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| **U.S.                SECURITIES AND EXCHANGE COMMISSION** |
|------------------------------------------------------------|
| **Washington,                D.C. 20549**                  |

| **FORM                  10-KSB/A** |
|------------------------------------|
| Amendment                  No. 1   |

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

**Commission      File Number 0032939**

**Viper      Networks, Inc.**

**(Exact      Name of Registrant as specified in its Charter)**

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

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

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

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

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

**APPLICABLE      ONLY TO CORPORATE ISSUERS**

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**Documents      Incorporated by Reference:**

**Explanatory        Note**

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

|                               |                                                                                                                                                              | **Page No.** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------|
| PART                I                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |              |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |              |
|           Item                1.                                                                    | DESCRIPTIONOF                BUSINESS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 3                 |
|           Item                1A.                                                                                            | FACTORS                THAT MAY AFFECT                FUTURE RESULTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 17                |
|           Item                2.                                                                                             | DESCRIPTION                OF                PROPERTY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 23                |
|           Item                3.                                                                                             | LEGAL                PROCEEDINGS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 24                |
|           Item                4.                                                                                             | SUBMISSION                OF MATTERS TO A VOTE OF                SECURITY HOLDERS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 24                |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |              |
| PART                II                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |              |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |              |
|           Item                5.                                                                                             | MARKET                FOR COMMON EQUITY AND RELATED                STOCKHOLDER MATTERS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 25                |
|           Item                6.                                                                                             | MANAGEMENT'S                DISCUSSION AND                ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 35                |
|           Item                7.                                                                                             | FINANCIAL                STATEMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 41                |
|           Item                8.                                                                                             | CHANGES                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING                AND FINANCIAL DISCLOSURE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 41                |
|           Item                8A.                                                                                            | CONTROLS                AND PROCEDURES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 42                |
|           Item                8B.                                                                                            | OTHER                INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 42                |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |              |
| PART III                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |              |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |              |
|           Item                9.                                                                                             | DIRECTORS,                EXECUTIVE OFFICERS AND CONTROL                PERSON                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 43                |
|           Item                10.                                                                                            | EXECUTIVE                COMPENSATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 44                |
|           Item                11.                                                                                            | SECURITY                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND                MANAGEMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 47                |
|           Item                12.                                                                                            | CERTAIN                RELATIONSHIPS AND RELATED                TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 47                |
|           Item                13.                                                                                            | EXHIBITS                AND REPORTS ON FORM 8-K                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 48                |
|           Item                14.                                                                                            | PRINCIPAL                ACCOUNTANT FEES AND                SERVICES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 49                |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| SIGNATURES                                                                                                                                                                     | 51                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| INDEX                TO CONSOLIDATED FINANCIAL                STATEMENTS                                                                                                       | F-1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| REPORT                OF INDEPENDENT REGISTERED PUBLIC                ACCOUNTANTING FIRM                                                                                       | F-2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

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**Available      Information**

**PART      I**

**ITEM      1.     DESCRIPTION OF      BUSINESS**

**BACKGROUND**

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**Business      of the Company**

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|            | Viper                International LLC (“Viper International”), formed in August 2004,                represents the combination of the capabilities obtained through the                acquisitions of Mid-Atlantic (9/03) and Adoria (2/04).  Viper                International’s network is powered by the Company’s Nextone softswitch and                is compatible with most VoIP networks (including Sansay, Cisco, and                Nextone).  Viper International sells wholesale minutes on our                VoIP network to other telecommunications providers through our internal                sales force.                                                                                                                                                 |
|--------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                         | Viper-CA                (“Viper Consumer Products”), which we acquired in November 2000, along                with Coliance (7/03) offers an alternative to traditional telephone                companies through its suite of VoIP products. Our VoIP products allow                voice telephone calls to be placed at a substantial savings compared                to                traditional calling methods to any phone number in the world over                our                global VoIP network (*no* special hardware or software, other than                a standard telephone, is needed at the destination end of a                call).  As of December 31, 2004, we had approximately 12,000                active accounts using our suite of VoIP                products. |

**Industry      Background**

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**Our      Strategy**

| Cap*italize                on the Growth of VoIP Products and Services*.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| We                believe that if we can                implement our Strategy, we will be well positioned to take advantage                of                the expected growth of the VoIP products and services                markets.  Technology research firm Jupiter Research predicted                that VoIP telephony services would grow to about 400,000 U.S. households                by the end of 2004, and to 12.1 million U.S. households by 2009                (http://www.clickz.com/stats/sectors/broadband/article.php/3418651). |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| *Capitalize                on our technological expertise to introduce new products and                features.*                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Over                the past three years, we                have developed or acquired several core technologies that form the                backbone of our VoIP service and which we intend to use to develop                product                enhancements and future products.                                                                                                                                                                                                                                                                              |

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| *Offer                the best possible service and support to our customers with a world                class                customer support organization.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| We                have established relationships                with several resellers and distributors of telecommunications                products.  To further accelerate growth of our vPhone and future                consumer and enterprise offerings, we intend to build upon our existing                relationships and establish new relationships with distributors,                value                added resellers and system integrators, other service providers and                retailers with strong local sales and marketing channels to make                our                products more readily available and accessible to potential customers                of                our service. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| *Focus                Viper Networks on Opportunities in Emerging Markets and New Service                Offerings.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Viper                Networks’ Mid-Atlantic                International, Inc. and Adoria Communications LLC targets international                markets undergoing telecommunications deregulation, which we believe                will                provide high margin opportunities.  As our financial resources                allow, we seek to continue to enhance and expand our global VoIP                network                into new markets by internal growth, acquisition and strategic                alliances.  Our plan is to develop, expand and integrate new                services into our existing managed platform.                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| *Focus                Retail Sales Efforts on Selected Ethnic Population Centers and Flat-Rate                Calling Plans*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| A                new business unit formed in                November, 2006 will promote, through a direct sales effort (telemarketing)                flat-rate calling plans to ethnic groups who typically make a                disproportionately large volume of international telephone                calls.  Our plan is to remain a low-price provider, but target                customers who, because of their penchant for international (i.e.,                additional charge) calls, are likely to be more profitable to the                Company.                                                                                                                                                              |

**Our      Solution**

**Consumer      Products and Services**

*no*

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*vPhone*

|                                                                           | •      | Greatly                reduces the cost of telephone calls by routing them over the                internet.                                                        |
|--------------------------------------------------------------------------------|---------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                           | •      | Connects                and installs in minutes with our proprietary, downloadable vPhone                Dialer                Software and the included USB cable. |
|                                                                           | •      | Provides                superior voice quality wherever a stable internet connection is                present.                                                     |
|               | •      | Works                with Dial-Up or Broadband internet connections.                                                                                                |
|                                                                           | •      | Allows                our customers to pay only for the minutes used without monthly fees,                contracts or hidden charges.                              |
|                                                                           | •      | Allows                customers to purchase additional minutes conveniently                online.                                                                  |

*IP      Phone Adaptor (IPA)*

|               | •      | Greatly                reduces the cost of telephone calls by routing them over the                internet.                                                                                                                |
|--------------------------------------------------------------------------------|---------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|               | •      | Connects                and installs in minutes with our proprietary, downloadable vPhone                Dialer                Software and the included USB cable.                                                         |
|               | •      | Connects                a standard telephone – or all telephones in a customer’s house or business                – to our global VoIP network through their existing internet                connection. |
|               | •      | Is                compatible with both traditional wired telephones and with cordless                telephones – allowing the user to make calls from anywhere inside a home                or office.               |
|               | •      | Works                with Dial-Up or Broadband internet connections.                                                                                                                                                        |
|               | •      | Allows                our customers to pay only for the minutes used without monthly fees,                contracts or hidden charges.                                                                                      |
|               | •      | Allows                customers to purchase additional minutes conveniently                online.                                                                                                                          |

*Broadband      Phone Adaptor (BPA)*

|                                                                           | •      | Greatly                reduces the cost of telephone calls by routing them over the                internet.                                                                                                                |
|--------------------------------------------------------------------------------|---------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                           | •      | Connects                a standard telephone – or all telephones in a customer’s house or business                – to our global VoIP network through their existing internet                connection. |
|                                                                           | •      | Provides                2-line direct connectivity - making it an ideal device for small                office/home office (“SOHO”) applications.                                                               |
|               | •      | Connects                and installs in minutes to an existing internet connection (requires                a                broadband internet connection).                                                                |
|                                                                           | •      | Is                compatible with both traditional wired telephones and with cordless                telephones – allowing the user to make calls from anywhere inside a home                or office.               |
|               | •      | Eliminates                the need for a computer to make or manage calls (does not require                our                vPhone Dialer Software).  Only an internet connection is                required.   |
|                                                                           | •      | Allows                our customers to pay only for the minutes used without monthly fees,                contracts or hidden charges.                                                                                      |
|                                                                           | •      | Allows                customers to purchase additional minutes conveniently                online.                                                                                                                          |

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*Wi-Fi      vPhone*

|               | •      | Greatly                reduces the cost of telephone calls by routing them over the                internet.                                                                                             |
|--------------------------------------------------------------------------------|---------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|               | •      | Operates                almost like a cell phone; provides VoIP call capability throughout                the                world where ever a standard 802.11b wireless network                exists. |
|               | •      | Can                be used in most any 802.11 Wi-Fi “Hot Spot” location in the world (user ID                and Password may be required for privately operated                networks).   |
|               | •      | Easily                configured and installed in minutes (similar to authentication of                a laptop                computer for use within your wireless network).                           |
|               | •      | Completely                self-contained; does not require a personal computer or our vPhone                Dialer                Software.                                                              |
|               | •      | Allows                our customers to pay only for the minutes used without monthly fees,                contracts or hidden charges.                                                                   |
|               | •      | Allows                customers to purchase additional minutes conveniently                online.                                                                                                       |

*IP      PBX*

|                                                                           | •      | Greatly                reduces the cost of telephone calls by routing them over the                internet.                                                                                                                                                                                                                                                                      |
|--------------------------------------------------------------------------------|---------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|               | •      | Provides                multi-functional telephone features and calling services to Business                users, blending access to the local telephone network, the public                internet, and internal communications.                                                                                                                                               |
|                                                                           | •      | Provides                simultaneous voice, text, data and graphics support over standard                telephone lines and/or IP connections.                                                                                                                                                                                                                                   |
|                                                                           | •      | Compatible                with existing analog or digital telephones (with optional FXS gateway),                or                with VoIP-enabled telephones.                                                                                                                                                                                                                  |
|                                                                           | •      | Intra-company                connectivity either through local network or through existing telephone                wiring.                                                                                                                                                                                                                                                       |
|                                                                           | •      | Provides                automated attendant, dial by name and spell/say, call history and                call                detail reports, intercom, full call monitoring, conference calling,                voice                mail (including voice mail to email), caller ID, call forwarding,                music on                hold, and most other PBX functions. |
|                                                                           | •      | Fully                scalable from 1 to 1,000 (or more) extensions (depending on hardware                selected).                                                                                                                                                                                                                                                               |
|                                                                           | •      | Compatible                with a variety of incoming local voice connections (T1, T3, FXO,                etc.).                                                                                                                                                                                                                                                                  |
|                                                                           | •      | Easily                managed and reconfigured through intuitive menu driven                interface.                                                                                                                                                                                                                                                                            |
|                                                                           | •      | Provided                with a pre-programmed server running the PBX                functionality.                                                                                                                                                                                                                                                                                |

*Calling      time*

*Wholesale      Operations*

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**Sales,      Marketing and Promotional Activities**

**Competition**

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**Operations**

**Suppliers**

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**Research      and Development**

**Industry      Overview**

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**     Voice      on Data Networks**

**     The      Economics of Internet Telephony**

**     Limitations      of Existing Internet Telephony Solutions**

**     Increasing      Trends Toward Outsourcing Telephony Solutions**

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**     Government      Regulation**

*United      States*
*.*

*911      and E911      Services*
*.*
*VoIP 911 Order*

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*International*
*.      *

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**     Certain      Other Regulations Affecting the Internet**

*United      States*
*.*
*** ***

*International*
*.*

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

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| ***1.  Continued                    Operating Losses.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| The                    Company has incurred $1,929,685 in losses during the twelve months                    ending                    December 31, 2005 and cumulative losses of $13,054,628 since the                    Company’s inception through December 31, 2005.  The Company                    is an early-stage company and may well incur significant additional                    losses                    in the future as well and there can be no assurance that the                    Company will                    be successful or that it will be profitable in the                    future. |

| ***2.  Current                    Financial Structure, Limited Equity, Limited Working Capital& Need                    for Additional Financing.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| While                    the Company’s management believes that its financial policies have been                    prudent, the Company has relied, in large part, upon the use                    of common                    stock financing to provide a substantial portion of the Company’s                    financial needs.  The Company anticipates that it will need to                    raise significant additional capital to implement is business                    plan.  This dependence upon common equity financing has meant                    that we are reliant upon the price of our common stock in the                    public                    markets, which has dramatically declined over the past two years                    and there                    can be no assurance that the price of our common stock will recover.                    In                    addition, we have had only limited discussions with potential                    investors                    and there can be no guarantee that the Company will receive additional                    capital from any investors or, if it does receive sufficient                    additional                    capital, that it can obtain additional capital on terms that                    are                    reasonable in light of the Company’s current circumstances.  We                    have limited equity and limited working capital.  Further, the                    Company has not received any commitments or assurances from any                    underwriter, investment banker, venture capital fund, or other                    individual                    or institutional investor. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| ***3.  Auditor's                    Opinion: Going Concern.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| The                    Company’s independent auditors, Armando C. Ibarra, CPA, P.C., have                    expressed substantial doubt about the Company's ability to continue                    as a                    going concern since the Company is an early-stage company and                    there exists                    only a limited history of operations and has continued operating                    losses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| ***4.  Subordinate                    to Existing and Future Debt & Authorized But Unissued Preferred                    Stock.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| All                    of the Common Stock is subordinate to the claims of the Company's                    existing                    and future creditors and the holders of the Company's existing                    preferred                    stock and any that may be issued in the                    future.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

| ***5.  ******Outstanding                      Debt******and Stock Purchase                      Warrants******to Current and Former                      Management***.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| In                      August of 2005, we entered into agreements with certain of                      our current and                      former officers and directors.  Under the terms of these                      agreements, these individuals returned an aggregate of 16,500,000                      shares                      of our common stock previously awarded as bonuses in connection                      with their                      prior employment with the Company and in exchange, we issued                      an aggregate                      of 16,500,000 common stock purchase warrants. In addition,                      the existing                      short term unsecured promissory notes with these officers were                      amended to                      include certain unpaid salaries, benefits, previous salary                      deferrals, and                      unpaid expenses within the existing notes. The warrants grant                      the holder                      the right to purchase our common stock at an exercise price                      of $0.25 per                      share and the warrants do not expire until August 26, 2009. In                      February                      of 2006, the short term unsecured                      promissory                      notes were exchanged for unsecured twelve month convertible                      promissory notes with variable interest equal to the greater                      of the                      monthly market yield on 1-year constant maturity U.S. Treasury                      securities                      or the noteholders cost of funds.  Each of the notes, at the                      option of each noteholder, are convertible, in whole or part,                      into shares                      of the Company’s common stock at a percentage of the preceding 52-week low                      trading range of the Company’s publicly traded common stock price. While                      the Company believed at the time the issuance of the warrants                      and the                      exchange of the notes served to support the Company’s plans, the terms of                      the notes and the warrants may limit the ability to raise additional                      capital. Further, while the transactions involve the return                      of shares                      previously issued in connection with the Company’s payment of employment                      bonuses and unpaid accrued salaries, the Company did not undertake                      any                      evaluation of whether the transactions do not expose the Company                      to                      potential claims under the California Labor Code and other                      state                      employment rules and                      regulations. |

| ***6.  ******Conflicts                    of Interest***.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| As                    a small company, we are dependent, from time to time, upon one                    or more our                    officers and directors to assist us in meeting our financial                    obligations.  In some cases, we may enter into an agreement with                    an officer or director who assists us in completing one or more                    transactions or in providing us with financing or other services.                    These                    transactions involve a conflict of interest.  A conflict of                    interest arises whenever a party has an interest on both sides                    of a                    transaction.  While we believe that we have and will continue to                    enter into such agreements with officers and directors on terms                    that are                    no different than that which we can obtain from independent third                    parties,                    there can be no assurance that we will always be successful in                    these                    efforts or that we can successfully resolve conflicts of interest                    to fully                    satisfy our obligations to our Company and our                    stockholders. |

