactions as they were 100% controlled by Winsted's  President and CEO at the
time of the investment.

Cash advance to Nu Image Medspa, Inc.
-------------------------------------

The Company has also made certain payments of operational  expenses on behalf of
Nu Image. These expenses consist primarily of rent expense, aggregate $47,000 at
December 31, 2005. This amount is included in the Company's consolidated balance
sheet at December 31, 2005 as  investments  and  advances to  affiliates - other
affiliates.

Winsted's  President  and Chief  Executive  Officer is the majority  owner of Nu
Image  Medspa  and  these  advances   should  not  be  considered   arms  length
transactions.

Cash advance to Bareskin Medspa, Inc.
-------------------------------------

The Company has also made certain payments of operational  expenses on behalf of
Bareskin  Medspa,  Inc.  These  expenses  consist  primarily  of  rent  expense,
aggregate $27,440 at December 31, 2005. This amount has been fully reserved, and
$27,440 has been charged to operations during the year ended December 31, 2005.

Winsted's  President and Chief Executive Officer and his spouse are the majority
owners of  Bareskin  Medspa and these  advances  should not be  considered  arms
length transactions.

Receivable From Portfolio Company
--------------------------------

On April 5, 2005,  the Company  entered into a consulting  agreement with Medspa
Solutions, a company which Winsted controls.  Under the terms of this consulting

                                      F-28

<PAGE>

agreement,  Winsted  receives a consulting  fee of $50,000 per month  payable in
cash.  Winsted  recognizes  consulting  revenue as services  are rendered in the
contractual  amount of  $50,000  per  month.  Winsted  recognized  the amount of
$300,000  as  revenue  from this  agreement  during  the  period  April  through
September  2005.  The Company has received cash payments of a total of $240,500,
and has  reserved  the  amount of  $14,500  as  uncollectible.  Winsted  has not
recognized  any  revenue  from this  agreement  for the period  October  through
December,  2005.  At December  31, 2005,  Winsted has a  receivable  from Medspa
Solutions in the amount of $45,000.

Preferred  Stock  Issued  to  Chief  Executive  Officer
-------------------------------------------------------

During the year ended December 31, 2004, the Company issued 49,000,000 shares of
preferred  stock with a fair value of  $56,092,000  to its  President  and Chief
Executive  Officer as  compensation.  The preferred  shares are convertible into
shares  of  common  stock at the rate of 1  preferred  share  for each 20 common
shares.  The preferred  shares were valued at the market price of the underlying
common shares.

During the year ended December 31, 2005, the Company issued  5,000,000 shares of
preferred  stock  with a fair  value  of  $50,000  to its  President  and  Chief
Executive  Officer as  compensation.  The preferred  shares are convertible into
shares  of  common  stock at the rate of 1  preferred  share  for each 20 common
shares.  The preferred  shares were valued at the market price of the underlying
common shares.

Employment  of  Spouse  of  Chief  Executive  Officer
-----------------------------------------------------

The  Company  employed  the spouse of its Chief  Executive  Officer.  During the
twelve months ended  December 31, 2004, the spouse was paid a salary of $26,000,
and also received non-cash compensation in the form of stock options with a fair
value of $13,387.

12. COMMITMENTS AND CONTINGENCIES

Employment  Contract

On March 7, 2003,  and as  subsequently  amended on August 14, 2003 and November
24, 2003,  the Company  entered into a five-year  employment  agreement with its
Chief Executive Officer. The agreement calls for the following:

                     2003         2004         2005         2006         2007
                     ----         ----         ----         ----         ----
Base salary       $350,000     $400,000     $450,000     $500,000     $550,000

Bonus - cash      $50,000 to   $50,000 to   $50,000 to   $50,000 to   $50,000 to
                  $100,000     $100,000     $100,000     $100,000     $100,000

Stock options        *            *              *           *            *

* less than one share, post reverse-splits.

During the years ended  December 31, 2005,  2004 and 2003,  the Company has paid
the  Company's  Chief  Executive  Officer in the form of cash and the  Company's
common stock substantially in excess of his employment  agreement.  Also, during
the year ended  December  31,  2004,  the Company  has paid the Chief  Executive
Officer in the form of Preferred Stock substantially in excess of his employment
agreement.