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| ***7.  Dependence                  & Reliance Upon Others.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Some                  of our products and services may rely upon hardware, software,                  and                  communications systems provided by others. For this reason we may                  become                  dependent upon third parties which may materially and adversely                  affect our                  ability to offer distinct products and services which may result                  in                  adverse pricing pressures on our products with resulting adverse                  impact on                  our profits, if any.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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| ***8.  Recent                  Acquisitions & Limited History of                  Operations.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| During                  the fiscal year ending December 31, 2005, we generated $3,482,549 in                  net revenues, primarily through our acquisition of Coliance and                  Mid-Atlantic in 2003 and our acquisition of Adoria in 2004. We                  will need                  to further increase our revenues and successfully develop and implement                  our business strategy in an ever-changing and challenging marketplace                  if                  we are to succeed. In the event that we are not able to successfully                  develop and implement our business strategy, we may be subject                  to                  continuing significant risks and resulting financial                  volatility.  Our limited history and the continuing                  technological and competitive challenges that we face are beyond                  our                  ability to control.  For these and other reasons we may incur                  continuing and protracted losses with the result that an investor                  may lose                  all or substantially all of their investment.                                                                                                                                                                                                                                                                  |
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| ***9.  Matter                  of 911 and Emergency Calling Services and Exposure to                  Liability.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Both                  our emergency calling service and our E911 calling service are                  different,                  in significant respects, from the emergency calling services offered                  by                  traditional wireline telephone companies. In each case, those differences                  may cause significant delays, or even failures, in callers’ receipt of the                  emergency assistance they need.  Traditional wireline telephone                  companies route emergency calls over a dedicated infrastructure                  directly                  to an emergency services dispatcher at the public safety answering                  point,                  or PSAP, in the caller’s area. Generally, the dispatcher automatically                  receives the caller’s phone number and actual location                  information.  While our system being deployed is designed to                  route calls in a similar fashion to traditional wireline services,                  our 911                  services are not yet available in all locations.  Further to the                  extent that it is not available in a specific location or to the                  extent                  that a caller experiences delays in obtaining and accessing emergency                  calling services, we may face significant liability. |
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| ***10.  Matter                  of National Security Agency and Potential                  Liability.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| As                  a provider of telephone services, our company may be asked to provide                  information regarding our customer telephone records to the National                  Security Agency (NSA) and governmental agencies in connection with                  efforts                  taken by these agencies to fight the war against terror. In the                  event that                  we assist the NSA and other agencies in providing such information,                  we may                  be exposed to potential liability in violating the privacy rights                  of our                  customers.  We may also face the loss of revenues and customer                  good will.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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| ***11.  Decreasing                  Pricing Trends. ***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Domestic                  and international telecommunications prices continue to decrease                  and we                  anticipate that this trend will continue.  Further, users who                  select our services may switch to the services offered by our competitors                  to take advantage of lower priced services offered by                  them.  Such continued competition or continued price decreases                  may require us to lower our prices to remain competitive.  This                  will serve to reduce our revenue and lead to loss of customers                  or a                  decrease in our growth and may delay or prevent us from achieving                  profitability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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| ***12.  Consumer                  Acceptance of VoIP Technology and Competitive                  Issues.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| The                  market for VoIP services continues to grow and                  develop.   While we believe that a significant portion of                  this growth is due to customers who are “early adopters,” as this market                  segment utilizes VoIP services in larger numbers, if we are to                  achieve any                  growth in revenues, we will likely incur higher marketing expenses                  in                  attracting customers from other segments.  For these reasons, we                  may experience lower growth and higher expenses than our larger                  competitors.  Further, our larger competitors have entered into                  co-marketing agreements with other technology and internet companies                  and,                  in other cases, they are offering VoIP services bundled with other                  internet services that we do not offer and have no ability to                  offer.  These and other competitive conditions will serve to                  severely limit our ability to compete effectively.                                                                                                                                                                                                                                                                                   |
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| ***13.                  Flaws in Technology and Systems.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| While                  we believe that our VoIP serve network offers a high level of system                  integrity, flaws in our technology and systems may arise which                  may create                  disruptions and other outages. Software and hardware malfunctions                  or                  problems with our network may arise.  In addition, “hacker                  attacks” can occur from the Internet. As a result, if the reliability of                  our services is adversely perceived by our customers, we may have                  difficulty ion attracting and retaining customers and our reputation                  may                  suffer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
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| ***14.  Losses                  Due to Customers Fraud.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| Customers                  have obtained access to the Company’s service without prepaying for the                  service (minutes) by submitting fraudulent credit card                  information.  Losses from unauthorized credit card transactions                  and theft of service totaled $42,579 during the twelve months ending                  December 31, 2005.  We have implemented new anti-fraud                  procedures in                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

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| order                  to control losses relating to unauthorized credit card use, but                  these                  procedures may not be adequate to effectively limit our exposure                  in the                  future from customer fraud.  If our procedures are not                  effective, consumer fraud and theft of service could be significant                  and                  have a material adverse effect on our business and operating                  results.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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| ***15.  Price                  Competition on Certain Services.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| The                  products and services that we intend to offer may, through changing                  technology and cost structures, become commodities which result                  in intense                  price competition. While we believe that we will be able to distinguish                  our products and services from competing products, services, and                  technologies offered by others, if we fail to distinguish ourselves                  from                  others, this could hinder market acceptance of our services, force                  reductions in contemplated sales prices for our products and services,                  and                  reduce our overall sales and gross margins. Potential customers                  may view                  price as the primary distinguishing characteristic between our                  products                  and services and those of our competitors.  This could result in                  the Company incurring significant and protracted                  losses.  Further, we are selling into a market that has a broad                  range of desired product characteristics and features which may                  make it                  difficult for us to develop products that will address a broad                  enough                  market to be commercially viable.                                                                                     |
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| ***16.  Absence                  of Barriers to Entry & Lack of Patent                  Protection.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| Our                  planned products and services are not unique and others could easily                  copy                  our strategy and provide the same or similar services since there                  are no                  significant barriers to entering the business of providing internet                  telephone services or VoIP networks and no significant barriers                  to entry                  are expected in the future.  In addition, we do not hold and do                  not expect to hold any patent protection on any of our planned                  products or                  services.  Our products and services primarily utilize the                  intellectual property rights of others.  For these reasons we                  may face continuing financial losses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
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| ***17.  Limited                  Customer Base.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| While                  we seek to implement our plans, we have a limited customer base                  of                  approximately 20,000 accounts using our suite of VoIP products                  and there                  can be no assurance that we will grow and develop a sufficient                  customer                  base that generates sufficient sustainable revenues that provide                  stable                  profit margins.  The absence of growth at pricing levels that                  can provide for sustainable revenues and profit margins may greatly                  inhibit our ability to attract additional capital and otherwise                  lead to                  volatile results from operations with consequent adverse and material                  impact on our financial condition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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| ***18.  Customers,                  Technology/Feature Options & Commercial                  Viability.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| If                  we are able to implement our business plan, we will be selling                  our                  products and services into a marketplace that is experiencing a                  convergence of competing technologies. Typically, telecommunications                  providers desire extremely robust products with the expectation                  of a                  relatively long effective life. As a result and depending on the                  outcome                  of unknown trends in technology, market forces, and other variables,                  we                  may not attract a broad enough market to achieve commercial                  viability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
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| ***19.  ******New                  Technologies May Be Developed******.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| New                  products or new technologies may be developed that supplant or                  provide                  lower-cost or better-performing alternatives to our planned products                  and                  services.  This could negatively impact our financial results                  and delay or prevent us from achieving profitability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
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| ***20.  Absence                  of Brand Name Recognition: Limited Ability to                  Promote.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| The                  market for telecommunications services is intensely competitive;                  brand                  name recognition is critical to success.  Many companies offer                  products and services like ours and many have a well established                  presence                  in major metropolitan centers.  We may not be able to compete                  successfully with these companies and others that may enter the                  market.  Some of them also have substantially greater financial,                  distribution, and marketing resources than we do.  If we do not                  succeed in this competitive marketplace, we will lose customers                  and our                  revenue will be substantially reduced and our business, financial                  condition, and results of operations may be materially and adversely                  affected.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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| ***21.  Domestic                  and Foreign Government Regulation.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| We                  incur significant additional costs to remain a public company and                  to file                  current and prior period past due original and amended periodic                  reports                  (with the U.S. Securities and Exchange Commission) to meet our                  obligations                  as a public company.  Since September 22, 2004 (the date at                  which we were informed that our common stock was registered under                  Section                  12(g) of the Securities Exchange Act of 1934), we have had to expend                  and                  divert significant managerial and financial resources to address                  prior                  year filing delinquencies and to meet our current year filing obligations                  under Section 13(a) of the Securities Exchange Act of                  1934.  While we have made significant progress in filing many                  periodic reports with the SEC, we have yet to complete work on:                  (A)                  amending certain previously filed reports to respond to comments                  from the                  staff at the SEC; and (B) completing certain other reports that                  need to be                  filed for certain prior periods, including, for example, the filing                  of                  Form 10-QSB for the first                  quarter |

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| of                  2006 through March 31, 2006.  Our goal is to complete the filing                  of all of our past periodic reports, respond to SEC comments on                  all of                  prior and current periodic filings, and to file all of our current                     periodic reports in a timely manner. However, until we accomplish                  these                  and related objectives, we cannot assure you that we have satisfy                  our                  obligations as a public company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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| Our                  planned operations will likely be subject to extensive                  telecommunications-based regulation by the United States and foreign                  laws                  and international treaties.  In the United States we are subject                  to various Federal Communications Commission ("FCC") rules and                  regulations.  Current FCC regulations suggest that our VoIP will                  not be unduly burdened by new and expanded regulations. However,                  there can                  be no assurance that the occurrence of regulatory changes would                  not                  significantly affect our operations by restricting our planned                  operations                  or increasing the opportunity of our competitors.  In the event                  that government regulations change, there can be no assurance that                  the                  costs and burdens imposed on us will not materially and adversely                  impact                  our planned business. |
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| ***22.  Loss                  of Equipment.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| Equipment                  located in a foreign country with a developing or emerging economy                  may be                  materially adversely affected by possible political or economic                  instability.  The risks include, but are not limited to rapid                  political and legal change, terrorism, military repression, or                  expropriation of assets.  In the event that equipment is damaged                  or lost our ability to service to our customers will be substantially                  reduced and our business, financial condition, and results of operations                  may be materially and adversely                  affected.                                                                                                                                                                                                                                                                                                                                                                                                             |

| ***23.  Control.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
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| Our                      current officers and directors directly and indirectly hold                      an aggregate                      of 6,193,333 shares of the Company’s common stock (before including any                      shares issuable upon exercise of any options, warrants, or                      the conversion                      of certain convertible promissory notes issued on February                      9,                      2006).  This represents approximately 4.1% of the Company’s                      total outstanding shares as of December 31, 2005 and thereby                      allows the                      Company’s officers and directors to retain significant influence over                      the                      Company.  Further and due to our limited financial resources, in                      the past we have issued our common stock and granted common                      stock purchase                      options to our officers and directors in lieu of paying cash                      compensation                      and we anticipate that we may need to continue this practice                      in the                      future.  This may further limit the ability of                      stockholders |

| ***24.  Prior                    Filing of Form 10-SB.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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| In                    June of 2001 we prepared and filed a registration statement on                    Form 10-SB                    with the U.S. Securities and Exchange Commission                    ("SEC").  Subsequently, our then legal counsel delivered a                    letter (dated November 15, 2001) to the SEC which, by its terms,                    stated                    that the SEC had agreed to allow us to withdraw the registration                    statement. At the time the Company’s management believed, in reliance upon                    assurances from the Company’s then legal counsel, that the Company had                    been allowed to withdraw the registration statement, notwithstanding                    that                    the Securities Exchange Act of 1934 (the "Exchange Act") provides                    that any                    withdrawal of a Form 10-SB registration statement (at any time                    after 60                    days from the date at which it is originally filed) requires                    that the                    registrant: (a) file Form 15 with the SEC; (b) meet certain requirements                    that allow the registrant to file Form 15 to terminate the registration                    of                    the securities that were previously registered on Form 10-SB;                    and (c) file                    such other periodic reports as required to ensure compliance                    with Section                    13(a) of the Exchange Act up to the date at which the Form 15                    is filed.                    Subsequently, in September 2004, the Company received a letter                    from the                    SEC (the "SEC Letter") informing the Company that the Company                    had not                    satisfied its obligations to file periodic reports required under                    Section                    13(a) of the Exchange Act. While we believed that we had reasonably                    relied                    upon the assurances from our legal counsel (that we had effectively                    withdrawn the Form 10-SB registration statement), we are determined                    to                    complete all past and current periodic filings and to comply                    with the SEC                    Letter as expeditiously as possible. However, we have not received                    any                    assurances from the SEC that we will not be subject to any adverse                    enforcement action by the SEC. While we did not seek to avoid                    our                    obligations under the Exchange Act in any way, our prior actions                    in                    mistakenly believing that we had no obligation to file periodic                    reports                    required by the Exchange Act exposes us to risk of liability                    for                    significant civil fines and the SEC could, among other enforcement                    actions, suspend trading in our Common Stock. Further, we offered                    and sold                    securities in reliance upon exemptions that were predicated on                    our                    mistaken belief that the registration statement had been withdrawn.                    For                    these and other reasons we may be exposed to liability. We intend                    to                    continue a dialogue with the staff of the SEC and, as information                    is                    collected and documents are prepared, to complete all filings                    needed to                    demonstrate that we are fulfilling our obligations under the                    Exchange Act                    with due care and in full observance of our obligations as a                    "reporting                    company" thereunder. |
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| ***25.                    Dependence Upon Key Personnel and New                    Employees.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| We                    believe that our success will depend, to a significant extent,                    on the                    efforts and abilities of Farid Shouekani, Paul W. Atkiss, and                    James R.                    Balestraci. The loss of the services of any of them could have                    a material                    and continuing adverse effect on the Company.  Our success also                    depends upon our ability to attract and retain qualified                    employees.  Hiring to meet our anticipated operations will                    require that we assimilate significant numbers of new employees                    during a                    relatively short period of time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
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| ***26.                  Absence of Key Man Insurance.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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| We                  currently do not maintain any key man life insurance on the life                  of any of                  our officers or directors and there are no present plans to obtain                  any                  such insurance. In the event that any one or more of them are unable                  to                  perform their duties, the Company's business may be adversely impacted                  and                  our results of operations and financial condition would be materially                  and                  adversely impacted for a protracted period.                                                                                                                                                                                    |
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| ***27.  Lack                  of Independent Evaluation of Business Plan & Proposed                  Strategy.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| We                  have not obtained any independent or professional evaluation of                  our                  business plan and our business strategy and we have no present                  plans to                  obtain any such evaluation. There can be no assurance that we will                  successfully increase revenues, or if revenues we do, that we can                  do so at                  levels that will allow us to achieve or maintain                  profitability.  If we are unsuccessful, our results of                  operations and financial condition would be materially and adversely                  impacted and investors would likely lose all or a significant portion                  of                  their investment. |
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| ***28.  No                  Planned Dividends.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| We                  do not anticipate that we will pay any dividends on our Common                  Stock.  Any profits that we may generate, if any, will be                  reinvested.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

| ***29.                  Potential Immediate and Substantial                  Dilution.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
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| Funding                  of our planned business is likely to result in substantial and                  on-going                  dilution of our existing stockholders. While there can be no guarantee                  that we will be successful in raising additional capital, if we                  are                  successful in obtaining any additional capital, existing stockholders                  will                  likely incur immediate and substantial dilution.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| ***30.                  Matter of Public Market and Rule 144 Stock                  Sales.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| As                  of December 31, 2005, there were 93,824,016 shares of the Company’s Common                  Stock that were “restricted securities” and which may be sold pursuant to                  Rule 144.  Since September 16, 2002, we have had a limited                  public trading market for our Common Stock in the “Pink Sheets” market.                  Since that date trading volumes have been volatile with sporadic                  liquidity                  levels.  Further, our Common Stock is (as of the date of the                  filing of this Report) a “Penny Stock” and for this reason we face                  continuing difficulties in our efforts to gain a liquid trading                  market and                  there can be no assurance that any liquid trading market will ever                  develop                  or, if it does develop, that it can be maintained. In the event                  that we                  are able to complete the filing of all periodic reports (the “Periodic                  Reports”) required by Section 13(a) of the Exchange Act, we may be able                  to                  avoid any significant adverse enforcement action by the SEC arising                  out of                  our lack of compliance with the Exchange Act. Rule 144 provides                  that a                  person holding restricted securities for a period of one year may                  thereafter sell in brokerage transactions, an amount not exceeding                  in any                  three month period 1% of our outstanding Common Stock. Further,                  unless the                  Company can complete all of the required Periodic Reports and remain                  current in the filing of all future Periodic Reports, persons holding                  restricted stock will not be able to avail themselves of the safe                  harbor                  provisions of Rule 144. Persons who are not affiliated with the                  Company                  and who have held their restricted securities for at least two                  years are                  not subject to the volume limitation. In any trading market for                  our Common                  Stock, possible or actual sales of our Common Stock by present                  shareholders under Rule 144 may have a depressive effect on the                  price of                  our Common Stock even if a liquid trading market                  develops. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| ***31.  General                  Risks of Low Priced Stocks.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| In                  any trading market for our Common Stock, we anticipate that our                  Common                  Stock will be deemed a "Penny Stock" which will limit trading and                  liquidity and thereby the retail market for the Common Stock. The                  limitations are primarily due to the burdens that are imposed on                  brokers                  whose customers may wish to acquire our Common                  Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

----

**ITEM      2.     DESCRIPTION OF      PROPERTY**

**Principal      Office**

**Hills      of Bajamar Commercial/Residential development**

| During                  September 1998, the                  Company entered into an agreement with Tri-National, a related                  party, to                  purchase 50 acres of real property known as the Hills of Bajamar,                  located                  in Ensenada, Mexico (the “Land) that is valued at the predecessor cost of                  $125,000. The Company intended, at the time, to sell lots for residential                  development and build a communications facility for residents in                  the                  surrounding area.                                                                                                                                                                                                             |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| As                  consideration for the Land,                  the Company issued 3,000,000 shares of its series B Preferred Stock                  and                  stock warrants to purchase 1,000,000 shares of Common                  Stock.  During June 2001, the Company negotiated a settlement                  and release with the Class B preferred stockholder whereby the                  Preferred                  Stock and stock warrants were exchanged for 400,000 shares of the                  Company’s Common Stock and the cumulative undeclared dividend was not                  declared.  During October 2001, Tri-National filed a voluntary                  bankruptcy petition; the court appointed a Trustee in October                  2002. |

----

| Because                  consideration for the                  agreement (documented title) never was received the Company did                  not                  believe it was ever the owner of the Land.  Accordingly, the                  value of the Land had previously been classified as a stock subscription                  receivable.  |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ITEM      3.     LEGAL      PROCEEDINGS**

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

----

**PART      II**

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

| **Year** |                                             | **Period**                    |   | **High Close** |               |   | **High Bid** |               |   | **Low Close** |               |   | **Low                Bid** |
|----------|--------------------------------------------------|-------------------------------|--------|---------------------|--------------------|--------|-------------------|--------------------|--------|--------------------|--------------------|--------|----------------------------|
| 2004     |          | First                Quarter  | $      | 1.55                |     | $      | 1.55              |     | $      | 0.35               |     | $      | 0.35                       |
|     |                                             | Second                Quarter | $      | 0.72                |               | $      | 0.72              |               | $      | 0.36               |               | $      | 0.36                       |
|     |                                             | Third                Quarter  | $      | 0.46                |               | $      | 0.50              |               | $      | 0.23               |               | $      | 0.23                       |
|     |                                             | Fourth                Quarter | $      | 0.47                |               | $      | 0.49              |               | $      | 0.27               |               | $      | 0.27                       |
| 2005     |                                             | First                Quarter  | $      | 0.33                |     | $      | 0.33              |     | $      | 0.105              |     | $      | 0.105                      |
|     |                                             | Second                Quarter | $      | 0.21                |               | $      | 0.21              |               | $      | 0.095              |               | $      | 0.095                      |
|     |                                             | Third                Quarter  | $      | 0.13                |               | $      | 0.13              |               | $      | 0.04               |               | $      | 0.04                       |
|     |                                             | Fourth                Quarter | $      | 0.095               |               | $      | 0.095             |               | $      | 0.041              |               | $      | 0.041                      |

----

----

|         | (1)      | 10,000                shares to one purchaser in exchange for the Company’s receipt of cash of                $1,000;        |
|--------------------------------------------|-----------------------------------|------------------------------------------------------------------------------------------------------------------------------------|
|                                       | (2)                               | 240,000                shares to two purchasers in exchange for the Company’s receipt of cash of                $60,000; and |
|                                       | (3)                               | 110,000                shares to two purchasers in exchange for the Company’s receipt of cash of                $27,500.     |

----

----

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

----

----

----

| In                July 2005, the Company issued                shares of the Company’s Common Stock in payment for services received as                follow: |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   (1)                                                                                                                                                      | A                total of 83,333 shares were issued to two persons in payment for                services                received by the Company.  These shares were valued at an                aggregate of $0.1945 per share; |
|  (2)                                                                                                                                                            | A                total of 126,027 shares were issued to Donald Sinnar, an officer                of the                Company in payment of services received by the Company.  These                shares were valued at $0.12 per share; |
|  (3)                                                                                                                                                            | A                total of 250,000 shares were issued to Paul E. Atkiss, an officer                and                director of the Company in payment of services received by the                Company.  These shares were valued at $0.125 per share;                and |
|  (4)                                                                                                                                                            | A                total of 119,837 shares were issued to one person in payment for                legal                services received by the Company.  These shares were valued at                an aggregate of $0.2223 per share. |

----

| (1) | 4,400,000                  shares by Ronald G. Weaver originally issued: (a) 2,200,000 October                  2003,                  (b) 1,100,000 March 2004, and (c) 1,100,000 September                  2004;    |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | 4,400,000                  shares by John L. Castiglione originally issued: (a) 2,200,000                  October                  2003, (b) 1,100,000 March 2004, and (c) 1,100,000 September                  2004; |
| (3) | 4,400,000                  shares by Jason A. Sunstein originally issued: (a) 2,200,000 October                  2003,                  (b) 1,100,000 March 2004, and (c) 1,100,000 September                  2004;   |
| (4) | 2,200,000                  shares by Farid Shouekani originally issued: (a) 1,100,000 March                  2004, and                  (b) 1,100,000 September 2004; and                                              |
| (5) | 1,100,000                  shares by James R. Balestraci originally issued 1,100,000 September                  2004.                                                                                                  |

----

|                                In November 2005, the Company issued shares of the Company’s Common Stock                in payment for services received as follow: |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                     (1)                                                                                                                                                                                                          | A                total of 199,113 shares were issued to Donald Sinnar, an officer                of the                Company in payment of services received by the Company.  These shares                were valued at $0.09 per share; |
|                     (2)                                                                                                                                                                                                               | A                total of 250,000 shares were issued to Paul E. Atkiss, an officer                and                director of the Company in payment of services received by the                Company.  These shares were valued at $0.057 per share;                and |
|                     (3)                                                                                                                                                                                                          | A                total of 20,000 shares were issued to one person in payment for services                received by the Company.  These shares were valued at an aggregate of                $0.095 per share. |

----

| **Plan                Category**                                                                                                                                                                                                                                               |               | **Number of securities to be****issued upon exercise of****outstanding                options,****warrants                and rights**                                                                                                      |               | **Weighted average exercise****price of outstanding options,****warrants                and rights**                                                                                                                                                  |               | **Number of securities****remaining                available****for                future issuance.**                                                                                                                                                                |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                           |     | (a)                                                                                                                                                                                                                                                                            |     | (b)                                                                                                                                                                                                                                                                            |     | (c)                                                                                                                                                                                                                                                                            |
|                                               |               |                                               |               |                                               |               |                                               |
| Equity                Issuances pursuant to 2000 Equity Plan*                                                                                                                                                                                                                  |               | 7,250,000                                                                                                                                                                                                                                                                      |               | $0.232                                                                                                                                                                                                                                                                         |               | 4,750,000                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                           |               |                                                                                                                                                                                                                                                                           |               |                                                                                                                                                                                                                                                                           |               |                                                                                                                                                                                                                                                                           |
| Equity                Issuances Pursuant to 2002 Employee Compensation Plan*                                                                                                                                                                                                   |               | 0                                                                                                                                                                                                                                                                              |               | $0.00                                                                                                                                                                                                                                                                          |               | 0                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                           |               |                                                                                                                                                                                                                                                                           |               |                                                                                                                                                                                                                                                                           |               |                                                                                                                                                                                                                                                                           |
| Equity                compensation plans not approved by security holders                                                                                                                                                                                                      |               | 0                                                                                                                                                                                                                                                                              |               | 0                                                                                                                                                                                                                                                                              |               | 0                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                           |               |                                                                                                                                                                                                                                                                           |               |                                                                                                                                                                                                                                                                           |               |                                                                                                                                                                                                                                                                           |
| Total                                                                                                                                                                                                                                                                          |               | 7,250,000                                                                                                                                                                                                                                                                      |               | $0.232                                                                                                                                                                                                                                                                         |               | 4,750,000                                                                                                                                                                                                                                                                      |

**ITEM      6.     MANAGEMENT’S DISCUSSION AND      ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

**Basis        Of Discussion And Analysis**

**Forward-Looking        Statements**

----

**Results        of Operations**

***Organization        of Business; Presentation of Results***

***Comparison      of Fiscal Year Ending December 31, 2005 and Fiscal Year Ending December 31,      2004***

----

**Impact        of Inflation**

**Liquidity      and Capital Resources**

----

----

**Critical      Accounting Policies**

----

**Recent      Accounting Pronouncements**

----

**ITEM      7.     FINANCIAL      STATEMENTS**

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

----

**ITEM      8A.  CONTROLS AND PROCEDURES**

*Disclosure      Controls and Procedures*

*Changes      in Internal Controls Over Financial Reporting*

*Limitations        On The Effectiveness Of Controls*

|   | 1. | Control                  environment sets the tone of an organization, influencing the control                  consciousness of its people and is the foundation for all other                  components                  of internal control, providing discipline and                  structure, |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | Risk                  assessment is the entity's identification and analysis of relevant                  risks                  to achievement of its objectives, forming a basis for determining                  how the                  risks should be managed, |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | Control                  activities are the policies and procedures that help ensure that                  management directives are carried                  out, |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4. | Information                  and communication systems support the identification, capture,                  and                  exchange of information in a form and time frame that enable people                  to                  carry out their responsibilities,                  and |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5. | Monitoring                  is a process that assesses the quality of internal control performance                  over time. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------|

**ITEM      8B.  OTHER INFORMATION**

----

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

| **ITEM                9.     DIRECTORS, EXECUTIVE                OFFICERS, PROMOTERS, AND CONTROL                PERSONS** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|

**Directors      and Executive      Officers**

| **Name**                        |                                             | **Age** | **        ** | **Position**                                                     | **        ** | **Date****Elected** |
|---------------------------------|--------------------------------------------------|---------|------------------------------------------------------|------------------------------------------------------------------|------------------------------------------------------|---------------------|
|                            |                                             |    |                                                 |                                                             |                                                 |                |
| Ronald                G. Weaver |          | 62      |                                                 | President,                Chief Executive Officer & Director |                                                 | 2003                |
| Farid                Shouekani  |                                             | 42      |                                                 | Chief                Technical Officer & Director            |                                                 | 2003                |
| Paul                E. Atkiss   |                                             | 51      |                                                 | Chief                Financial Officer and Director              |                                                 | 2004                |

*Securities Act of 1933*

***Ronald      G. Weaver, age      62,***

***Farid      Shouekani, age 42,***

***Paul      E. Atkiss, age      50,***

***James      R. Balestraci, age      40,***

----

**Advisory      Board Member**

***Paul      Goss, age 62,***

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

| **Name**                                                                                                                                                                                              |                                             | **Position**                                                   |                                                         | **No.                of Reports Not Filed**** on                a Timely Basis(1)** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------|----------------------------------------------------------------|--------------------------------------------------------------|------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                  |                                             |                                                           |                                                         |                                                                                     |
| Paul                E. Atkiss                                                                                                                                                                         |          | Chief                Financial Officer  and Director |            | Form                4                                                                    |
| James                R. Balestraci                                                                                                                                                                    |                                             | Former                Vice President                           |                                                         | Form                4                                                                    |
| John                L.                Castiglione**                        ** |                                             | Former                Vice President & Director            |                                                         | Form                4                                                                    |
| Farid                Shouekani                                                                                                                                                                        |                                             | President,                CEO & Director                   |                                                         | Form                4                                                                    |
| Jason                A. Sunstein                                                                                                                                                                      |                                             | Former                Treasurer & Director                 |                                                         | Form                4                                                                    |
| Ronald                G. Weaver                                                                                                                                                                       |                                             | Director                & Former President & CEO       |                                                         | Form                4                                                                    |

|                      Footnote: |                                                                                                                                                                                                                                                                                                                                                                            |   |
|----------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| (1)                                                | To                the Company's knowledge, based solely on a review of the copies of                the                reports furnished to the Company by such persons, in the fiscal year                ended                December 31, 2005 such persons have subsequently filed the reports                required by Section 16(a) of the Exchange                Act. |

**ITEM      10.     EXECUTIVE      COMPENSATION**

----

**SUMMARY      COMPENSATION TABLE**

|                                                                                                                                | **Annual                  Compensation** | **Long-Term                  Compensation**                                                                 |                                                         |
|-------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------|-------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------|
|                                                                                                                                |                                     |                                                                                                        |                                                         |
|                                                                                                                                |                                     |                                                                                                        |                                                         |   | **Awards               Payouts** |   |
|                                                                                                                                |                                     |                                                                                                        |                                                         |   |   |   |
| **Name                  and****Principal****Position****(a)**                                                                       | **Year****(b)**                          | **Salary****($)(c)**                                                                                        | **Bonus****($)(d)**                                          | **Other****Annual****Compen-****sation(1)****($)(e)** | **Restricted****Stock****Awards(2)****(s)($)(f)** | **Securities****Underlying****Options/****SARs****(#)(g)** | **LTIP****Payouts****($)(h)** | **All                  Other****Compen-****sation(3)****($)(i)** |
|                                                                                                                                |                                     |                                                                                                        |                                                         |   |   |   |   |   |
| Ronald                  G. Weaver,Chairman(4)                                                                                       | 200320042005                             | $                    13,846$ 140,885$                  109,269                               | $                  0$                  0$                  0 | $         0$  9,000$10,527 | $                  80,000$                  80,000$          0 |    750,000              0              0 | $                  0$                  0$                  0 | $         0$         0$     389 |
| John                  L. Castiglione,V.P.                  Marketing, Treasurer, and Director(5)                                    | 200320042005                             | $  13,846$140,885$100,038                                                                         | $                  0$                  0$                  0 | $        0$  9,000$  7,332 | $167,875$  80,000$           0 |    250,000              0              0 | $                  0$                  0$                  0 | $         0$         0$  4,246 |
| Farid                  Shouekani,President,                  CEO and Director (6)                                                   | 200320042005                             | $ 24,000$120,000$120,000                                                                               | $                  0$                  0$                  0 | $  1,831$  8,787$  7,930 | $         0$80,000$         0 |    250,000              0              0 | $                  0$                  0$                  0 | $         0$         0$74,570 |
| Jason                  A. Sunstein,V.P.                  Finance, Secretary&                  Director(7)                       | 200320042005                             | $                  13,846$140,885$100,038                                                                   | $                  0$                  0$                  0 | $         0$  9,000$  7,534 | $167,875$                  80,000$          0 |    250,000              0              0 | $                  0$                  0$                  0 | $         0$         0$  4,187 |
| Paul                  E. Atkiss,CFO                  & Director (8)                                                             | 200320042005                             | $           0$                   75,077$100,000 | $                  0$                  0$                  0 | $         0$         0$  1,058 | $           0$  76,750$120,750 |               01,000,0004,000,000 | $                  0 | $         0$         0$     181 |
| James                  R. BalestraciChief                  of InternationalWholesale                  Operations & Director (9) | 200320042005                             | $           0$132,353$120,000                        | $                  0$                  0$                  0 | $        0$        0$20,928 | $           0$  40,000$           0 |               0              01,150,000 | $                  0$                  0$                  0 | $         0$  6,753$     765 |
|                                                                                                                                |                                     |                                                                                                        |                                                         |   |   |   |   |   |
| All                  Directorsas                  a Group(6                  persons)                                               | 200320042005                             | $  65,538$750,085$649,346                                                                         | $                  0$                  0$                  0 | $   1,831$35,787$53,309 | $415,750$436,750$120,750 | 1,500,0001,000,0005,150,000 | $                  0$                  0$                  0 | $         0$  6,753$84,337 |

| Footnotes: |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)        | The                  amounts shown as “Other Annual Compensation” includes for 2004 payments                  made as auto allowance or auto leases and for 2005 payments made                  as auto                  allowance or auto leases  and employee medical/dental/vision                  insurance net of employee  copayment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| (2)        | The                  amounts shown for 2005 do not include the effect of certain agreements                  (the “Bonus Return Agreements”) involving the return of an aggregate of                  16,500,000 shares of the Company’s common by James Balestraci (1,100,000                  shares), John L. Castiglione (4,400,000 shares), Farid Shouekani                  (2,200,000 shares), Jason A. Sunstein (4,400,000 shares), and Ronald                  G.                  Weaver (4,400,000 shares) pursuant to certain agreements entered                  into                  between each of them and the Company. These shares that were returned                  (a                  total of 16,500,000 shares) were previously awarded as bonuses                  in                  connection with prior year employment.  In exchange, we issued                  an aggregate of 16,500,000 common stock purchase warrants  The                  warrants grant the holder the right to purchase our common stock                  at an                  exercise price of $0.25 per share and the warrants do not expire                  until  August 26, 2009. |
| (3)        | The                  amount shown as “All Other Compensation” for 2004 includes payment by                  subsidiary of 2003 contribution to qualified retirement plan and                  for 2005                  represents interest earned on promissory notes issued by the Company                  in                  payment of salary and benefits, unreimbursed business expenses                  and funds                  advanced to the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (4)        | Mr.                  Weaver became an officer of the Company in July 2003 and resigned                  as an                  officer in August 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (5)        | Mr.                  Castiglione resigned as an officer and director of the Company                  in August                  2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (6)        | Mr.                  Shouekani became an officer of the Company in October                  2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (7)        | Mr.                  Sunstein resigned as an officer and director of the Company in                  August                  2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (8)        | Mr.                  Atkiss became an officer and Director of the Company in June                  2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (9)        | Mr.                  Balestraci became an officer of the Company in January 2004 and                  resigned                  in January 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

----

**OPTION/SAR      GRANTS IN 2005 FISCAL YEAR**

|  **Name****(a)**                                                                                           |  **No.                of****Securities****Underlying****Options/SARs****Granted****(#)****(b)** |  **Percent                of****Total                Options/****SARs****Granted                to****Employees                in****Fiscal                Year****(c)** |  **Exercise                of****Base                Price****($/Sh)****(d)** |  **Expiration****Date****(e)**                           |
|-----------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------|---------------------------------------------------------------|
|                                                                                                            |                                                                                                 |                                                                                                                                                                          |                                                                               |                                                          |
| Ronald                G. Weaver, Chairman                                                                       | 4,400,000  (1)                                                                             | 20.23%                                                                                                                                                                        | $0.25                                                                              | August                26, 2009                                |
| Farid                Shouekani, CEO &     Director                                 | 2,200,000  (1)                                                                             | 10.11%                                                                                                                                                                        | $0.25                                                                              | August                26, 2009                                |
| Paul                E. Atkiss, CFO                                                                              | 4,000,000  (2)                                                                             | 18.39%                                                                                                                                                                        | $0.20                                                                              | January                31, 2015                               |
| James                R. Balestraci, Former V.P.                                                            | 1,150,000  (2)1,100,000  (1)                                                     | 5.29%5.06%                                                                                                                                                                    | $0.20$0.25                                                                         | January                31, 2015August                26, 2009 |
| John                L. Castiglione, Former     Treasurer                and Director   | 4,400,000  (1)                                                                             | 20.23%                                                                                                                                                                        | 0.25                                                                               | August                26, 2009                                |
| Jason                A. Sunstein, Former V.P.     Finance                and Secretary | 4,400,000  (1)                                                                             | 20.23%                                                                                                                                                                        | $0.25                                                                              | August                26, 2009                                |

| Footnotes: |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)        | The                options granted to each of the listed individuals were granted in                connection with certain Bonus Return Agreements entered into with                the                Company. These agreements concern the return of certain shares of                the                Company’s common stock previously issued to each of them. Under the terms                of the Bonus                Return Agreements, all of these individuals returned an aggregate                of                16,500,000 shares of our common stock previously awarded to them                as                bonuses in connection with their prior employment with the Company                and in                exchange, we issued an aggregate of 16,500,000 common stock purchase                warrants.  In addition, accrued but unpaid salary and benefits,                unreimbursed business expenses, and funds advanced to the Company                were                aggregated into individual unsecured promissory notes for an aggregate                of                $838,969.26. Each of the notes are convertible, at the option of                each                noteholder, into shares of the Company’s common stock (using 50% of the                52-week low trading range of the Company’s public common stock price) and                the number of shares so issued in payment of all accrued and unpaid                interest and principal cannot be reduced as a result of any reverse                split                of the Company’s common stock or any recapitalization.  Further,                the number of shares issuable to each noteholder are described in                each                note as non-dilutive;                that is the number of shares                that may be purchased upon conversion any note will increase in direct                proportion to any increase in the number of shares issued by the                Company                after the issuance of the notes. The warrants grant the holder the                right                to purchase our common stock at an exercise price of $0.25 per share                and                the warrants do not expire until August 26,                2009. |
| (2)        | During                the calendar year ending December 31, 2005, Mr. Atkiss was awarded                an                option to purchase 4,000,000 shares of the Company’s common stock at an                exercise price of $0.200 per share with the option expiring on January                31,                2015; and Mr. Balestraci was awarded an option to purchase 1,150,000                shares of the Company’s common stock at an exercise price of $0.200 per                share with the option expiring on January 31,                2015                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

| **SUMMARY                - EXECUTIVE OPTION HOLDINGS, 12/31/05**                                                                                                                     |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                 |   |
|                                                                                                                                                                                 |   | **Outstanding** |   | **In                the Money** |
|                                                                                                                                                                                 |   |   |   |   |
| **Name**                                                                                                                                                                             |   | **as                of** |   | **Shares** |   | **Exercise** |   | **Market** |
|                                                                                                                                                                                 |   | **12/31/05** |   |   |   | **Cost** |   | **Value*** |
|                                                                                                                                                                                 |   |   |   |   |   |   |   |   |
| Ron                Weaver                                                                                                                                                            |   | 750,000 |   | 500,000 |   | $17,000 |   | $47,500 |
| Farid                Shouekani                                                                                                                                                       |   | 250,000 |   | 0 |   | $        0 |   | $        0 |
| Paul                Atkiss                                                                                                                                                           |   | 5,000,000 |   | 0 |   | $        0 |   | $        0 |
| TOTAL                                                                                                                                                                                |   | 6,000,000 |   | 500,000 |   | $17,000 |   | $47,500 |
|                                |       |                      |       |                 |       |                 |       |                 |
| *                At the 12/31/05 closing price of                $0.095                                                                                                              |