In addition,  the agreement  calls for stock awards of up to less than one share
(post  reverse-split)  of either common stock or preferred  stock based upon the
Company reaching certain milestones.

During the year ended December 31, 2003, the Company settled a note payable to a
related  party  in the  amount  of  $117,006  for  less  than  one  share  (post
reverse-splits) of the Company's  restricted common stock with an estimated fair
value of $105,000.

During the year ended  December 31, 2003 a  shareholder  of the Company  forgave
amounts  due to him in the amount of $11,675,  which the  Company  recorded as a
capital contribution.

                                      F-29

<PAGE>

Lease  Commitments
-------------------

The Company leases office space on a month to month basis.  All previous  leases
have expired or been assumed by third parties. The Company has no non-cancelable
lease commitments at December 31, 2005.

Contingencies
-------------

During  the  years  ended  December  31,  2003,  the  Company  filed a series of
Registration  Statements  on SEC Form S-8  registering  shares of the  Company's
common  stock (see Note 9). The  Company  issued  shares of its common  stock in
excess of the shares  authorized  under the plans. As a result,  the Company may
have violated  federal and state securities laws in connection with the issuance
of those shares.

In the event that any of the exemptions  from  registration  with respect to the
issuance of the  Company's  common  stock under  federal  and  applicable  state
securities  laws were not  available,  the  Company  may be subject to claims by
federal  and state  regulators  for any such  violations.  In  addition,  if any
purchaser of the Company's common stock were to prevail in a suit resulting from
a violation of federal or applicable  state  securities laws with respect to the
unavailability  of such  exemption,  the  Company  could be liable to return the
amount paid for such  securities with interest  thereon,  less the amount of any
income received thereon,  upon tender of such securities,  or for damages if the
purchaser  no  longer  owns the  securities.  As of the date of these  financial
statements , the Company is not aware of any alleged  specific  violation or the
likelihood of any claim.  There can be no assurance  that  litigation  asserting
such claims will not be initiated, or that the Company would prevail in any such
litigation.

The  Company is unable to  predict  the extent of its  ultimate  liability  with
respect to any and all future securities matters. The costs and other effects of
any future litigation, government investigations, legal and administrative cases
and proceedings,  settlements, judgments and investigations,  claims and changes
in this matter could have a material  adverse effect on the Company's  financial
condition and operating results.

13. INCOME TAXES

Due to the Company's  operating  losses,  there was no provision for U.S. income
taxes for the years ended December 31, 2005, 2004, and 2003.

For income tax reporting purposes,  the Company's aggregate unused net operating
losses  approximate   $66,000,000,   which  expires  through  2025,  subject  to
limitations of Section 382 of the Internal  Revenue Code, as amended.  Also, due
to change in control  carryforward losses may be limited under the provisions of
Internal  Revenue Code.  The deferred tax asset related to the  carryforward  is
approximately $1,500,000.

The Company has provided a valuation  reserve against the full amount of the net
operating  loss  benefit,  since in the  opinion  of  management  based upon the
earning  history of the  Company,  it is more likely than not that the  benefits
will be realized.

Components of deferred tax assets as of December 31, 2005 are as follows:

Non Current:
Net operating loss carryforward       $ 1,500,000
Valuation allowance                    (1,500,000)
                                      ------------
Net deferred tax asset                $        --
                                      ============

14 - ECONOMIC DEPENDENCY

Management fee income from the Company's one major customer-related party was
$300,000 or 100% of total revenue for the year ended December 31, 2005.


15 - SUBSEQUENT EVENTS

Reverse Stock-Splits

The Board of Directors approved the following reserve stock splits:

Reverse Stock-split
-------------------

-  1-for-1250 reverse stock-split effective January 26, 2006.

                                      F-30

<PAGE>

For the purposes of financial  statement  presentation,  all share and per share
information has been restated to reflect the cumulative effects of these reverse
stock-splits.  Because  the  cumulative  effect of the  splits is so large,  the
restatement  of shares to a post  reverse-split  basis  sometimes  results  in a
fraction of a share. In these cases,  the exact fraction is not stated,  but the
phrase "less than one share" is used.

Stock Issuances
---------------

From January 1, 2006 through March 31, 2006, the Company sold 18,441,722  shares
of common stock for net cash proceeds of $59,500.

                                      F-31