----

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

|                                                                       |                           |                                                                                                                                 |                           |                                                                                                             |                           |                                                            |
|----------------------------------------------------------------------------|--------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|------------------------------------------------------------------------------------------------------------------|--------------------------------|-----------------------------------------------------------------|
| **(1)**  **Title                Of****Class**                    |                           |  **(2)****Name                And****Address                Of****Beneficial****Owner**                                         |                           |  **(3)****Amount                And****Nature                Of****Beneficial****Owner                (1)** |                           |  **(4)** **Percent****Of****Class (1) (2)** |
|                                                                       |                           |                                                                                                                                 |                           |                                                                                                             |                           |                                                            |
| Common                Stock                                                |       | Ronald                G. Weaver10373                Roselle StreetSuite                170San                Diego, California 92121 |       | 8,000,000                                                                                                        |       | 5.30%                                                           |
|  Common                Stock                                          |                           | Farid                Shouekani10373                Roselle StreetSuite                170San                Diego, California 92121  |                           | 4,550,000                                                                                                        |                           | 3.01%                                                           |
|  Common                Stock                                          |                           | Paul                E. Atkiss10373                Roselle StreetSuite                170San                Diego, California 92121   |                           | 6,243,333                                                                                                        |                           | 4.13%                                                           |
|                                                                       |                           |                                                                                                                                 |                           |                                                                                                             |                           |                                                            |
| Officers                and Directors asa                group (3 persons) |                           |                                                                                                                                 |       | 18,793,333                                                                                                       |                           | 12.44%                                                          |

| Footnote: |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)       | "Beneficial                  Owner" means having or sharing, directly or indirectly (i) voting                  power,                  which includes the power to vote or to direct the voting, or (ii)                  investment power, which includes the power to dispose or to direct                  the                  disposition, of shares of the common stock of an issuer. The definition                  of                  beneficial ownership includes shares underlying options or warrants                  to                  purchase common stock, or other securities convertible into common                  stock,                  that currently are exercisable or convertible or that will become                  exercisable or convertible within 60 days. Unless otherwise indicated,                  the                  beneficial owner has sole voting and investment power.                                                                                                                                                                                                                                                                                                                                                                      |
| (2)       | Percentages                  are based on 151,048,582 shares outstanding on December 31, 2005                  and an                  aggregate of 12,600,000 shares purchasable upon exercise of certain                  Common                  Stock Purchase Options and Warrants granted to the Company’s officers and                  directors, including 10,600,000 granted in fiscal 2005.  The                  amounts and percentages shown include the effect of the exercise                  of: (a)                  an option to purchase 5,150,000 common shares held by Ronald G.                  Weaver,                  (b) an option to purchase 2,450,000 shares held by Mr. Farid Shouekani,                  (c) an option to purchase 5,000,000 shares held by Mr. Paul E.                  Atkiss, and                  do not include the effect of the conversion of certain unsecured                  promissory notes - $71,832 issued to Mr. Weaver and $380,276 issued                  to Mr.                  Shouekani pursuant to the “Bonus Return Agreements” as described elsewhere                  in this Form 10-KSB. (See “Option/SAR Grants in Last Fiscal Year” table                  shown above). |

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

----

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

| (a)                                                                            | The                    following Exhibits are attached or incorporated by reference,                    as stated                    below.                                        |
|--------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|               |                                                                                                                                                                               |
|  3.1                                                                      | Articles                    of Incorporation of Tinglefoot Mining, Inc., Utah                    2-28-83*                                                                          |
|  3.1(a)                                                                   | Articles                    of Amendment to Articles of Incorporation of Tinglefoot Mining,                    Inc.,                    11-22-95*                                  |
|  3.1(b)                                                                   | Articles                    of Amendment to Articles of Incorporation of Mexico Investment                    Corporation, 2-22-96*                                                |
|  3.1(c)                                                                   | Articles                    of Amendment to the Articles of Incorporation of Baja Pacific                    International, Inc., 4-30-98*                                         |
|  3.1(d)                                                                   | Amendment                    to the Articles of Incorporation of Taig Ventures, Inc.,                    1-11-01*                                                                  |
|  3.1(e)                                                                   | Articles                    of Incorporation for Coliance Communications, Inc.#*                                                                                                   |
|  3.1(f)                                                                   | Articles                    of Incorporation for Mid-Atlantic International, Inc.#*                                                                                                |
|  3.1(g)                                                                   | Articles                    of Organization for Adoria Communications, LLC#**                                                                                                      |
|  3.1(h)                                                                   | Articles                    of Incorporation of Viper Networks, Inc., Nevada 5-18-05##[as                    3(i)]                                                                 |
|  3.3                                                                      | By-Laws                    for Bylaws for Viper Networks, Inc., Utah*                                                                                                              |
|  3.3(a)                                                                   | Bylaws                    for Coliance Communications, Inc. #*                                                                                                                     |
|  3.3(b)                                                                   | Bylaws                    for Mid-Atlantic International, Inc. #*                                                                                                                  |
|  3.3(c)                                                                   | Bylaws                    for Viper Networks, Inc., Nevada##[as 3(ii)]                                                                                                             |
|  4.0                                                                      | Specimen                    Common Stock certificate*                                                                                                                              |
|  4.1                                                                      | Specimen                    Mutual Release and Restructuring Agreement###(8-26-05)                                                                                                 |
|  4.2                                                                      | Specimen                    Warrant Agreement###(8-26-05)                                                                                                                          |
|  4.3                                                                      | Specimen                    Revolving Promissory Note###(8-26-05)                                                                                                                  |
| 10.1                                                                           | Securities                    Purchase Agreement and Plan of Reorganization (between Taig Ventures,                    Inc.                    and Viper Networks, Inc), 11-15-00* |
| 10.2                                                                           | Viper                    Networks, Inc. 2000 Equity Incentive Plan, 12-29-00*                                                                                                      |
| 10.3                                                                           | Employment                    Agreement (Wray), 10-31-00*                                                                                                                          |
| 10.4                                                                           | Employment                    Agreement (Castiglione), 10-31-00*                                                                                                                   |
| 10.5                                                                           | Employment                    Agreement (Sunstein),                    10-31-00*                                                                                                   |

----

| 10.6  | Agreement                    of Purchase and Sale of Assets (between Taig Ventures, Inc. and                    Tri-National Development Corporation), 4-30-98*                                                                                 |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.7  | Addendum                    to the Agreement of Purchase and Sale of Assets (between Viper                    Networks,                    Inc. and Tri-National Development Corporation),                    11-15-00*                         |
| 10.8  | Settlement                    Agreement And General Release of Claims (between Viper Networks,                    Inc. and                    Tri-National Development Corporation), 6-30-01*                                                   |
| 10.9  | Month-to-Month                    Industrial Lease, 8-26-00**                                                                                                                                                                                   |
| 10.10 | Employee                    Compensation Fund and Plan, 3-1-05***                                                                                                                                                                               |
| 10.11 | Asset                    Purchase Agreement (between Viper Networks, Inc. and ePhone,                    Inc.),                    5-20-03***                                                                                                   |
| 10.12 | Month-to-Month                    Industrial Lease, 8-26-02***                                                                                                                                                                                  |
| 10.13 | Securities                    Purchase Agreement (between Viper Networks, Inc. and PC Mailbox,                    Inc.),                    11-19-02***                                                                                         |
| 10.14 | Citi                    Capital lease, 12-14-00*                                                                                                                                                                                                |
| 10.15 | Citi                    Capital lease, 3-8-01*                                                                                                                                                                                                  |
| 10.16 | Securities                    Merger Agreement (between Viper Networks, Inc. and Mid-Atlantic                    International, Inc.),10-15-03#*[as                    10.11]                                                                   |
| 10.17 | Amendment                    to Securities Merger Agreement (between Viper Networks, Inc.                    and                    Mid-Atlantic International, Inc.), 1-20-04#*[as 10.12]                                                      |
| 10.18 | Securities                    Merger Agreement (between Viper Networks, Inc. and Adoria Communications,                    LLC), 1-30-04#**[as 10.13]                                                                                           |
| 10.19 | Push                    to Talk Services Reseller Billing Direct Agreement with ITXC,                    Inc.,                    8-14-01 #**[as 10.14]                                                                                         |
| 10.21 | Securities                    Purchase Agreement (between Viper Networks, Inc. and Coliance                    Communications, LLC for 40% interest), 6-16-03                                                                                   |
| 10.22 | Securities                    Purchase Agreement (between Viper Networks, Inc. and Coliance                    Communications, LLC for additional 60% interest),                    7-16-03                                                     |
| 10.23 | Asset                    Purchase Agreement (between Viper Networks, Inc. and Young’s Environmental                    Solutions, LLC for 50% interest), 8-21-03                                                                          |
| 10.24 | Settlement                    Agreement (between Viper Networks, Inc., Young’s Environmental Solutions,                    LLC, Young’s Environmental Solutions, Inc., and Stephen D. Young),                    1-27-05###(2-1-05) |
| 10.25 | Employment                    Agreement (Sinnar), 3-5-05###(3-14-05)                                                                                                                                                                            |
| 14    | Code                    of business Conduct and Ethics#**                                                                                                                                                                                       |
| 21.1  | Subsidiaries                    of Viper Networks, Inc.                                                                                                                                                                                         |
| 23.1  | Consent                    of Independent Accountants, Armando C. Ibarra, C.P.A.,                    P.C.                                                                                                                                       |
| 31.1  | Certification                    Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act,                    as Adopted                    Pursuant to Section 302 of the Sarbanes-Oxley Act of                    2002                     |
| 31.2  | Certification                    Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act,                    as Adopted                    Pursuant to Section 302 of the Sarbanes-Oxley Act of                    2002                     |
| 32.1  | Certification                    Pursuant to Title 18 U.S.C. Section 1350, as Adopted Pursuant                    to Section                    906 of the Sarbanes-Oxley Act of 2002                                                           |
| 32.2  | Certification                    Pursuant to Title 18 U.S.C. Section 1350, as Adopted Pursuant                    to Section                    906 of the Sarbanes-Oxley Act of                    2002                                        |

|               |                                                                                                                                                                                  |
|--------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                           | *Previously                  filed with Form 10-SB, 10-SB-Amendment No. 1, or 10-SB-Amendment                  No. 2 and                  incorporated herein by reference.           |
|                                                                           | **Previously                  filed with 2001 Form 10-KSB and incorporated herein by                  reference.                                                                      |
|                                                                           | ***Previously                  filed with 2002 Form 10-KSB and incorporated by reference                  herein.                                                                     |
|                                                                           | #*Previously                  filed with 2003 Form 10-KSB and incorporated by reference                  herein.                                                                      |
|                                                                           | #**Previously                  filed with 2004 Form 10-KSB, 10-KSB Amendment No. 1, or 10-KSB                  Amendment                  No. 2 and incorporated by reference herein. |
|                                                                           | ##Previously                  filed with March 31, 2005 Form 10-QSB and incorporated by reference                  herein.                                                            |
|                                                                           | ###Previously                  filed with Form 8-K and incorporated by reference                  herein.                                                                             |
|                                                                           |                                                                                                                                                                                  |
| (b)                                                                            | The                  Company filed the following Reports on Form 8-K during the year                  ending                  December 31, 2005:                                      |
|                                                                           |                                                                                                                                                                                  |
|                                                                           | -     Form                  8K January 27, 2005, amended February 4, 7, and 15,                  2005                                                        |
|                                                                           | -     Form                  8K February 4, 2005                                                                                                              |
|                                                                           | -     Form                  8K February 17, 2005                                                                                                             |
|                                                                           | -     Form                  8K March 14, 2005                                                                                                                |
|                                                                           | -     Form                  8K March 16, 2005                                                                                                                |
|                                                                           | -     Form                  8K August 22, 2005                                                                                                               |
|               | -     Form                  8K September 2, 2005                                                                                                             |

----

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

**Audit      Fees**

**Tax      Fees**

**Other      Fees**

**Audit      Committee Charter**

**Audit      Committee Report**

----

**SIGNATURES**

| **Viper                  Networks, Inc.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                       |                                  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                       |                                  |
| By:  /s/                  *Farid Shouekani*Farid                  ShouekaniChief                  Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                          |                                 | Date:                  August 6, 2007 |
|                                                                                           |                                                                                                                                                                                       |                                  |
| By:  /s/*Paul E. Atkiss*Paul                  E. AtkissChief                  Financial Officer/Principal Accounting Officer                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                       | Date:                  August 6, 2007 |

| By:  /s/                  *Farid Shouekani*Farid                  ShouekaniChief                  Executive Officer & Director                                                                                                                                                                                                                                                                                                                                                                                                           |                                 | Date:                  August 6, 2007 |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------|
|                                                                                           |                                                                                                                                                                                       |                                  |
| By:  /s/*Paul E. Atkiss*Paul                  E. AtkissChief                  Financial Officer, Secretary & Director                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                       | Date:                  August 6, 2007 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                       |                                  |
| By:  /s/                  *Ronald G. Weaver*Ronald                  G. WeaverChief                  Executive Officer & Director                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                       | Date:                  August 6, 2007 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                       |                                  |

----

| **Indexto                  Consolidated Financial                  Statements**                                                                             |                                                                                                                                 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                        |                        |
| Report                  of Independent Registered Public Accounting Firm                                                                                    | F-2                                                                                                                                  |
|                                                                                                                                                        |                                                                                                                                 |
| Consolidated                  Balance Sheet as of December 31, 2005                                                                                         | F-3                                                                                                                                  |
|                                                                                                                                                        |                                                                                                                                 |
| Consolidated                  Statements of Operations for the Years Ended December 31, 2005                  and                  2004                     | F-4                                                                                                                                  |
|                                                                                                                                                        |                                                                                                                                 |
| Consolidated                  Statements of Changes in Stockholders’ Equity (Deficit) for the Years                  Ended December 31, 2005 and 2004 | F-5                                                                                                                                  |
|                                                                                                                                                        |                                                                                                                                 |
| Consolidated                  Statements of Cash Flows for the Years Ended December 31, 2005                  and                  2004                     | F-6                                                                                                                                  |
|                                                                                                                                                        |                                                                                                                                 |
| Notes                  to the Consolidated Financial Statements                                                                                             | F-8                                                                                                                                  |

----

| **A** | **C** | **I** |   ARMANDO                C. IBARRA         Certified                Public Accountants           A                Professional Corporation |
|-------|-------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**  **

| REPORT                OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING                FIRM |
|---------------------------------------------------------------------------------------|

| /s/                  Armando C. Ibarra                                                                      |
|-------------------------------------------------------------------------------------------------------------|
| ARMANDO                  C. IBARRA, CPAMay                  25, 2006Chula                  Vista, Ca. 91910 |

----

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

|                                                                                                                                                             |   |    |   | **December                  31,** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|--------|-----------------------------------|--------|
|                                                                                                                                                             |   |    |   | **2005**                          |   |
|                                                                                                                                                             |   |    |   |                              |   |
| **ASSETS**                                                                                                                                                       |   |
| Current                  assets:                                                                                                                                 |   |    |   |
| Cash                                                                                                                                                             |   |    |   |                              | $      | 33,430 |   |
| Short-term                  investments                                                                                                                          |   |    |   |                              |   | 4,000 |   |
| Accounts                  receivable, net of allowance for doubtful accounts and                  sales returns (Note 4)                                    |   |    |   |                              |   | 119,039 |   |
| Inventories                  (Note 4)                                                                                                                            |   |    |   |                              |   | 74,959 |   |
| Other                  current assets (Note 4)                                                                                                                   |   |    |   |                              |   | 194,874 |   |
| Total                  current assets                                                                                                                            |   |    |   |                              |   | 426,301 |   |
|                                                                                                                                                             |   |    |   |                              |   |   |   |
| Property                  and equipment, net (Note 4)                                                                                                            |   | 179,640 |   |
| Goodwill                  (Note 5)                                                                                                                               |   | 149,541 |   |
| Total                  assets                                                                                                                                    |   |    |   |                              | $      | 755,482 |   |
|                                                                                                                                                             |   |    |   |                              |   |   |   |
| **LIABILITIES                  AND STOCKHOLDERS’ EQUITY (DEFICIT)**                                                                                        |
| Current                  liabilities:                                                                                                                            |   |    |   |
| Accounts                  payable                                                                                                                                |   |    |   |                              | $      | 589,918 |   |
| Accrued                  liabilities (Note 4)                                                                                                                    |   |    |   |                              |   | 84,492 |   |
| Loans                  from related party (Note 7)                                                                                                               |   |    |   |                              |   | 460,052 |   |
| Taxes                  payable                                                                                                                                   |   |    |   |                              |   | 3,749 |   |
| Deferred                  revenues (Note 4)                                                                                                                      |   |    |   |                              |   | 185,293 |   |
| Short                  term debt                                                                                                                                 |   |    |   |                              |   | 148,438 |   |
| Total                  current liabilities                                                                                                                       |   |    |   |                              |   | 1,471,943 |   |
|                                                                                                                                                             |   |    |   |
| Commitments                  and Contingencies (Note 9)                                                                                                          |   | -       |   |
|                                                                                                                                                             |   |    |   |                              |   |   |   |
| Stockholders’                  equity (deficit):                                                                                                           |   |    |   |
| Preferred                  stock: authorized 10,100,000 shares at $0.001 par value,                    -0- shares issuedand outstanding (Note 10) |   |    |   |                              |   | - |   |
| Common                  stock: 250,000,000 shares authorized of $0.001 par value,   151,048,582                  shares issued and outstanding    |   |    |   |                              |   | 151,049 |   |
| Additional                  paid-in capital                                                                                                                      |   |    |   |                              |   | 12,602,966 |   |
| Unearned                  stock-based compensation                                                                                                               |   |    |   |                              |   | (113,694 | ) |
| Treasury                  Stock                                                                                                                                  |   |    |   |                              |   | (223,028 | ) |
| Accumulated                  deficit                                                                                                                             |   |    |   |                              |   | (13,054,628 | ) |
| Accumulated                  comprehensive loss                                                                                                                  |   |    |   |                              |   | (79,125 | ) |
| Total                  stockholders’ equity (deficit)                                                                                                      |   |    |   |                              |   | (716,461 | ) |
| Total                  liabilities and stockholders’ equity (deficit)                                                                                      |   |    |   |                              | $      | 755,482 |   |

----

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

|                                                           |   | **Year                  Ended December 31,** |        |
|----------------------------------------------------------------|--------|----------------------------------------------|-------------|
|                                                           |   | **2005**                                     |        |   | **2004** |   |
|                                                           |   |                                         |        |   |   |   |
| Net                  Revenues                                  |   | $                                            | 3,482,549   |   |   | $ | 4,612,783 |   |
| Cost                  of revenues                              |   |                                         | 3,136,285   |   |   |   | 4,108,185 |   |
| Gross                  Margin                                  |   |                                         | 346,265     |   |   |   | 504,598 |   |
|                                                           |   |                                         |        |   |   |   |   |   |
|                                                           |   |                                         |        |   |   |   |   |   |
| Operating                  Expenses                            |   |                                         |        |   |   |   |   |   |
| General                  and administrative                    |   |                                         | 2,810,055   |   |   |   | 3,660,801 |   |
| Bad                  debt (recovery) expense                   |   |                                         | 26,845      |   |   |   | 83,712 |   |
| Equity                  loss from unconsolidated subsidiaries  |   |                                         | 46,329      |   |   |   | 181,067 |   |
| Impairment                  of purchased intangibles           |   |                                         | 275,000     |   |   |   | 3,396,138 |   |
| (Gain                  on sale) impairment of purchased assets |   |                                         | (615,216    | ) |   |   | 1,092,100 |   |
| Total                  Operating Expenses                      |   |                                         | 2,543,012   |   |   |   | 8,413,818 |   |
|                                                           |   |                                         |        |   |   |   |   |   |
| Gain                  (Loss) from operations                   |   |                                         | (2,196,748  | ) |   |   | (7,909,220 | ) |
|                                                           |   |                                         |        |   |   |   |   |   |
| Other                  income (expenses)                       |   |                                         |        |   |   |   |   |   |
| Realized                  gain on marketable securities        |   |                                         | 392,034     |   |   |   | 15,761 |   |
| Interest                  expense                              |   |                                         | (128,412    | ) |   |   | (73,060 | ) |
| Other                  income (expense)                        |   |                                         | 3,441       |   |   |   | 2,327 |   |
| Total                  other income (expenses)                 |   |                                         | 267,063     |   |   |   | (54,972 | ) |
|                                                           |   |                                         |        |   |   |   |   |   |
|                                                           |   |                                         |        |   |   |   |   |   |
| Net                  loss                                      |   | $                                            | (1,929,685  | ) |   | $ | (7,964,192 | ) |
|                                                           |   |                                         |        |   |   |   |   |   |
| Basic                  loss per share                          |   | $                                            | (0.01       | ) |   | $ | (0.08 | ) |
|                                                           |   |                                         |        |   |   |   |   |   |
| Weighted                  average number of shares outstanding |   |                                         | 130,766,267 |   |   |   | 101,961,298 |   |

----

| **VIPER                  NETWORKS, INC. AND SUBSIDIARIES**                                                   |
|--------------------------------------------------------------------------------------------------------------|
| Consolidated                  Statements of Changes in Stockholders’ Equity                  (Deficit) |

|                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                              |        |   |        |   |    | **Additional**    |   |   | **Stock**       |   |   | **Unearned**     |     |   |            |   |     |              |   |   | **Other**  |   |   | **Total                  Stockholders’** |        |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|-------------|--------|-------------|--------|---------|-------------------|--------|--------|-----------------|--------|--------|------------------|----------|--------|-----------------|--------|----------|-------------------|--------|--------|------------|--------|--------|------------------------------------------------|-------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | **Common                  Stock** |        |   | **Paid-In** |   |    | **Subscriptions** |   |   | **Stock-based** |   |   | **Treasury**     |     |   | **Accumulated** |   |     | **Comprehensive** |   |   | **Equity** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | **Shares**                        |        |   | **Amount**  |   |    | **Capital**       |   |   | **Receivable**  |   |   | **Compensation** |     |   | **Stock**       |   |     | **Deficit**       |   |   | **Loss**   |   |   | **(Deficit)**                                  |        |
|                                                                          |   |                              |        |   |        |   |    |              |   |   |            |   |   |             |     |   |            |   |     |              |   |   |       |   |   |                                           |        |
| Balance,                  December 31, 2003                                                                                                                                                                                                                                                                                                                                                                                                      |   |                              | 78,796,146  |   |        | $      | 78,796  |              |   | $      | 3,901,379       |   |   | $                | (125,000 | )      |            | $      | (324,548 | )                 |   | $      | -          |   |   | $                                              | (3,160,751  | ) |   | $ | (48,018 | ) |   | $ | 321,858 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                              |        |   |        |   |    |              |   |   |            |   |   |             |     |   |            |   |     |              |   |   |       |   |   |                                           |        |   |   |   |   |   |   |   |   |   |
| Issuance                  of common stock for cash                                                                                                                                                                                                                                                                                                                                                                                               |   |                              | 14,244,836  |   |        |   | 14,245  |              |   |   | 2,127,218       |   |   |             | -        |   |            |   | -        |              |   |   | -          |   |   |                                           | -           |   |   |   | - |   |   |   | 2,141,463 |   |
| Issuance                  of common stock for services   received                                                                                                                                                                                                                                                                                                                                                                 |   |                              | 12,113,382  |   |        |   | 12,113  |              |   |   | 908,048         |   |   |             | -        |   |            |   | -        |              |   |   | -          |   |   |                                           | -           |   |   |   | - |   |   |   | 920,162 |   |
| Issuance                  of common stock loan                    interest                                                                                                                                                                                                                                                                                                                                                             |   |                              | -           |   |        |   | -       |              |   |   | -               |   |   |             | -        |   |            |   | -        |              |   |   | -          |   |   |                                           | -           |   |   |   | - |   |   |   | - |   |
| Issuance                  of common stock for                    acquisition                                                                                                                                                                                                                                                                                                                                                           |   |                              | 4,500,000   |   |        |   | 4,500   |              |   |   | 4,090,000       |   |   |             | -        |   |            |   | -        |              |   |   | -          |   |   |                                           | -           |   |   |   | - |   |   |   | 4,094,500 |   |
| Conversion                  of notes payable and                    interest                                                                                                                                                                                                                                                                                                                                                           |   |                              | 646,322     |   |        |   | 646     |              |   |   | 201,327         |   |   |             | -        |   |            |   | -        |              |   |   | -          |   |   |                                           | -           |   |   |   | - |   |   |   | 201,973 |   |
| Issuance                  of common stock for stock   dividend                                                                                                                                                                                                                                                                                                                                                                    |   |                              | 10,632,213  |   |        |   | 10,632  |              |   |   | (10,632         | )      |   |             | -        |   |            |   | -        |              |   |   | -          |   |   |                                           | -           |   |   |   | - |   |   |   | - |   |
| Employee                  Compensation Fund                                                                                                                                                                                                                                                                                                                                                                                                      |   |                              | 290,000     |   |        |   | 290     |              |   |   | 213,645         |   |   |             | -        |   |            |   | -        |              |   |   | -          |   |   |                                           | -           |   |   |   | - |   |   |   | 213,935 |   |
| Stock-based                  compensation                                                                                                                                                                                                                                                                                                                                                                                                        |   |                              | -           |   |        |   | -       |              |   |   | (5,299          | )      |   |             | -        |   |            |   | 71,230   |              |   |   | -          |   |   |                                           | -           |   |   |   | - |   |   |   | 65,931 |   |
| Comprehensive                  loss                                                                                                                                                                                                                                                                                                                                                                                                              |   |                              | -           |   |        |   | -       |              |   |   | -               |   |   |             | -        |   |            |   | -        |              |   |   | -          |   |   |                                           | -           |   |   |   | (30,107 | ) |   |   | (30,107 | ) |
| Net                  Loss for the year ended   December                  31,                  2004                                                                                                                                                                                                                                                                                                                                |   |                              | -           |   |        |   | -       |              |   |   | -               |   |   |             | -        |   |            |   | -        |              |   |   | -          |   |   |                                           | (7,964,192  | ) |   |   | - |   |   |   | (7,964,192 | ) |
| Balance,                  December 31, 2004                                                                                                                                                                                                                                                                                                                                                                                                      |   |                              | 121,222,899 |   |        |   | 121,223 |              |   |   | 11,425,685      |   |   |             | (125,000 | )      |            |   | (253,318 | )                 |   |   | -          |   |   |                                           | (11,124,943 | ) |   |   | (78,125 | ) |   |   | (34,478 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                              |        |   |        |   |    |              |   |   |            |   |   |             |     |   |            |   |     |              |   |   |       |   |   |                                           |        |   |   |   |   |   |   |   |   |   |
| Issuance                  of common stock for cash                                                                                                                                                                                                                                                                                                                                                                                               |   |                              | 29,185,475  |   |        |   | 29,185  |              |   |   | 1,179,036       |   |   |             | 125,000  |   |            |   | -        |              |   |   | -          |   |   |                                           | -           |   |   |   | - |   |   |   | 1,333,221 |   |
| Issuance                  of common stock for services   received                                                                                                                                                                                                                                                                                                                                                                 |   |                              | (10,386,811 | )      |        |   | (10,387 | )                 |   |   | 148,576         |   |   |             | -        |   |            |   | -        |              |   |   | -          |   |   |                                           | -           |   |   |   | - |   |   |   | 138,189 |   |
| Cancellation                  of common stock upon   recision                  of                  notes payable                                                                                                                                                                                                                                                                                                                  |   |                              | (554,283    | )      |        |   | (554    | )                 |   |   | (150,614        | )      |   |             |     |   |            |   |     |              |   |   |       |   |   |                                           |        |   |   |   |   |   |   |   | (151,168 | ) |
| Conversion                  of Notes payable and                    interest                                                                                                                                                                                                                                                                                                                                                           |   |                              | 12,094,140  |   |        |   | 12,094  |              |   |   | 491,523         |   |   |             | -        |   |            |   | -        |              |   |   | -          |   |   |                                           | -           |   |   |   | - |   |   |   | 503,617 |   |
| Cancellation                  of common stock for                    settlement and                  termination of                    acquisition                                                                                                                                                                                                                                                                      |   |                              | (1,375,000  | )      |        |   | (1,375  | )                 |   |   | (636,125        | )      |   |             | -        |   |            |   | -        |              |   |   | -          |   |   |                                           | -           |   |   |   | - |   |   |   | (637,500 | ) |
| Issuance                  of common stock for cashless   exercise                  ofwarrants and options                                                                                                                                                                                                                                                                                                                         |   |                              | 862,162     |   |        |   | 862     |              |   |   | 229,566         |   |   |             | -        |   |            |   | -        |              |   |   | (223,028   | )      |   |                                           | -           |   |   |   | - |   |   |   | 7,400 |   |
| Stock-based                  compensation                                                                                                                                                                                                                                                                                                                                                                                                        |   |                              | -           |   |        |   | -       |              |   |   | (84,681         | )      |   |             | -        |   |            |   | 139,624  |              |   |   | -          |   |   |                                           | -           |   |   |   | - |   |   |   | 54,943 |   |
| Comprehensive                  loss                                                                                                                                                                                                                                                                                                                                                                                                              |   |                              | -           |   |        |   | -       |              |   |   | -               |   |   |             | -        |   |            |   | -        |              |   |   | -          |   |   |                                           | -           |   |   |   | (1,000 | ) |   |   | (1,000 | ) |
| Net                  Loss for the year ended   December                  31, 2005                                                                                                                                                                                                                                                                                                                                                 |   |                              | -           |   |        |   | -       |              |   |   | -               |   |   |             | -        |   |            |   | -        |              |   |   | -          |   |   |                                           | (1,929,685  | ) |   |   | - |   |   |   | (1,929,685 | ) |
| Balance,                  December 31, 2005                                                                                                                                                                                                                                                                                                                                                                                                      |   |                              | 151,048,582 |   |        | $      | 151,049 |              |   | $      | 12,602,966      |   |   | $                | -        |   |            | $      | (113,694 | )                 |   | $      | (223,028   | )      |   | $                                              | (13,054,628 | ) |   | $ | (79,125 | ) |   | $ | (716,461 | ) |

----

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

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | **Year                  Ended December 31,** |       |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | **2005**                                     |       |   | **2004** |   |
|                                                                                                      |   |                                         |       |   |   |   |
| Cash                  flows from operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                         |       |   |   |   |
| Net                  loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $                                            | (1,929,684 | ) |   | $ | (7,964,192 | ) |
| Adjustments                  to reconcile net loss to net cash used in operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                         |       |   |   |   |   |   |
| Depreciation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                         | 285,763    |   |   |   | 291,549 |   |
| Allowance                  for doubtful accounts and sales returns                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                         | (20,062    | ) |   |   | 76,272 |   |
| Allowance                  for inventory obsolescence                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                         | 31,175     |   |   |   | - |   |
| Allowance                  for warranty returns                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                         | 2,000      |   |   |   | - |   |
| Amortization                  of stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                         | 54,943     |   |   |   | 65,931 |   |
| Amortization                  of stock-based interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                         | -          |   |   |   | 19,944 |   |
| Loss                  on sale of property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                         | 26,314     |   |   |   | - |   |
| Equity                  loss from unconsolidated subsidiaries, net of cash                  contributions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                         | 32,115     |   |   |   | 181,067 |   |
| Impairment                  of purchased intangibles                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                         | 275,000    |   |   |   | 3,396,138 |   |
| Impairment                  of purchased assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                         | (615,216   | ) |   |   | 1,092,100 |   |
| Stock                  based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                         | (76,961    | ) |   |   | 948,163 |   |
| Interest                  accrual                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                         | 106,832    |   |   |   | (1,446 | ) |
| (Gain)                  on sale of marketable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                         | (392,034   | ) |   |   | (15,761 | ) |
| Changes                  in assets and liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                         |       |   |   |   |   |   |
| Accounts                  receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                         | 31,522     |   |   |   | (52,736 | ) |
| Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                         | (34,114    | ) |   |   | (72,020 | ) |
| Prepaid                  expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                         | (7,323     | ) |   |   | 739 |   |
| Other                  current assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                         | (18,505    | ) |   |   | (35,039 | ) |
| Accounts                  payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                         | 247,285    |   |   |   | 240,061 |   |
| Accrued                  liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                         | 345,204    |   |   |   | 22,268 |   |
| Taxes                  payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                         | 1,126      |   |   |   | (885 | ) |
| Deferred                  revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                         | 103,190    |   |   |   | 79,625 |   |
| Net                  cash used in operating activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                         | (1,551,430 | ) |   |   | (1,728,222 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                         |       |   |   |   |   |   |
| Cash                  flows from investing activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                         |       |   |   |   |   |   |
| Acquisition,                  net of cash acquired                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                         | -          |   |   |   | (757,091 | ) |
| Purchases                  of property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                         | (19,858    | ) |   |   | (182,594 | ) |
| Proceeds                  from sale of property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                         | 22,995     |   |   |   | 1,750 |   |
| Proceeds                  from the sales of marketable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                         | 290,611    |   |   |   | 3,306 |   |
| Net                  cash provided by (used in) investing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                         | 293,748    |   |   |   | (934,629 | ) |

----

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

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | **Year                Ended December 31,** |      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|-----------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | **2005**                                   |      |   | **2004** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                       |      |   |   |   |
| Cash                flows from financing activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                       |      |   |   |   |
| Proceeds                from issuance of common stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                       | 1,208,221 |   |   |   | 2,355,398 |   |
| Net                borrowing (repayments) under revolving credit lines                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                       | -         |   |   |   | (107,661 | ) |
| Repayment                of debt from acquisition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                       | -         |   |   |   | (269,500 | ) |
| Proceeds                from short term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                       | -         |   |   |   | 143 |   |
| Repayments                of short term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                       | -         |   |   |   | (15,000 | ) |
| Proceeds                from shareholder loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                       | 485,481   |   |   |   | 753,041 |   |
| Repayments                of shareholder loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                       | (409,048  | ) |   |   | (228,303 | ) |
| Proceeds                from convertible loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                       | -         |   |   |   | 150,000 |   |
| Repayments                of convertible loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                       | (38,110   | ) |   |   | (75,000 | ) |
| Payments                on capital lease obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                       | (2,389    | ) |   |   | (35,086 | ) |
| Stock                subscription deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                       | -         |   |   |   | 11,435 |   |
| Net                cash provided by financing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                       | 1,244,155 |   |   |   | 2,539,467 |   |
|                                                                                                      |   |                                       |      |   |   |   |   |   |
| Net                increase in cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                       | (13,527   | ) |   |   | (123,385 | ) |
| Cash                at the beginning of the period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                       | 46,957    |   |   |   | 170,341 |   |
| Cash                at the end of the period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $                                          | 33,430    |   |   | $ | 46,956 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                       |      |   |   |   |   |   |
| Supplemental                schedule of cash flow activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                       |      |   |   |   |   |   |
| Cash                paid for:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                       |      |   |   |   |   |   |
| Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $                                          | 11,465    |   |   | $ | 20,839 |   |
| Income                taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                                          | 800       |   |   | $ | 800 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                       |      |   |   |   |   |   |
| Non-cash                investing and financial activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                       |      |   |   |   |   |   |
| Common                stock issued for business acquisition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                                          | (637,500  | ) |   | $ | 4,094,500 |   |
| Common                stock issued in payment of services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $                                          | 138,189   |   |   | $ | 920,161 |   |
| Common                stock issued in payment of convertible loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $                                          | 503,617   |   |   | $ | 201,973 |   |
| Common                stock received upon recision of convertible loan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $                                          | (151,168  | ) |   | $ | - |   |
| Common                stock issued for cashless exercise of options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $                                          | 230,428   |   |   | $ | - |   |

----

| **VIPER                NETWORKS, INC. AND SUBSIDIARIES**      |
|---------------------------------------------------------------|
| Notes                to the Consolidated Financial Statements |
| As                of December 31, 2005                        |

| NOTE                  1 -                                                                                           | ORGANIZATION                  AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                     | a.  Organization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                     | The                  consolidated financial statements presented are those of Viper                  Networks,                  Inc. and its wholly-owned Subsidiaries (the “Company”).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                     | We                  are a provider of Voice over Internet Protocol, or VoIP, communications                  products and services.  The company has evolved from a pioneer                  in selling VIPER CONNECT, a “push to talk” technology developed by ITXC,                  to a next generation provider of high-quality telecommunication                  services                  and technology for internet protocol, or IP telephony                  applications.  We utilize our VoIP technology to transmit                  digital voice and facsimile communications over data networks and                  the                  internet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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|                                                                                                                     | Taig                  Ventures, Inc. (“Taig”) was incorporated under the laws of the State of                  Utah on February 28, 1983.  Viper Networks, Inc. (“Viper-CA”)                  was incorporated on September 14, 2000 under the laws of the State                  of                  California.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
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|                                                                                                                     | On                  November 15, 2000, Taig and Viper-CA completed a Securities Purchase                  Agreement and Plan of Reorganization whereby Taig issued 36,000,000                  pre-split or 3,000,000 post-split shares of its common stock in                  exchange                  for all of the outstanding common stock of                  Viper-CA.  Immediately prior to the Securities Purchase                  Agreement and Plan of Reorganization, Taig had 6,788,507 pre-split                  or                  565,786 post-split shares of common stock and 3,000,000 shares                  of                  non-voting preferred stock issued and outstanding.  For                  accounting purposes, the acquisition has been treated as a                  recapitalization of Viper-CA with Viper-CA as the acquirer (reverse                  acquisition).  Viper-CA was treated as the acquirer for                  accounting purposes because the shareholders of Viper-CA controlled                  Taig                  after the acquisition.  The historical financial statements                  prior to November 15, 2000 are those of Viper-CA. |
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|                                                                                                                     | On                  December 29, 2000, Taig changed its name to Viper Networks, Inc.                  (“Viper-UT”) and authorized a reverse split of the Company’s common stock                  on a 1-for-12 basis.  On May 18, 2005, Viper-UT changed its                  state of domicile from Utah to Nevada.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
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|                                                                                                                     | b.  Basis                  of presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
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|                                                                                                                     | The                  Company’s consolidated financial statements are prepared using the accrual                  method of accounting and include its wholly-owned                  subsidiaries.  All significant intercompany accounts and                  transactions have been eliminated.  Investments in businesses                  which the Company does not control, but has the ability to exercise                  significant influence over operating and financial policies are                  accounted                  for using the equity method and are included in Investments in                  Unconsolidated Businesses on the consolidated balance                  sheet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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|                                                                                                                     | c.  Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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|                                                                                                                     | Inventories                  are stated at the lower of cost, using the first-in first-out method,                  or                  market.  Inventory costs include international inbound freight,                  duty and custom fees.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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|                                                                                                                     | d.  Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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|                                                                                                                     | The                  preparation of financial statements in conformity with generally                  accepted                  accounting principles requires the Company 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                  consolidated financial statements and the reported amounts of revenues                  and                  expenses during the reporting periods.  The Company is required                  to make judgments and estimates about the effect of matters that                  are                  inherently uncertain.  Although, we believe our judgments and                  estimates are appropriate, actual future results may be different;                  if                  different assumptions or conditions were to prevail, the results                  could be                  materially different from our reported                  results.                                                                                                                               |

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| **VIPER                NETWORKS, INC. AND SUBSIDIARIES**      |
|---------------------------------------------------------------|
| Notes                to the Consolidated Financial Statements |
| As                of December 31, 2005                        |

| NOTE                  1 -                                                                                                | ORGANIZATION                  AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                  (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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|                                                                                                                     | d.  Estimates                  (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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|                                                                                                                     | On                  an on-going basis, the Company evaluates our estimates, including,                  but not                  limited to, those related to bad debts, product returns, warranties,                  inventory reserves, long-lived assets, income taxes, litigation,                  and other                  contingencies.  The Company bases our estimates on historical                  experience and various other assumptions we believe to be reasonable                  under                  the circumstances, the results of which form the basis for making                  judgments about the carrying value of assets and liabilities that                  are not                  readily apparent from other sources.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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|                                                                                                                     | e.  Property                  and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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|                                                                                                                     | Property                  and equipment are stated at cost and are depreciated over their                  estimated                  useful lives using the straight-line method.  Useful lives range                  from three to five years for office furniture and                  equipment.  Additions to property and equipment together with                  major renewals and betterments are capitalized.  Maintenance,                  repairs and minor renewals and betterments are charged to expense                  as                  incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
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|                                                                                                                     | f.  Goodwill                  and Other Intangible Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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|                                                                                                                     | Goodwill                  represents the excess of the cost of businesses acquired over the                  fair                  value of the identifiable net assets at the date of                  acquisition.  Goodwill and intangible assets acquired in a                  purchase business combination and determined to have an indefinite                  useful                  lives are not amortized, but instead are evaluated for impairment                  annually                  and if events or changes in circumstances indicate that the carrying                  amount may be impaired per Statement of Financial Accounting Standards                  (“SFAS”) No.142 “Goodwill and Other Intangible Assets” (“SFAS                  142”).  An impairment loss would generally be recognized when                  the carrying amount of the reporting unit’s net assets exceeds the                  estimated fair value of the reporting unit.  The estimated fair                  value is determined using a discounted cash flow analysis.  SFAS                  142 also requires that intangible assets with estimable useful                  lives be                  amortized over their respective estimated useful lives to their                  estimated                  residual values, and reviewed for impairment in accordance with                  SFAS No.                  144, “Accounting for Impairment or Disposal of Long-Lived Assets” (“SFAS                  144”). |
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|                                                                                                                     | g.  Long                  lived assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
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|                                                                                                                     | Long-lived                  assets, such as property and equipment and purchased intangibles                  subject                  to amortization, are evaluated for impairment whenever events or                  changes                  in circumstances indicate that the carrying amount of the asset                  may not be                  recoverable per SFAS 144.  Recoverability of assets is measured                  by a comparison of the carrying amount of an asset to estimated                  undiscounted future cash flows expected to be generated by an                  asset.  If the carrying amount of an asset exceeds its estimated                  future cash flows, an impairment charge is recognized as the amount                  by                  which the carrying amount exceeds the estimated fair value of the                  asset.  The estimated fair value is determined using a                  discounted cash flow analysis.  Any impairment in value is                  recognized as an expense in the period when the impairment                  occurs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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|                                                                                                                     | h.  Revenue                  recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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|                                                                                                                     | The                  Company recognizes revenues and the related costs for voice, data                  and                  other services along with product sales when persuasive evidence                  of an                  arrangement exists, delivery and acceptance has occurred or service                  has                  been rendered, the price is fixed or determinable, and collection                  of the                  resulting receivable is reasonably assured in accordance with Securities                  and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104                  “Revenue Recognition in Financial Statements”.  Service revenue                  from monthly and per minute fee agreements is recognized gross,                  consistent                  with Emerging Issues Task Force (“EITF”) No. 99-19 “Reporting Revenues                  Gross as a Principal Versus Net as an Agent”, as the Company is the                  primary obligor in its transaction, has all credit                  risk,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

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| **VIPER                NETWORKS, INC. AND SUBSIDIARIES**      |
|---------------------------------------------------------------|
| Notes                to the Consolidated Financial Statements |
| As                of December 31, 2005                        |

| NOTE                  1 -                                                                                                | ORGANIZATION                  AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                  (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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|                                                                                                                     | h.  Revenue                  recognition (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
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|                      | maintains                  all risk and rewards, and establishes pricing.  Combined product                  and service agreements are allocated consistent with EITF No. 00-21                  “Accounting for Revenue Arrangements with Multiple Deliverables” with the                  multiple deliverables divided into separate units of                  accounting.  Revenue is allocated among the separate units of                  accounting based on the relative fair value of the hardware (product)                  and                  minutes of calling time (service) based on published                  pricing.   Support and maintenance sales are recognized                  over the contract term.  Amounts invoiced or collected in                  advance of product delivery or providing services are recorded                  as a                  deferred revenue liability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
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|                                                                                                                     | The                  Company’s hardware products consist of both i) devices connected to and                  used in conjunction with a computer for use over any speed Internet                  connection (dial-up or broadband) and ii) devices used with a broadband                  Internet connection not requiring a computer.  Hardware products                  contain embedded software or firmware provided by the third party                  manufacture which is incidental to the product sale.  Included                  with each product sale are a Viper Networks VoIP calling account                  (“VoIP                  Account”) and the ability to download our proprietary dialer software/VoIP                  Account interface.  Our dialer software/VoIP Account interface                  is not sold separately; the current version is available for customers                  to                  download from our web site.                                                                                                                                                                                                                                                                                                                                                                                                                                     |
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|                                                                                                                     | The                  Company sells the routing and delivery of internet traffic which                  conforms                  with Voice over Internet Protocol to both consumers and wholesale                  carriers.  Consumers purchase prepaid calling time for addition                  to a VoIP Account either directly from the Company web site or                  by the                  purchase of a voucher from our distributor network.  Revenue                  from the sale of prepaid calling time to consumers or vouchers                  to                  distributors is deferred upon sale.  These deferred revenues are                  recognized into revenue based on the number of minutes during a                  call in                  accordance with our published calling rates.  Consumer revenue                  for a period is calculated by our proprietary software from information                  received through our network switches.  Wholesale carriers                  purchase bulk minutes of VoIP traffic typically billed weekly in                  arrears                  from information received through our network switches.  Other                  services are sold on a per use basis typically billed in                  arrears.                                                                          |
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|                                                                                                                     | The                  Company accrues for warranty costs, sales returns, bad debts, and                  other                  allowances based on its historical experience.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
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|                                                                                                                     | i.  Stock-based                  compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
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|                                                                                                                     | SFAS                  No. 123 “Accounting for Stock-Based Compensation” (“SFAS 123”), provides                  for the use of a fair value based method of accounting for stock-based                  compensation.  However, SFAS 123 allows the measurement of                  compensation cost for stock options granted to employees using                  the                  intrinsic value method of accounting prescribed by Accounting Principles                  Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees”                  (“APB 25”), which only requires charges to compensation expense for the                  excess, if any, of the fair value of the underlying stock at the                  date a                  stock option is granted (or at an appropriate subsequent measurement                  date)                  over the amount the employee must pay to acquire the stock.  The                  Company has elected to account for employee stock options using                  the                  intrinsic value method under APB 25.  By making that election,                  the Company is required by SFAS 123 to provide pro forma disclosures                  of                  net loss as if a fair value based method of accounting had been                  applied. |
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|                                                                                                                     | In                  accordance with the provisions of SFAS 123, all other issuances                  of stock,                  stock options or other equity instruments to employees and non-employees                  as the consideration for goods or services received by the Company                  are                  accounted for based on the fair value of the equity instrument                  issued.  During the year ended December 31, 2005 and 2004, the                  Company recognized $351,176 and $171,863 and $323,005 and $549,557                  of                  gross expense relating to the grant of common stock to non-employees                  and                  employees, respectively, for services which are included in the                  accompanying consolidated                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

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| **VIPER                NETWORKS, INC. AND SUBSIDIARIES**      |
|---------------------------------------------------------------|
| Notes                to the Consolidated Financial Statements |
| As                of December 31, 2005                        |

| NOTE                  1 -                                                                                                | ORGANIZATION                  AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                  (continued)                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
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|                                                                                                                     | i.  Stock-based                  compensation (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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|                                                                                                                     | statements                  of operations.  The value of these shares was determined based                  upon over the counter closing prices.  Additionally during the                  year ended December 31, 2005, the Company recognized a $600,000                  benefit                  relating to the return of stock previously granted to Officers                  of $360,000                  and $240,000 during the years ended December 31, 2004 and 2003,                  respectively. |

|                      | j.  Income                  taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
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|                                                                                                                     | Current                  income tax expense (benefit) is the amount of income taxes expected                  to be                  payable (receivable) for the current year.  A deferred tax asset                  and/or liability is computed for both the expected future impact                  of                  differences between the financial statement and tax bases of assets                  and                  liabilities and for the expected future tax benefit to be derived                  from tax                  loss and tax credit carry forwards.  Deferred income tax expense                  is generally the net change during the period in the deferred income                  tax                  asset and liability.  Valuation allowances are established when                  necessary to reduce deferred tax assets to the amount expected                  to be “more                  likely then not” realized in future tax returns.  Tax rate                  changes are reflected in income in the period such changes are                  enacted. |
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|                                                                                                                     | k.  Net                  loss per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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|                                                                                                                     | Basic                  net loss per share is computed using the weighted average number                  of common                  shares outstanding during the periods presented.  Diluted loss                  per share has not been presented because the assumed exercise of                  the                  Company’s outstanding options and warrants would have been                  antidilutive.  Options and/or warrants will have a dilutive                  effect only when the average market price of the common stock during                  the                  period exceeds the exercise price of the options and/or                  warrants.  There were options to purchase 7,250,000 shares of                  common stock and 34,951,346 warrants potentially issuable at December                  31,                  2002 which were not included in the computation of net loss per                  share.                                                                                                                                                                          |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | **Year                Ended December 31,** |        |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|-------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                       |        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | **2005**                                   |        |   | **2004** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                       |        |   |   |   |
|                                                                                          |   |                                       |        |   |   |   |
| Net                loss (numerator)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                                          | (1,929,685  | ) |   | $ | (7,964,192 | ) |
| Weighted                average shares outstanding for basic net                loss per share (denominator)                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                       | 130,766,267 |   |   |   | 101,961,298 |   |
| Per                share amount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $                                          | (0.01       | ) |   | $ | (0.08 | ) |

|                      | l.  Concentrations                  of Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
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|                                                                                                                     | The                  Company entered into an agreement during September 1998 to acquire                  50                  acres of real property known as the Hills of Bajamar, located in                  Ensenada,                  Mexico (the “Land”) with the intent, at the time, to sell lots for                  residential development and build a communications facility for                  residents                  in the surrounding area.  As of the date of these consolidated                  financial statements, the Company had not received documented title                  to the                  Land.  Since consideration for the agreement (documented title)                  has never been received the Company does not believe it is the                  owner of                  the Land.  If the Company was determined to be the owner of the                  Land the Company could be subject to the following risks.  The                  property is located in Mexico which has a developing                  economy.  Hyperinflation, volatile exchange rates and rapid                  political and legal change, often accompanied by military insurrection,                  have been common in this and certain other emerging markets in                  which the                  Company may conduct operations.  The Company may be materially                  adversely affected by possible political or economic instability                  in                  Mexico.  The risks include, but are not limited to terrorism,                  military repression, expropriation, changing fiscal regimes, extreme                  fluctuations in currency exchange rates, high rates of inflation                  and the                  absence of industrial and economic infrastructure.  Changes in                  land development or investment policies or shifts in the                  prevailing |

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| **VIPER                NETWORKS, INC. AND SUBSIDIARIES**      |
|---------------------------------------------------------------|
| Notes                to the Consolidated Financial Statements |
| As                of December 31, 2005                        |

| NOTE                  1 -                                                                                                | ORGANIZATION                  AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                  (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
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|                                                                                                                     | l.  Concentrations                  of Risk (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
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|                                                                                                                     | political                  climate in Mexico in which the Company plans to sell lots for residential                  development and build a communications facility could adversely                  affect the                  Company’s business.  Operations may be affected in varying                  degrees by government regulations with respect to development                  restrictions, price controls, export controls, income and other                  taxes,                  expropriation of property, maintenance of claims, environmental                  legislation, labor, welfare, benefit policies, land use, land claims                  of                  local residents, water use and mine safety.  The effect of these                  factors cannot be accurately predicted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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|                                                                                                                     | m.  New                  Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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|                                                                                                                     | In                  November 2004, the Financial Accounting Standards Board (“FASB”) issued                  Statement of Financial Accounting Standard (“SFAS”) No. 151, “Inventory                  Costs – an amendment of ARB No. 43, Chapter 4”.  This Statement                  amends the guidance in ARB No. 43, Chapter 4, “Inventory Pricing,” to                  clarify the accounting for abnormal amounts of idle facility expense,                  freight, handling costs, and wasted material                  (spoilage).  Paragraph 5 of ARB 43, Chapter 4, previously stated                  that “... under some circumstances, items such as idle facility expense,                  excessive spoilage, double freight, and rehandling costs may be                  so                  abnormal as to require treatment as current period charges...” This                  Statement requires that those items be recognized as current-period                  charges regardless of whether they meet the criterion of “so                  abnormal.”  In addition, this Statement requires that allocation                  of fixed production overheads to the costs of conversion be based                  on the                  normal capacity of the production facilities.  The provisions of                  this Statement will be effective for the Company beginning with                  its fiscal                  year ending November 30, 2006.  Management believes that the                  adoption of this Statement will not have any immediate material                  impact on                  the Company. |
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|                                                                                                                     | In                  December 2004, the FASB issued SFAS No. 152, “Accounting for Real Estate                  Time-Sharing Transactions—an amendment of FASB Statements No. 66 and                  67”.  This Statement amends FASB Statement No. 66, “Accounting                  for Sales of Real Estate”, to reference the financial accounting and                  reporting guidance for real estate time-sharing transactions that                  is                  provided in AICPA Statement of Position (“SOP”) 04-2, and Statement No.                  67, “Accounting for Costs and Initial Rental Operations of Real Estate                  Projects”, to state that the guidance for (a) incidental operations and                  (b) costs incurred to sell real estate projects does not apply                  to real                  estate time-sharing transactions.  The accounting for those                  operations and costs is subject to the guidance in SOP                  04-2.  This Statement is effective for financial statements for                  fiscal years beginning after June 15, 2005, with earlier application                  encouraged.  The Company believes that the implementation of                  this standard will not have a material impact on its financial                  position,                  results of operations or cash flows.                                                                                                                                                                                                                                                                                            |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                     | In                  December 2004, the FASB issued SFAS No. 123 (revised 2004) “Share-Based                  Payment” (“SFAS 123R”).  This Statement requires that the cost                  resulting from all share-based transactions be recorded in the                  financial                  statements.  The Statement establishes fair value as the                  measurement objective in accounting for share-based payment arrangements                  and requires all entities to apply a fair-value-based measurement                  in                  accounting for share-based payment transactions with                  employees.  The Statement also establishes fair value as the                  measurement objective for transactions in which an entity acquires                  goods                  or services from non-employees in share-based payment                  transactions.  The Statement replaces SFAS 13 “Accounting for                  Stock-Based Compensation” and supersedes APB Opinion No. 25 “Accounting                  for Stock Issued to Employees”.  The provisions of this                  Statement will be effective for the Company beginning with its                  fiscal year                  ending December 31, 2006.  The Company believes that the                  implementation of this standard will not have a material impact                  on its                  financial position, results of operations or cash                  flows.                                                                                                                                                        |

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| **VIPER                NETWORKS, INC. AND SUBSIDIARIES**      |
|---------------------------------------------------------------|
| Notes                to the Consolidated Financial Statements |
| As                of December 31, 2005                        |

| NOTE                  1 -                                                                                                | ORGANIZATION                  AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                  (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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|                                                                                                                     | m.  New                  Accounting Pronouncements (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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|                                                                                                                     | In                  March 2005, the SEC issued SAB No. 107 which provides guidance                  regarding                  the interaction of SFAS 123R and certain SEC rules and                  regulations.  The new guidance includes the SEC’s view on the                  valuation of share-based payment arrangements for public companies                  and may                  simplify some of SFAS 123R‘s implementation challenges for registrants and                  enhance the information investors receive.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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|                                                                                                                     | In                  March 2005, the FASB issued FASB Interpretation No. 47 (“FIN 47”),                  “Accounting for Conditional Asset Retirement Obligations”, which clarifies                  that the term ‘conditional asset retirement obligation’ as used in SFAS                  No. 143, “Accounting for Asset Retirement Obligations”, refers to a legal                  obligation to perform an asset retirement activity in which the                  timing                  and/or method of settlement are conditional on a future event that                  may or                  may not be within the control of the entity.  FIN 47 requires an                  entity to recognize a liability for the fair value of a conditional                  asset                  retirement obligation if the fair value can be reasonably                  estimated.  FIN 47 is effective no later than the end of the                  fiscal year ending after December 15, 2005.  The Company does                  not believe that FIN 47 will have a material impact on its financial                  position or results from operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                     | In                  May 2005, the FASB issued SFAS No. 154, "Accounting Changes and                  Error                  Corrections: a Replacement of Accounting Principles Board Opinion                  No. 20                  and FASB Statement No. 3" ("SFAS 154"). SFAS 154 requires retrospective                  application for voluntary changes in accounting principle unless                  it is                  impracticable to do so or another methodology is required by the                  standard.                  Retrospective application refers to the application of a different                  accounting principle to previously issued financial statements                  as if that                  principle had always been used. SFAS 154's retrospective application                  requirement replaces APB No. 20's ("Accounting Changes") requirement                  to                  recognize most voluntary changes in accounting principle by including                  in                  net income (loss) of the period of the change the cumulative effect                  of                  changing to the new accounting principle. This statement defines                  retrospective application as the application of a different accounting                  principle to prior accounting periods as if that principle had                  always been                  used or as the adjustment of previously issued financial statements                  to                  reflect a change in the reporting entity. SFAS 154 also redefines                  restatement as the revising of previously issued financial statements                  to                  reflect the correction of an error. The requirements are effective                  for                  accounting changes made in fiscal years beginning after December                  15, 2005                  and will only impact the consolidated financial statements in periods                  in                  which a change in accounting principle is made.  The Company does not                  expect that the adoption of SFAS 154 in the first quarter of fiscal                  2006                  will have a material impact on its results of operations and financial                  condition. |
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|                                                                                                                     | In                  November 2005, the FASB issued FASB Staff Position (“FSP”) FSP 115-1, “The                  Meaning of Other-Than-Temporary Impairment and Its Application                  to Certain                  Investments” (“FSP 115-1”), which provides guidance on determining when                  investments in certain debt and equity securities are considered                  impaired,                  whether that impairment is other-than-temporary, and on measuring                  such                  impairment loss. FSP 115-1 also includes accounting considerations                  subsequent to the recognition of an other-than-temporary impairment.                  The                  Company expects to adopt FSP 115-1 effective for the quarter beginning                  January 1, 2006, and the adoption is not expected to have a material                  impact on our results of operations or financial                  condition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

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| **VIPER                NETWORKS, INC. AND SUBSIDIARIES**      |
|---------------------------------------------------------------|
| Notes                to the Consolidated Financial Statements |
| As                of December 31, 2005                        |

| NOTE                  2 -                                                                                                | GOING                  CONCERN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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|                                                                                                                     | The                  Company’s consolidated financial statements are prepared using generally                  accepted accounting principles applicable to a going concern which                  contemplates the realization of assets and liquidation of liabilities                  in                  the normal course of business.  The Company has incurred a loss                  from inception on September 14, 2000 through December 31, 2005,                  which has                  resulted in an accumulated deficit of $13,054,628 at December 31,                  2005                  which raises doubt about the Company’s ability to continue as a going                  concern.  The accompanying consolidated financial statements do                  not include any adjustments relating to the recoverability and                  classification of asset carrying amounts or the amount and classification                  of liabilities that might result from the outcome of this                  uncertainty.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                     | It                  is the intent of management to continue to develop its voice and                  data                  services to Web-based customers and expand its Voice over Internet                  Protocol networks for businesses, institutions, and Internet Service                  Providers (ISP).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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|                                                                                                                     | Company                  management will seek additional financing through new stock issuances                  and                  lines of credit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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| NOTE                  3 -                                                                                                | ACQUISTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                      | During                  January 2004, the Company acquired 100% of the membership interest                  in                  Adoria Communications, LLC (“Adoria”) from Mr. James Balestraci, the sole                  member.  Adoria owns and operates a global VoIP network with                  operations in Boston, Mass.  As consideration for the purchase,                  the Company issued an aggregate of 2,500,000 shares of the Company’s                  Common Stock, with 500,000 of these shares (the “Performance Shares”)                  subject to the condition that Adoria’s financial results in 2004 must                  equal or exceed its financial results in 2003, and $500,000 payable                  in                  cash for an aggregate purchase price of $3,574,500.  The                  Performance Shares were contingent on Adoria’s 2004 financial results                  being equal to or exceeding its 2003 results; the Performance Shares                  were                  earned.  Mr. Balestraci joined the Company as Chief of                  International Wholesale Operations and a Director.  Management                  intends to consolidate the wholesale VoIP operations of Mid-Atlantic                  and                  Adoria and expand the Company’s global network into India and Europe                  through this investment.  Goodwill of $3,482,238 was recognized                  upon the acquisition as the excess of the aggregate purchase price                  over                  the fair value of Adoria’s identifiable net assets.  There were                  no purchased research and development assets.  Based on a                  discounted cash flow model the goodwill balance was considered                  to be                  significantly impaired.  A non-cash impairment loss of                  $3,396,138 was charged to income during 2004 as an Impairment of                  Purchased                  Intangibles. |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                     | The                  Adoria acquisition was were accounted for using the purchase method                  and,                  accordingly, results of operations of the acquired company are                  included in                  the Company’s operating results as of the date of                  purchase.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

|                                                                                                                                                                                                                                                                                                                                                                                                   |   | **Adoria** |      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|-----------|
|                                                                                                                                                                                                                                                                                                                                                                                                   |   |       |      |
|                                                                   |   |       |      |
| Current                assets                                                                                                                                                                                                                                                                                                                                                                          |   | $          | 101,972   |   |
| Fixed                assets                                                                                                                                                                                                                                                                                                                                                                            |   |       | 72,515    |   |
| Other                intangible assets                                                                                                                                                                                                                                                                                                                                                                 |   |       | -         |   |
| Goodwill                upon acquisition                                                                                                                                                                                                                                                                                                                                                               |   |       | 3,482,238 |   |
| Current                liabilities                                                                                                                                                                                                                                                                                                                                                                     |   |       | 82,225    |   |
| Long-term                liabilities                                                                                                                                                                                                                                                                                                                                                                   |   |       | -         |   |
| Aggregate                purchase                price                                                                                                                                                                                                                                                                                                                                                 |   | $          | 3,574,500 |   |

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| **VIPER                NETWORKS, INC. AND SUBSIDIARIES**      |
|---------------------------------------------------------------|
| Notes                to the Consolidated Financial Statements |
| As                of December 31, 2005                        |

| NOTE                  3 -                                                                                                | ACQUISTIONS                  (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                      | During                  May 2004, the Company acquired an aggregate 50% of the membership                  interests of Brasil Communications, LLC (“Brasil LLC”) in two concurrent                  transactions with Software Innovations, Inc. (“SII”) and Brasil                  LLC.  Brasil LLC owns and operates a VoIP network with licenses                  and operations in Brazil and El Salvador.  As consideration for                  the purchase, the Company issued 2,000,000 shares of the Company’s Common                  Stock to SII and $300,000 payable in cash to Brasil LLC for an                  aggregate                  purchase price of $1,320,000, recorded on the consolidated balance                  sheet                  as an in investment in unconsolidated businesses.  Management                  intended to expand the Company’s global VoIP network and hardware sales                  into Latin America through this investment. |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                      | Subsequently,                  the Company evaluated the fair market value of the assets and liabilities                  held by Brasil LLC, as shown below, and determined its investment                  to be                  impaired:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

|                                                                                                                                                                                                                                                                                                                                                                                                   |   |                           | **Brasil                LLC****FMV** |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|--------------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                   |   |                           |                                 |    |
|                                                                   |   |       |                                 |    |   |
| Fixed                assets                                                                                                                                                                                                                                                                                                                                                                            |   |                           | $                                    | 130,000 |   |
| Other                intangible assets (license)                                                                                                                                                                                                                                                                                                                                                       |   |                           |                                 | 100,100 |   |
| Net                current assets  (liabilities)                                                                                                                                                                                                                                                                                                                                             |   |                           |                                 | (2,200  | ) |
|   Aggregate                FMV of purchased Assets                                                                                                                                                                                                                                                                                                                                           |   |                           | $                                    | 227,900 |   |

|                      | Since                  the Company determined this to be other than a temporary impairment,                  a                  charge against earnings was taken in the amount of $1,092,100 for                  Impairment of Purchased Assets.  Following this charge, the book                  value of Brasil LLC investment was $227,900.  For the years                  ended December 31, 2005 and 2004 the Company recorded $46,329 and                  $181,067                  as its 50% equity share in Brasil LLC operating loss subsequent                  to the                  Company’s investment, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                      | In                  June, 2005 SII (the other 50% member of Brasil LLC), Brasil LLC,                  and the                  Company reached a settlement agreement and release to terminate                  the                  Company’s 50% ownership in Brasil LLC arising from a disagreement between                  SII and the Company over responsibility for operating cash calls,                  the                  management of, and the operation of Brasil LLC.  The Company                  assigned its 50% interest in Brasil LLC to SII, and SII returning                  to the                  Company 1,375,000 shares of the Company’s Common Stock previously issued                  to them as part of the original purchase price paid for the Brasil                  LLC                  acquisition (inclusive of the Company’s subsequent 10% stock                  dividend).  The aggregate value of the Company’s Common Stock                  returned ($637,500) was allocated as follows: 1) $7,566 to open                  accounts                  receivable; 2) $14,718 to zero out the remaining book investment                  in                  unconsolidated businesses; and, 3) $615,216 as a gain on the disposal                  of                  the purchased assets.  At December 31, 2005 the Company had no                  equity investment in Brasil                  LLC. |

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| **VIPER                NETWORKS, INC. AND SUBSIDIARIES**      |
|---------------------------------------------------------------|
| Notes                to the Consolidated Financial Statements |
| As                of December 31, 2005                        |

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

|                                                                                                                                                                                                                                                                                                                                           |                                                         | **December                31,** |     |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------|---------------------------------|----------|
|                                                                                                                                                                                                                                                                                                                                           |                                                         | **2005**                        |     |
|                                                                                                                                                                                                                                                                                                                                           |                                                         |                            |     |
|                                                                                                                                                                                                                                                                                                                                           |                                                         |                            |     |   |
| Accounts                receivable, net of allowance for   doubtful                accounts and sales returns:                                                                                                                                                                                                                  |            |                            |     |   |
| Accounts                receivable                                                                                                                                                                                                                                                                                                             |                                                         | $                               | 131,628  |   |
| Allowance                for doubtful                accounts                                                                                                                                                                                                                                                                                  |                                                         |                            | (5,000   | ) |
| Allowance                for sales                returns                                                                                                                                                                                                                                                                                      |                                                         |                            | (7,589   | ) |
|                                                                                                                                                                                                                                                                                                                                           |                                                         |                            | $        | 119,039 |   |
|                                                                                                                                                                                                                                                                                                                                           |                                                         |                            |     |
|                                                                                                                                                                                                                                                                                                                                           |                                                         |                            |     |   |
| Inventories:                                                                                             |            |                            |     |   |
| Consumer                products                                                                                                                                                                                                                                                                                                               |                                                         | $                               | 106,134  |   |
| Reserve                for                obsolescence                                                                                                                                                                                                                                                                                         |                                                         |                            | (31,175  | ) |
|                                                                                                                                                                                                                                                                                                                                           |                                                         |                            | $        | 74,959 |   |
|                                                                                                                                                                                                                                                                                                                                           |                                                         |                            |     |   |   |
|                                                                                                                                                                                                                                                                                                                                           |                                                         |                            |     |   |
| Other                current                assets:                                                      |            |                            |     |   |
| Prepaid                expenses                                                                                                                                                                                                                                                                                                                |                                                         | $                               | 141,838  |   |
| Employee                travel and payroll                advances                                                                                                                                                                                                                                                                             |                                                         |                            | 1,500    |   |
| Arbitration                bond with the                courts                                                                                                                                                                                                                                                                                 |                                                         |                            | 15,000   |   |
| Deposits                                                                                                                                                                                                                                                                                                                                       |                                                         |                            | 36,536   |   |
|                                                                                                                                                                                                                                                                                                                                           |                                                         |                            | $        | 194,874 |   |
|                                                                                                                                                                                                                                                                                                                                           |                                                         |                            |     |
|                                                                                                                                                                                                                                                                                                                                           |                                                         |                            |     |   |
| Property                and equipment,                net:                                               |            |                            |     |   |
| Routing                and networking                systems                                                                                                                                                                                                                                                                                   |                                                         | $                               | 715,254  |   |
| Computers                and office                equipment                                                                                                                                                                                                                                                                                   |                                                         |                            | 35,181   |   |
|                                                                                                                                                                                                                                                                                                                                           |                                                         |                            | 750,435  |   |
| Less                accumulated                depreciation                                                                                                                                                                                                                                                                                    |                                                         |                            | (570,794 | ) |
|                                                                                                                                                                                                                                                                                                                                           |                                                         |                            | $        | 179,640 |   |
|                                                                                                                                                                                                                                                                                                                                           |                                                         |                            |     |
|                                                                                                                                                                                                                                                                                                                                           |                                                         |                            |     |   |
| Accrued                liabilities:                                                                      |            |                            |     |   |
| Wages                and payroll                tax                                                                                                                                                                                                                                                                                            |                                                         | $                               | 9,636    |   |
| Other                accruals                                                                                                                                                                                                                                                                                                                  |                                                         |                            | 74,857   |   |
|                                                                                                                                                                                                                                                                                                                                           |                                                         |                            | $        | 84,492 |   |
|                                                                                                                                                                                                                                                                                                                                           |                                                         |                            |     |   |
| Deferred                revenues:                                                                        |            |                            |     |   |
| Consumer                products                                                                                                                                                                                                                                                                                                               |                                                         | $                               | 91,317   |   |
| Consumer                calling                time                                                                                                                                                                                                                                                                                            |                                                         |                            | 93,976   |   |
|                                                                                                                                                                                                                                                                                                                                           |                                                         |                            | $        | 185,293 |   |

----

| **VIPER                NETWORKS, INC. AND SUBSIDIARIES**      |
|---------------------------------------------------------------|
| Notes                to the Consolidated Financial Statements |
| As                of December 31, 2005                        |

| NOTE                5 -                                                                                                  | GOODWILL                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                     | Goodwill                represents the excess of the cost of businesses acquired over the                fair                value of the identifiable net assets at the date of                acquisition.  Goodwill is evaluated in accordance with SFAS 142                for impairment annually and if events or changes in circumstances                indicate                that the carrying amount may be impaired.  An impairment loss is                the amount that the carrying amount of the reporting unit’s net assets                exceeds the estimated fair value of the reporting unit.  The                estimated fair value is determined using a discounted cash flow                analysis.  The changes in the carrying amount of goodwill is as                follows: |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                         | **December                31,** |     |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------|---------------------------------|----------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                         | **2005**                        |     |
|                                                                                           |            |                            |     |   |
| Balance                at beginning of year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                         | $                               | 424,541  |   |
| Goodwill                from                acquisitions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                         |                            | -        |   |
| Impairment                losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                         |                            | (275,000 | ) |
| Balance                at end of year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                         | $                               | 149,541  |   |

|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| NOTE                  6 -                                                                                                | STOCK                  SUBSCRIPTION RECEIVABLE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                     | During                  September 1998, the Company entered into an agreement with Tri-National,                  a                  related party, to purchase 50 acres of real property known as the                  Hills of                  Bajamar, located in Ensenada, Mexico (the “Land) that is valued at the                  predecessor cost of $125,000. The Company intended, at the time,                  to sell                  lots for residential development and build a communications facility                  for                  residents in the surrounding area.                                                                                                                                                                                                                              |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                     | As                  consideration for the Land, the Company issued 3,000,000 shares                  of its                  series B Preferred Stock and stock warrants to purchase 1,000,000                  shares                  of Common Stock.  During June 2001, the Company negotiated a                  settlement and release with the Class B preferred stockholder whereby                  the                  Preferred Stock and stock warrants were exchanged for 400,000 shares                  of                  the Company’s Common Stock and the cumulative undeclared dividend was not                  declared.  During October 2001, Tri-National filed a voluntary                  bankruptcy petition; the court appointed a Trustee in October                  2002. |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                     | Because                  consideration for the agreement (documented title) never was received                  the                  Company did not believe it was ever the owner of the                  Land.  Accordingly, the value of the Land had previously been                  classified as a stock subscription                  receivable.  .                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                     | During                  January 2006, the Company and the court appointed Trustee entered                  into a                  settlement agreement whereby the 400,000 shares of the Company’s Common                  Stock was released to the Trustee as an asset of the bankruptcy                  estate and                  the Company relinquished any claim in the Land.  Accordingly,                  the $125,000 previously held as a stock subscription receivable                  was                  charged against earnings as a bad debt.                                                                                                                                                                                                                                                 |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| NOTE                  7 -                                                                                                | RELATED                  PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                     | During                  Fiscal 2005, the Company’s shareholders incurred expenses on behalf of the                  Company in the amount of $24,113, which will be repaid in the normal                  course of business.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                     | During                  Fiscal 2004, the Company’s shareholders incurred expenses on behalf of the                  Company in the amount of $120,912, which will be repaid in the                  normal                  course of business.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                     | During                  Fiscal 2005, certain of the Company’s shareholders advanced the Company                  $371,873 under short term unsecured promissory notes.  At                  December 31, 2005, outstanding advances plus accrued interest from                  these                  shareholders were                  $556,068.                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

----

| **VIPER                NETWORKS, INC. AND SUBSIDIARIES**      |
|---------------------------------------------------------------|
| Notes                to the Consolidated Financial Statements |
| As                of December 31, 2005                        |

| NOTE                7 -                                                                                                  | RELATED                PARTY TRANSACTIONS (Continued)                                                                                                                                                                                                                                                                |
|--------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                     | During                Fiscal 2004, certain of the Company’s shareholders advanced the Company                $753,041 under short term promissory notes.  At                December 31, 2004, outstanding advances plus accrued interest from                these shareholders were $607,094. |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                     | The                following shareholders advanced cash funds to the Company in                2005:                                                                                                                                                                                                                 |

| **Shareholder**                                                                                                                                                                                                                                        |   | **Cash                advances****during                2005** |    |   | **December                31, 2005** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------|---------|--------|--------------------------------------|--------|
|                                           |   |                                                           |    |   |                                 |   |
| Atkiss                                                                                                                                                                                                                                                 |   | $                                                              | 72,756  |   |                                 | $      | 11,751 |   |
| Balestraci                                                                                                                                                                                                                                             |   |                                                           | 15,000  |   |                                 |   | - |   |
| Castiglione                                                                                                                                                                                                                                            |   |                                                           | 91,275  |   |                                 |   | 59,100 |   |
| Shouekani                                                                                                                                                                                                                                              |   |                                                           | 20,900  |   |                                 |   | 380,276 |   |
| Sunstein                                                                                                                                                                                                                                               |   |                                                           | 79,930  |   |                                 |   | 36,916 |   |
| Weaver                                                                                                                                                                                                                                                 |   |                                                           | 7,012   |   |                                 |   | 68,024 |   |
| TOTAL                                                                                                                                                                                                                                                  |   | $                                                              | 286,873 |   |                                 | $      | 556,068 |   |

|                      | During                  August 2005, as part of management’s Mutual Release and Restructuring                  Agreement, the short term unsecured promissory notes were amended                  to                  include certain unpaid salaries, benefits, previous salary deferrals,                  and                  unpaid expenses within the loan and are included in the above outstanding                  balances at December 31, 2005.  The loans from Messrs Atkiss,                  Shouekani, and Weaver totaling $460,052 are classified on the balance                  sheet as loans from related party and the loans from the former                  employees                  Castiglione and Sunstein have been reclassified on the balance                  sheet as                  part of short term debt.                                                                                                                                                                                                          |
|--------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                      | The                  terms of the unsecured Notes carried full payment of principal                  and accrued                  interest as of the end of the following fiscal year.  Interest                  on the Notes accrued at a rate equal to the Treasury Bills annual                  rate of                  interest announced monthly by the U.S. Government for one year                  Treasury                  Constant Maturities or at the lenders cost of funds                  rate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                     | During                  November 2005, Messrs Castiglione and Sunstein each converted $176,000                  of                  their loan balance into 4,400,000 shares of the Company’s Common                  Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                     | On                  February 9, 2007, the Company exchanged certain short term unsecured                  promissory notes with current and former officers of the Company                  for                  unsecured twelve month convertible promissory notes with variable                  interest                  equal to the greater of the monthly market yield on 1-year constant                  maturity U.S. Treasury securities or the noteholders cost of                  funds.  Each of the notes, at the option of each noteholder, are                  convertible, in whole or part, into shares of the Company’s common stock                  at a percentage of the preceding 52-week low trading range of the                  Company’s publicly traded common stock price.  The potential                  beneficial conversion feature of the notes is recognized as debt                  discount                  and is accreted over the term of the notes as                  interest-in-kind. |

| **Noteholder**                                                                                                                                                                                                                                                                                                                                                                                               |                     | **Amount**   |                                                                                             |   | **Conversion                  Factor** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------|--------------|--------------------------------------------------------------------------------------------------|--------|----------------------------------------|
|                                                                    |      |    |                  |   |                    |                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                         |                     |         |                                                                                             |   |                                   |   |
| John                  Castiglione                                                                                                                                                                                                                                                                                                                                                                            |                     | $            | 59,100                                                                                           |   |                                   | 100%                  of the 52-week low trading range |
| Farid                  Shouekani, President and CEO                                                                                                                                                                                                                                                                                                                                                          |                     |         | 380,276                                                                                          |   |                                   | 50%                  of the 52-week low trading range |
| Jason                  Sunstein                                                                                                                                                                                                                                                                                                                                                                              |                     |         | 36,916                                                                                           |   |                                   | 100%                  of the 52-week low trading range |
| Ronald                  Weaver, Chairman                                                                                                                                                                                                                                                                                                                                                                     |                     |         | 68,025                                                                                           |   |                                   | 100%                  of the 52-week low trading range |
|                                                                                                                                                                                                                                                                                                                                                                                                         |                     | $            | 532.481                                                                                          |   |                                   |   |

----

| **VIPER                NETWORKS, INC. AND SUBSIDIARIES**      |
|---------------------------------------------------------------|
| Notes                to the Consolidated Financial Statements |
| As                of December 31, 2005                        |

| NOTE                  7 -                                                                                                | RELATED                  PARTY TRANSACTIONS (Continued)                                                                                                                                                                                                                                                                                                                         |
|--------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                     | Also                  during February 2006, Messrs Shouekani and Weaver converted their                  loan                  balances into 27,342,080 and 2,409,822 of the Company’s Common Stock,                  respectively.                                                                                                                                       |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                            |
| NOTE                  8 -                                                                                                | INCOME                  TAXES                                                                                                                                                                                                                                                                                                                                                   |
|                      |                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                     | Due                  to the Company’s net loss position from inception on September 14, 2000 to                  December 31, 2005, there was no provision for income taxes                  recorded.  The following is a reconciliation of the statutory                  federal income tax rate to the Company’s effective tax                  rate: |

|                                                                                                                                                                                                                                                                                                               |   | **Year                ended December 31,** |   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|--------|--------|
|                                                                                                                                                                                                                                                                                                               |   | **2005**                                        |   |   |   | **2004** |   |   |
|                                                                                                                                                                                                                                                                                                               |   |                                            |   |   |   |   |   |   |
|                                                     |   |                                            |   |   |   |   |   |   |
| Tax                provision (benefit) at statutory rate                                                                                                                                                                                                                                                           |   |                                            | (35    | )      | % |   |   | (35 | ) | % |
| State                tax, net of federal benefit                                                                                                                                                                                                                                                                   |   |                                            | (4     | )      | % |   |   | (4 | ) | % |
| Permanent                differences                                                                                                                                                                                                                                                                               |   |                                            | 7      |   | % |   |   | 8 |   | % |
| Valuation                allowance                                                                                                                                                                                                                                                                                 |   |                                            | 32     |   | % |   |   | 31 |   | % |
|                                                                                                                                                                                                                                                                                                               |   |                                            | -      |   | % |   |   | - |   | % |

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

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                         | **December                31,** |       |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------|---------------------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                         | **2005**                        |       |
|                                                                                           |            |                            |       |   |
| Deferred                tax assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                         |                            |       |   |
| Net                operating loss                carryforward                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                         | $                               | 4,233,666  |   |
| Other                assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                         |                            | 1,671      |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                         |                            | 4,235,337  |   |
| Less                valuation allowance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                         |                            | (4,235,337 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                         | $                               | -          |   |

|                                                                                                                     | As                a result of the Company’s losses to date, there exists doubt as to the                ultimate realization of the deferred tax assets.  Accordingly, a                valuation allowance equal to the total deferred tax assets has been                recorded at December 31, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                     | At                December 31, 2005, the Company had federal and state net operating                loss                carryforwards for tax purposes of approximately $10,390,385 and $9,471,875                which may be available to offset future taxable income and which,                if not                used, begin to expire in 2011 and 2013, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| NOTE 9 -                                                                                                       | COMMITMENTS                AND CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                     | Operating                Lease Obligation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                     | In                July, 2004 the Company entered into a twenty-four month lease agreement                for office space housing its corporate headquarters and sales; monthly                rent for this space is $1,736.  During November 2005 the Irvine                office was consolidated in with the San Diego office and the building                management subsequently placed a subtenant in the space; the Company                remains obligated for any unpaid rents through the July 2006 lease                termination.  In August, 2004 the Company entered into a forty                month lease agreement for administrative and warehouse space; monthly                rent                for this space is $4,387.  Rent expense for the year ended                December 31, 2005 and 2004 was $77,337 and $43,328,                respectively.  Future minimum rental commitments are $64,799 in                2006 and $52,644 in 2007. |

----

| **VIPER                NETWORKS, INC. AND SUBSIDIARIES**      |
|---------------------------------------------------------------|
| Notes                to the Consolidated Financial Statements |
| As                of December 31, 2005                        |

| NOTE 9 -                                                                                                       | COMMITMENTS                  AND CONTINGENCIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                     | Equity                  Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                     | In                  December 2000, the Company’s shareholders adopted the 2000 equity                  incentive plan (the “2000 Plan”) for the benefit of employees, directors,                  advisors and consultants of the Company. In December 2002, the                  Company’s                  shareholders increased the shares authorized within the 2000 Plan                  by                  10,500,000 shares.  Under the plan, the Company may grant stock                  options or awards at a maximum of 12,000,000 shares.  At                  December 31, 2005, there were 4,750,000 shares of the Company’s Common                  Stock available for grant under the 2000 Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| NOTE 10 -                                                                                                      | PREFERRED                  STOCK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                     | The                  Company has authorized 10,000,000 shares of preferred stock  in one                  or more series with such rights and privileges as the Board of                  Directors                  may, from to time, determine.  Under this provision, the Board                  of Directors has the right, as provided by our Articles of Incorporation                  to designate and issue up to 10,000,000 shares of our authorized                  preferred                  stock in one or more series and to fix the rights, preferences,                  privileges                  and restrictions thereof, including dividend rights, conversion                  rights,                  voting rights, terms of redemption, liquidation preferences and                  the number                  of shares constituting any series or the designation of such                  series.   There were no shares issued and outstanding at                  December 31, 2005.                                                                                                                                                                                                                                     |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| NOTE 11 -                                                                                                      | COMMON                  STOCK TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                     | On                  December 29, 2000, the Company approved a reverse-split of its                  Common                  Stock on a 1-for-12 basis leaving 3,565,786 shares issued and                  outstanding.  All references to common stock have been                  retroactively restated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                     | During                  March 2002, the Company created the Viper Networks Compensation                  Fund to                  provide compensation to employees and consultants.  The Company                  authorized the issuance of up to 10,000,000 shares of Common                  Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                     | During                  Fiscal 2005, the Company issued (received) 29,185,475, (10,386,811),                  (1,375,000), 11,539,857, and 862,162 shares for cash, in payment                  of                  services (net of bonuses returned), for acquisition, in conversion                  of                  notes and accrued interest (net of recission), and a cashless exercise                  of                  warrants and options, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| NOTE 12 -                                                                                                      | STOCK                  OPTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                     | During                  December 2000, the Company adopted the 2000 Plan which provides                  for the                  issuance of the Company’s Common Stock to employees and directors of the                  Company and its affiliates.  The Company has reserved 12,000,000                  shares of Common Stock for which incentive stock options and non-statutory                  stock options to purchase shares of the Company’s Common Stock, limited                  rights, and stock awards may be granted.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                     | Options                  and limited rights granted under the 2000 Plan shall be exercisable                  at                  such time or upon such events and subject to the terms, conditions,                  vesting, and restrictions as determined by the board of directors                  or the                  compensation committee (the “Plan Committee”) of the Company provided                  however that no option shall be exercisable after the expiration                  of ten                  years from the date of grant.  The exercise price of options                  granted under the 2000 Plan will be equal to the fair market value                  of the                  Company’s Common Stock as determined by the Plan Committee on the date                  of                  grant.  If, at the time of grant, an incentive stock option is                  granted to a 10% beneficial owner, as defined, the exercise price                  will not                  be less than to 110% of the fair market value of the Company’s Common                  Stock and the option shall not be exercisable after the expiration                  of five                  years. |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                     | Stock                  awards granted under the 2000 Plan shall be subject to the terms,                  conditions, vesting, and restrictions as determined by the Plan                  Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

----

| **VIPER                NETWORKS, INC. AND SUBSIDIARIES**      |
|---------------------------------------------------------------|
| Notes                to the Consolidated Financial Statements |
| As                of December 31, 2005                        |

| NOTE 12 -                                                                                                      | STOCK                OPTIONS (continued)                                                                                                                                   |
|--------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                       |
|                                                                                                                     | At                December 31, 2005, there were 4,750,000 shares of the Company’s Common                Stock available for future grant under the 2000 Plan.        |
|                                                                                                                     |                                                                                                                                                                       |
|                                                                                                                     | A                summary of the Company’s stock options as of December 31, 2005 and 2004                and changes during the periods is as                follows: |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | **Year                Ended December 31,** |       |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | **2005**                                   |       |   | **2004** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | **Options**                                |       |   | **Weighted****average****exercise****price** |   |   | **Options** |   |   | **Weighted****average****exercise****price** |   |
|                                                                               |   |                                       |       |   |   |   |   |   |   |   |   |   |
| Outstanding                at the beginning of the period                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                       | 3,600,000  |   |   | $ | 0.235 |   |   |   | 3,250,000 |   |   | $ | 0.132 |   |
| Granted                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                       | 8,250,000  |   |   |   | 0.211 |   |   |   | 1,000,000 |   |   |   | 0.488 |   |
| Exercised                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                       | (200,000   | ) |   |   | 0.037 |   |   |   | - |   |   |   | - |   |
| Cancelled                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                       | (4,400,000 | ) |   |   | 0.204 |   |   |   | (650,000 | ) |   |   | 0.116 |   |
| Outstanding                at the end of the period                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                       | 7,250,000  |   |   | $ | 0.232 |   |   |   | 3,600,000 |   |   | $ | 0.234 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Vested                at the end of the period                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                       | 600,000    |   |   |   |   |   |   |   | 940,000 |   |   |   |   |   |
| Exercisable                at the end of period                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                       | 7,250,000  |   |   |   |   |   |   |   | 3,600,000 |   |   |   |   |   |
| Weighted                average fair value per option of options                granted during  the                period                                                                                                                                                                                                                                                                                                                                            |   |                                       |       |   |   | $ | 0.1973 |   |   |   |   |   |   | $ | 0.4871 |   |

|                      | The                following table summarizes information regarding employee stock options                outstanding at December 31,                2005. |
|--------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                               |                         |   |                      |   |      | **Options                Outstanding**                                             |   |   | **Options                Exercisable**       |   |
|------------------------------------|------------------------------|--------|---------------------------|--------|-----------|------------------------------------------------------------------------------------|--------|--------|----------------------------------------------|--------|
| **Exercise                prices** |                         |   | **Number****Outstanding** |   |      | **Weighted****average****remaining****contractual****life                (years)** |   |   | **Weighted****average****exercise****price** |   |   | **Number****exercisable** |   |   | **Weighted****average****exercise****price** |   |
|                               |                         |   |                      |   |      |                                                                               |   |   |                                         |   |   |   |   |   |   |   |
| $                                  | 0.034                        |   |                      |   | 500,000   |                                                                               |   |   | 2.6                                          |   |   | $ | 0.034 |   |   |   | 500,000 |   |   | $ | 0.034 |   |
| $                                  | 0.200                        |   |                      |   | 5,250,000 |                                                                               |   |   | 9.1                                          |   |   | $ | 0.200 |   |   |   | 5,250,000 |   |   | $ | 0.200 |   |
| $                                  | 0.248                        |   |                      |   | 500,000   |                                                                               |   |   | 7.9                                          |   |   | $ | 0.248 |   |   |   | 500,000 |   |   | $ | 0.248 |   |
| $                                  | 0.450                - 0.526 |   |                      |   | 1,000,000 |                                                                               |   |   | 8.6                                          |   |   | $ | 0.488 |   |   |   | 1,000,000 |   |   | $ | 0.488 |   |
|                               |                         |   |                      |   | 7,250,000 |                                                                               |   |   | 9.0                                          |   |   | $ | 0.232 |   |   |   | 7,250,000 |   |   | $ | 0.232 |   |

|                      | Stock-based                compensation is recognized using the intrinsic value method.  In                connection with the grant of stock options to employees, the company                recorded unearned stock-based compensation within stockholders’ deficit of                zero during the year ended December 31, 2005 representing the difference                between the estimated fair value of the common stock determined for                financial reporting purposes and the exercise price of these options                at                the date of grant.  Amortization of unearned stock-based                compensation, net of any charges reversed during the period for the                forfeiture of unvested options, was $54,943 and $65,931 for the years                ended December 31, 2005 and 2004,                respectively. |
|--------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **VIPER                NETWORKS, INC. AND SUBSIDIARIES**      |
|---------------------------------------------------------------|
| Notes                to the Consolidated Financial Statements |
| As                of December 31, 2005                        |

| NOTE 12 -                                                                                                      | STOCK                OPTIONS (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                      | At                December 31, 2005, the unearned stock-based compensation of $113,694                will                be amortized as follows:  $35,506 in 2006, $36,506 in 2007,                $33,599 in 2008, and $7,083 in 2009.  The amount of stock-based                compensation expense to be recorded in future periods could decrease                if                options for which accrued but unvested compensation has been recorded                are                forfeited.                         |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                      | The                Company estimated the fair value of each option grant at the grant                date by                using the Black-Scholes option pricing model with the following weighted                average assumptions used for grants during the years ended December                31,                2005 and 2004; no dividend yield, expected volatility of 103.2% and                200.7%, risk-free interest rates of 4.36% and 4.43%, and expected                lives of                10.0 and 10.0 years, respectively. |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                     | Had                compensation cost for the Company’s stock-based compensation plan been                determined based on the fair value at the grant dates for awards                under                those plans consistent with the method described in SFAS 123, the                Company’s net loss would have been as                follows:                                                                                                                                                                                 |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | **Year                Ended December 31,** |       |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | **2005**                                        |       |   | **2004** |   |
|                                                                                          |   |                                            |       |   |   |   |
| Net                loss:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                            |       |   |   |   |
| As                reported                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $                                               | (1,929,685 | ) |   | $ | (7,964,192 | ) |
| Pro                forma                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | $                                               | (2,186,875 | ) |   | $ | (8,080,696 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                            |       |   |   |   |   |   |
| Basic                loss per share:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                            |       |   |   |   |   |   |
| As                reported                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $                                               | (0.01      | ) |   | $ | (0.08 | ) |
| Pro                forma                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | $                                               | (0.02      | ) |   | $ | (0.08 | ) |

| NOTE 13 -                                                                                                      | SUBSEQUENT                  EVENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                     | On                  May 1, 2006, the Company's Board of Directors approved the designation                  of                  up to 100,000 shares of newly-designated Series A Convertible Preferred                  Stock.  Each share of the Series A Preferred Stock is                  convertible into 100 shares of the Company's common stock at any                  time                  after ten days from the date at which the Company's shareholders                  approve an amendment to the Company's Articles of Incorporation                  increasing                  the number of shares of the Company's common stock to an amount                  which                  would allow the Series A Preferred Stock to be converted into common                  stock.  The Series A Preferred Stock convertible into 10,000,000                  shares of the Company’s common stock is to be issued to the Company's                  President and CEO, Farid Shouekani, as a retention bonus and for                  past                  services to the Company.  The Company plans to file a Certificate of                  Designation of Preferences with the Nevada Secretary of State and                  to adopt                  further resolutions consistent with this resolution prior to the                  issuance                  of the Series A Preferred Stock. |
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| NOTE 14 -                                                                                                      | AMENDMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                     | The                  above footnotes to the audited consolidated financial statements                  as of                  December 31, 2005, have been updated to conform to expanded disclosures                  made within items 5, and 6 of this amended annual report on Form                  10-KSB.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
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|                                                                                                                     | The                  changes include additional disclosures regarding; revenue recognition                  (footnote 1-h) and unsecured promissory notes (footnote                  7).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |