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


                         AMENDMENT NO. 1 TO FORM 10-KSB

                   [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2005

                                       OR

                    [ ] TRANSITION UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
               For the transition period from ________ to ________


                          The KingThomason Group, Inc.
             (Exact name of registrant as specified in its charter)

    Nevada                           333-60880                       73-1602395
    ------                           ---------                       ----------
  (state of                  (Commission File Number)              (IRS Employer
incorporation)                                                      I.D. Number)

                             309 Avenue H, Suite #C
                             Redondo Beach, CA 90277

                                  (310)540-1960

              ----------------------------------------------------
             (Address and telephone number of registrant's principal
               executive offices and principal place of business)


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

Securities registered under Section 12(g) of the Exchange Act: None

Check whether the issuer is not required to file reports  pursuant to Section 13
or 15(d) of the Exchange Act. [ ]

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

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the best of the  registrant's  knowledge,  in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

<PAGE>

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


State issuer's revenues for its most recent fiscal year:  $58,171


State the aggregate market value of the 7,903,647  voting and non-voting  common
equity held by non-affiliates computed by reference to the $0.03 average bid and
asked price of such common equity, as of March 21, 2006: $237,109.

As of March 21, 2006, there were 19,671,636  shares of the  Registrant's  Common
Stock, par value $0.001 per share, outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference,  briefly describe them
and  identify  the part of the Form 10-KSB  (e.g.,  Part I, Part II,  etc.) into
which the document is incorporated:  (1) any annual report to security  holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities  Act"). The listed
documents should be clearly described for identification  purposes (e.g., annual
report to security holders for fiscal year ended December 24, 1990). None

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]











                                       ii
<PAGE>

                                TABLE OF CONTENTS


                                                                            Page

Item 1   Description of Business...............................................1
         Business Development..................................................1
         Our Business..........................................................1
         Revenue by Sectors....................................................4
         Competition...........................................................4
         Distribution Methods..................................................4
         Dependence on Major Customers or Suppliers............................4
         Patents, Trademarks and Licenses......................................4
         Government Approval of Principal Products or Services.................5
         Government Regulations................................................5
         Research and Development..............................................5
         Environmental Laws and Controls ......................................5
         Employees.............................................................5
         Seasonality...........................................................5

Item 2   Description of Property...............................................5

Item 3   Legal Proceedings.....................................................5

Item 4   Submission of Matters to a Vote of Security Holders...................6

Item 5   Market for Common Equity and Related Stockholder Matters..............6

Item 6   Management's Discussion and Analysis .................................7
         Results of operations.................................................7
         Balance sheet items...................................................8
         Outlook...............................................................8
         Liquidity and Capital Resources.......................................8
         Off-Balance Sheet Arrangements........................................8


         Contractual obligations...............................................9

Item 7   Financial Statements..................................................9

Item 8   Changes In and Disagreements With Accountants on Accounting
           and Financial Disclosure...........................................26

Item 8A  Controls and Procedures..............................................26


                                      iii
<PAGE>

Item 8B  Other Information....................................................26

Item 9   Directors, Executive Officers, Promoters and Control Persons;
           Compliance with Section 16(a) of the Exchange Act .................26
         Directors, Executive Officers and Significant Employees..............26
         Audit Committee and Audit Committee Financial Expert.................28
         Code of Ethics.......................................................29
         Compliance with Section 16(a) of the Exchange Act....................29

Item 10  Executive Compensation...............................................29
         Employment Contracts.................................................29
         Stock Options........................................................29

Item 11  Security Ownership of Certain Beneficial Owners
           and Management.....................................................30

Item 12  Certain Relationships and Related Transactions.......................31

Item 13  Exhibits.............................................................31

Item 14  Principal Accountant Fees and Services...............................33

Signatures....................................................................34











                                       iv
<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS.

Business Development.
---------------------

     KingThomason Group, Inc. was incorporated in Nevada on November 8, 2000. On
December 7, 2001 it was the  surviving  corporation  in a merger  between it and
KingThomason,  Inc.,  which was  incorporated in Nevada on July 21, 2000.  Prior
December 31, 2000 KingThomason,  Inc. operated through Subchapter S corporations
that  owned  the  different  products  and  programs  that  were  developed.  (A
Subchapter S corporation is a small business corporation whose income, with some
exceptions,  is not taxed at the corporate level but is passed through and taxed
to its  shareholders.) On December 31, 2000 the interests of the founders in the
Subchapter S corporations were transferred to KingThomason,  Inc. The Subchapter
S status of all the corporations in the group was terminated, and on December 7,
2001, the merger between The KingThomason Group, Inc. and KingThomason, Inc. was
effected.  The historical  financial  statements of the post-merger  company are
those of KingThomason, Inc.

Our Business.
-------------

     Presently we have two wholly owned and operating subsidiaries, KingThomason
Credit Card Services, Inc. (KTCC) and KingThomason, Inc. (KTI) -

     o    KTCC's  business  plan is to offer a proprietary  patient-pay  medical
          accounts  receivable  recovery program,  TotalCare,  based on a credit
          card, that enables physicians and hospitals to recover that portion of
          a medical  provider's  bill not covered by  insurance  and that is the
          responsibility of the patient, and
     o    KTI markets healthcare  insurance  products,  on a wholesale basis, to
          retail  insurance  brokerage  firms  that  offer the  products  to the
          underinsured and uninsured, and
     o    A  sub-division  of KTI that  provides  a broad  range  of  consulting
          services  to  insurance  companies  by way of a  marketing  and  sales
          development agreement with Intelli-Services.

     The following is a brief description of our two divisions:

     1.   TotalCare Medical Accounts Receivable Credit Card Program

     Participating  physicians and hospitals  assign their past due  patient-pay
receivables to KTCC. KTCC offers the then past due patients a MasterCard  credit
card  enabling the patient with a flexible  means to pay down their medical bill
on a monthly basis. After a 12 month period, the Company is able to monetize the
performing  credit cards and return up to 70% of the original  receivable amount
to the physician. KingThomason retains the remaining 30%.

     The  TotalCare  Program  offers a solution  that is  designed  to recover a
significantly higher percentage of past due patient-pay accounts receivable, and
in less time, than the traditional collection process. Furthermore,  there is no
cost to the  physician  and the process can be expected to help  repatriate  the
patient's  relationship  with  their  physician.  To date we  have  realized  no
revenues from this segment of our business due to a previous lack of funding.


                                       1
<PAGE>

     Marketing

     We have a growing  number of  agreements  in place to  market  the  medical
accounts receivable program including:

     o    An April 1, 2002 agreement  with  Cal-Centurion  Management  Insurance
          Services, Inc.  ("Cal-Centurion").  Cal-Centurion  represents specific
          healthcare  providers  in the Los Angeles and Ventura  County  Medical
          Foundations  throughout  Southern California whose high priority is to
          address the issue of past due accounts receivable that keep expanding.
          For its  efforts,  Cal-Centurion  will  receive  a  commission  on the
          revenues received by us derived from Cal-Centurion clients enrolled in
          our credit card program.

     o    A March 6, 2004 agreement with Medical  Capital  Corporation.  Medical
          Capital  Corporation is a company that represents specific health care
          providers  and  institutions  in the United  States and is  especially
          focused on the issue of past due accounts receivable.  Pursuant to our
          March 6, 2004 agreement,  Medical Capital Corporation will promote our
          credit card program with its clients.  We will pay a commission  to it
          based on the revenues we receive from  Medical  Capital  Corporation's
          clients for the recovery of past due accounts receivable.

     o    An August 22, 2003 agreement with  PracticeXpert.  PracticeXpert is in
          the business of managing  healthcare  practices  and  improving  their
          operational  billing  procedures  and  efficiencies.  Pursuant  to the
          August 22nd agreement  PracticeXpert  is commencing the integration of
          our TotalCare  Medical  Accounts  Receivable  Credit Card Program into
          their  product  offerings  to help their  clients  recapture a greater
          percentage of their private-pay medical receivables.

     o    An April 1, 2002 agreement with The Independent Physicians Association
          of America (TIPAAA).  TIPAAA is the leading trade association  serving
          Independent  Physician  Associations (IPAs). They are in 39 states and
          represent more than 300,000 physicians  affiliated with IPAs. TIPAAA's
          mission is to provide  services  that assist IPAs in  improving  their
          overall  operations  and to become more cost  efficient in the managed
          care  environment.  TIPAAA intends to integrate the TotalCare  program
          into the basket of services they offer to their members

     2.   Healthcare Product Offerings

     We  operate  as a Master  General  Insurance  Agency or MGA as it is better
known in the insurance  industry.  As an MGA we market, on what can be described
as a wholesale basis, our insurance  products to retail insurance agencies whose
insurance brokers, in turn, offer the insurance products for sale to the general
public.  At this time there are  approximately  20 brokers selling our insurance
products.  The two healthcare  products currently being sold generate revenue to
us in the form of a  commission  that is paid  monthly  for each  policy that is
active that month.


                                       2
<PAGE>

     SpectraOne and HealthNext Major Medical Insurance Plans

     These two programs  provide a basic major  medical  plan to an  underserved
market of uninsured  people.  It is affordable to that segment of the population
that  is  incapable  to  pay  all-inclusive  medical  insurance  but  need  more
protection than a hospital-only  plan with minimal coverage.  With $2,000,000 in
coverage,  the plan  offers an  affordable  alternative  to little or no medical
insurance.  The plan features a simplified application,  is easy for an agent to
sell and costs,  on  average,  only fifty  percent of an  all-inclusive  medical
insurance plan. The plans are provided by American Select  Insurance  Management
Corporation.

     American  Select  Insurance  Management   Corporation  ("American  Select")
manages medical insurance programs for insurers.  Our December 1, 2001 agreement
with  American  Select  provides that we are the  exclusive  marketing  agent of
American  Select's limited medical plans in states where we are licensed to sell
our two limited medical plans.

     We are  responsible  for  recruiting  all agents that will sell the limited
medical plan and for  providing  all  marketing  materials.  We receive fees and
commissions  attributable  to our  recruitment of agents for American Select and
their sales of the insurance products.

     The term of our agreement with American Select depends on the attainment of
stated production goals. It can be canceled if either party's license to solicit
insurance business expires or is terminated. The American Select Plans now being
offered are the SpectraOne and HealthNext Plans.

     Consulting Services

     The  Consulting  Services  Division  provides  marketing and  developmental
support to companies that are trying to develop and bring to market products and
service  that are  directly  involved  in the  insurance  industry  and its many
affiliated businesses.

     3.   Transaction with Fusion Capital Fund II, LLC

     On October 14, 2004, we entered into a common stock purchase agreement with
Fusion  Capital Fund II, LLC pursuant to which Fusion Capital agreed to purchase
on each trading an aggregate of $6.0  million.  The $6.0 million of common stock
is to be purchased  over a 30 month period.  The purchase price of the shares of
common stock will be equal to a price based upon the future  market price of the
common stock without any fixed discount to the market price.

     The Company has authorized the sale and issuance of 6,000,000 shares of our
common  stock to Fusion  Capital  under the common stock  purchase  agreement of
which we have  registered  6,000,000.  We estimate  that the  maximum  number of
shares we will sell to Fusion Capital under the common stock purchase  agreement
will be 6,000,000 shares.

     Under the common  stock  purchase  agreement,  on each  trading  day Fusion
Capital is obligated to purchase a specified  dollar amount of our common stock.
Subject to our right to suspend  such  purchases  at any time,  and our right to
terminate  the  agreement  with Fusion  Capital at any time,  each as  described
below,  Fusion Capital shall purchase on each trading day during the term of the


                                       3
<PAGE>

agreement  $10,000  of our  common  stock.  This  daily  purchase  amount may be
decreased  by us at any  time.  We also  have the  right to  increase  the daily
purchase  amount at any time,  provided  however,  we may not increase the daily
purchase  amount above  $10,000  unless our stock price is above $0.50 per share
for five consecutive trading days.

Revenue by Sectors.
-------------------
Revenues from our subsidiaries during 2003, 2004 and 2005 are as follows:

                                             2003         2004         2005
                                           --------     --------     -------

     KingThomason, Inc.                     $19,080      $73,231     $57,301
     KingThomason Financial Services           $670         $710        $614
     KingThomason Credit Card Services           $0           $0          $0

Competition.
------------

     Our Medical Accounts Receivable Credit Card Program was created by us and -
to our  knowledge  - is unique  and has no direct  competition.  Our  HealthNext
Basics Major Medical Plan is targeted to an  underserved  market of uninsured or
underinsured  people and competes with numerous other  companies  offering major
medical insurance coverage.

Distribution Methods.
---------------------

     We distribute,  or in some  instances  plan to  distribute,  our healthcare
products through existing retail broker networks. We operate as a Master General
Insurance Agency that wholesales insurance products to retail insurance agencies
that ultimately sell to the consumer.  The agencies and their respective  agents
and brokers are independent  contractors  that sell and promote our products and
services as they feel  appropriate  for their  clients.  The agencies are paid a
commission  directly from the  insurance  company as they  complete  sales.  The
insurance  companies  take the  responsibility  to license and  maintain  proper
documentation for the agents that sell our products,  which means that we do not
have the responsibility to do so.

Dependence on Major Customers or Suppliers.
-------------------------------------------

     We are not dependent on one or a few customers.

Patents, Trademarks and Licenses.
---------------------------------

     We have a Trademark pending for the name SpectraOne,  the name of our Basic
Major Medical Plan and a Copyright Use Mark for TotalCare and TotalRecovery, our
Medical Credit Card Program.  We do not license any of the products we sell that
are owned by other companies.


                                       4
<PAGE>

Government Approval of Principal Products or Services.
------------------------------------------------------

     Because other  companies  provide the actual  insurance that we incorporate
into the  products we sell,  we are only  required to be approved as an Agent in
Good Standing by the insurance  commissions  where we sell these products.  This
approval process is taken care of by insurance companies, not their agents.

Government Regulations.
-----------------------

     The annuities we offer are underwritten by other  companies.  Any annuities
or other estate planning  products we offer must comply with certain  provisions
of the Internal  Revenue Code or  regulations  thereunder if they are to qualify
for tax-exempt treatment.

Research and Development.
-------------------------

         We have spent approximately $1,500,000 over the last four years in
development and implementation activities of our products and services. We have
worked to establish our agreements for the sale of the TotalCare medical
accounts receivable program and the distribution of the wholesale insurance
products. None of this has been borne by our customers.

Environmental Laws and Controls.
--------------------------------

     We have no direct costs with regard to complying  with  environmental  laws
and regulations.

Employees.
----------

     At present we have only two full-time company officers.  Thomas King is the
President  and  CEO  of  KingThomason   Group,  Inc.  and  runs  its  day-to-day
operations.  Hume Thomason is the President of the Healthcare  products division
and he manages its day-to-day operations.  Additionally, there are approximately
20 insurance agents appointed to sell our healthcare products

Seasonality.
------------

     There is no seasonal aspect to our business.

ITEM 2. DESCRIPTION OF PROPERTY.

     We own  no  plants  or  manufacturing  equipment,  only  office  furniture,
computers and related equipment.

ITEM 3. LEGAL PROCEEDINGS.

     Neither our  company nor any of our  property is a party to, or the subject
of,  any  material  pending  legal  proceedings  other  than  ordinary,  routine
litigation incidental to our business.


                                       5
<PAGE>

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

     There  were  no  matters  submitted  to a vote of the  stockholders  of our
company during 2005 through the solicitation of proxies or otherwise.

                                     PART II

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

     KingThomason's  Common Stock  presently  trades on the OTC  Bulletin  Board
under the symbol KGTH,  having been added to the OTC Bulletin Board on March 11,
2002.  The high and low bid and asked  prices,  as reported by the OTC  Bulletin
Board,  are as follows for 2004 and 2005.  The quotations  reflect  inter-dealer
prices,  without retail  mark-up,  mark-down or commission and may not represent
actual transactions.

                                    High             Low
         2004:
                  1st Qtr           $0.13            $0.10
                  2nd Qtr           $0.37            $0.13
                  3rd Qtr           $0.36            $0.27
                  4th Qtr           $0.48            $0.26
         2005:
                  1st Qtr           $0.44            $0.25
                  2nd Qtr           $0.30            $0.08
                  3rd Qtr           $0.15            $0.03
                  4th Qtr           $0.08            $0.03

     Holders.
     --------

     There are  approximately  558  holders  of record of our  company's  common
stock.

     Dividends.
     ----------

     We have  declared no cash  dividends on our common  stock since  inception.
There are no restrictions  that limit our ability to pay dividends on our common
stock or that are likely to do so in the future other than the  restrictions set
forth in Nevada Revised Statutes,  78.288.  These  restrictions  provide that no
distribution  may be made to our  shareholders  if, after  giving  effect to the
distribution,  (1) we would not be able to pay our  debts as they  mature or (2)
our  total  assets  would be less than our total  liabilities  plus any  amounts
needed, were we to be dissolved at the time of the distribution,  to satisfy the
preferential  rights upon dissolution of any shareholders over the rights of the
common stock shareholders.

     Securities Authorized for Issuance Under Equity Compensation Plans.
     -------------------------------------------------------------------

     We have no compensation  plans under which equity securities are authorized
for issuance.


                                       6
<PAGE>
<TABLE>
<CAPTION>

     Recent Sales of Unregistered Securities.
     ----------------------------------------

     During  2005,  we  issued  the  following  shares  of  common  stock to the
following  persons in  transactions  exempt  from  registration  pursuant to the
provisions of Regulation D, Rule 506:

----------- ---------------- --------- ---------------- ---------------------------------------
<S>         <C>              <C>       <C>              <C>
                             No. of    Value of
Date        Person           Shares    Consideration    Nature of Consideration
----------- ---------------- --------- ---------------- ---------------------------------------

----------- ---------------- --------- ---------------- ---------------------------------------
05-17-05    T.E. King III    37,500    $7,500           Waiver of interest owed on note payable
----------- ---------------- --------- ---------------- ---------------------------------------
07-07-05    Guy Gilson       25,000    $7,250           Consulting services
----------- ---------------- --------- ---------------- ---------------------------------------
08-16-05    iCapital         60,000    $6,000           Forbearance of filing lawsuit
----------- ---------------- --------- ---------------- ---------------------------------------

----------- ---------------- --------- ---------------- ---------------------------------------
</TABLE>

     All of the above purchasers were accredited  investors,  had a pre-existing
relationship  with the company and had an  opportunity  to ask  questions of our
management and to inspect documents reasonably available.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS.

     The following  discussion and analysis  should be read in conjunction  with
the financial  statements and the accompanying notes thereto and is qualified in
its  entirety  by the  foregoing  and by  more  detailed  financial  information
appearing elsewhere. See "Financial Statements."

     The following table presents,  as a percentage of sales,  certain  selected
financial data for each of fiscal years December 31, 2004 and December 31, 2005:

                                               Fiscal Year Ended
                                               -----------------
                                        12-31-2004            12-31-2005
                                        ----------            ----------

     Sales                                    100%                  100%


     Operating expenses                   (1,483)%                (469)%
     Income (loss) from operations        (1,383)%                (369)%

     Non-operating income (expense)       (1,063)%                  493%

     Net income (loss) after taxes          (326)%              (1,301)%


     Results of  Operations  - Year  ending  12/31/05  Compared  to Year  ending
     ---------------------------------------------------------------------------
12/31/04
--------


     KingThomason's  revenue was $58,171 for the year ended December 31, 2005, a
decrease  of $15,770 or 21.3%,  compared  to the revenue of $73,941 for the year
ended  December 31, 2004.  The reason for the decrease in revenue was a decrease
in the insurance services business.

     Operating  expenses  decreased  during the year ended  December 31, 2005 as
compared with the year ended December 31, 2004.  Operating expenses decreased by
$823,567 or 75% from $1,096,638 in 2004 to $273,071 in 2005.



                                       7
<PAGE>
<TABLE>
<CAPTION>

     Balance sheet items
     -------------------


     Current assets of $5,045 on December 31, 2005,  compares  unfavorably  with
current  liabilities of $1,027,709 at that time, an unfavorable current ratio of
0.005.


     Outlook
     -------

     The  Company is in the  process of  restructuring  its debt and seeking new
business opportunities that will provide the ability to leverage its assets.

     Liquidity and Capital Resources
     -------------------------------


     We are not  liquid  with  $4,790  cash on hand  at  fiscal  2005  year-end.
However,  we had $68,081 in negative operating cash flow during 2005. The $9,590
in current liabilities owed to officers is attributable to two promissory notes,
the principal amounts of which are as follows:


------------------------ ------------------------------ ------------------ --------------- ---------------
<S>                      <C>                            <C>                <C>             <C>
Lender                   Relationship to KingThomason   Principal Amount   Interest Rate   Maturity Date
------------------------ ------------------------------ ------------------ --------------- ---------------

------------------------ ------------------------------ ------------------ --------------- ---------------
T.E. King III            President and Director         $  6,047             6%            05-31-04
------------------------ ------------------------------ ------------------ --------------- ---------------
Hume A. "Tom" Thomason   Secretary and Director         $  3,543             6%            05-31-04
------------------------ ------------------------------ ------------------ --------------- ---------------
</TABLE>

It is  believed  that none of the above  lenders  will be  pressing  demands for
immediate  payment  of  amounts  owed to them.  KingThomason  plans  on  raising
additional capital later in 2006.

Off-Balance Sheet Arrangements

     Our  company  has not  entered  into any  transaction,  agreement  or other
contractual  arrangement  with an entity  unconsolidated  with us under which we
have

     o    an obligation under a guarantee contract,
     o    a  retained  or  contingent  interest  in  assets  transferred  to the
          unconsolidated  entity or similar  arrangement  that serves as credit,
          liquidity or market risk support to such entity for such assets,
     o    an  obligation,  including a contingent  obligation,  under a contract
          that would be accounted for as a derivative instrument, or
     o    an  obligation,  including a contingent  obligation,  arising out of a
          variable  interest  in an  unconsolidated  entity that is held by, and
          material  to, us where  such  entity  provides  financing,  liquidity,
          market risk or credit risk support to, or engages in leasing, hedging,
          or research and development services with, us.


                                       8
<PAGE>
<TABLE>
<CAPTION>

Contractual obligations

     The following table sets forth, as of the end of the latest fiscal year-end
balance sheet, information with respect to our known contractual obligations.

---------------------------- -----------------------------------------------------------------
                                                    Payments Due-by Period
---------------------------- -----------------------------------------------------------------
<S>                          <C>       <C>           <C>           <C>           <C>
        Contractual                      Less Than                                 More Than
        Obligations            Total      1 Year       1-3 Years     3-5 Years      5 Years
---------------------------- --------- ------------- ------------- ------------- -------------
Long-Term Debt Obligations
                                $0
---------------------------- --------- ------------- ------------- ------------- -------------
Capital Lease Obligations
                                $0
---------------------------- --------- ------------- ------------- ------------- -------------
Operating Lease Obligations
                                $0
---------------------------- --------- ------------- ------------- ------------- -------------
Other Long-Term
Liabilities Reflected on
Our Balance Sheet under
GAAP                            $0
---------------------------- --------- ------------- ------------- ------------- -------------

---------------------------- --------- ------------- ------------- ------------- -------------
Total                           $0
---------------------------- --------- ------------- ------------- ------------- -------------
</TABLE>

     KingThomason's  future results of operations and the other  forward-looking
statements  contained in this report,  in particular  the  statements  regarding
projected  operations in the present fiscal year,  involve a number of risks and
uncertainties.  In  addition  to the factors  discussed  above,  among the other
factors that could cause actual results to differ  materially are the following:
the loss of any of  several  key  personnel;  unexpected  costs in  establishing
branch  offices;  the emergence of competition  not now detected;  and a general
economic turndown.

ITEM 7. FINANCIAL STATEMENTS.

                                                                            Page
                                                                            ----


KingThomason  Group, Inc. and Subsidiaries:
Report of Independent Registered Public Accounting Firm.......................10
Consolidated Balance Sheet December 31, 2005..................................11
Consolidated Statements of Operations for the Years Ended
  December 31, 2005 and 2004..................................................12
Consolidated Statement of Stockholders' Equity (Deficit) for
   the Years Ended December  31, 2005 and 2004................................13
Consolidated Statements of Cash Flows for the Years
  Ended December 31, 2005 and 2004............................................14
Notes to Consolidated Financial Statements....................................15






                                       9
<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Stockholders and Board of Directors
The KingThomason Group, Inc.

We have audited the accompanying  consolidated balance sheet of the KingThomason
Group, Inc. and subsidiaries as of December 31, 2005 and the related  statements
of operations, stockholders' deficit and cash flows for each of the two years in
the  period  ended  December  31,  2005.  These  financial  statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of KingThomason Group,
Inc.,  and  subsidiary as of December 31, 2005 and the results of its operations
and its cash flows for the period  then ended,  in  conformity  with  accounting
principles generally accepted in the United States of America.

The Company's consolidated financial statements are prepared using the 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 accumulated deficit of $1,017,940 at December 31, 2005
including a net loss of $756,596 during the year ended December 31, 2005.  These
factors as discussed in Note 14 to the financial statements,  raises substantial
doubt about the Company's  ability to continue as a going concern.  Management's
plans in regard to these  matters are also  described in Note 14. The  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.


/s/ Kabani & Company, Inc.

KABANI & COMPANY, INC.
CERTIFIED PUBLIC ACCOUNTANTS

Los Angeles, California
October 02, 2006



                                       10
<PAGE>
<TABLE>
<CAPTION>


                      KING THOMASON, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2005

                                     ASSETS
                                     ------

CURRENT ASSETS:
<S>                                                                      <C>
         Cash & cash equivalent                                          $     4,790
         Commission receivable                                                   255

                                                                         -----------
                  Total current assets                                         5,045

PROPERTY AND EQUIPMENT, NET:                                                   4,724

                                                                         -----------
                  Total assets                                           $     9,769
                                                                         ===========


                      LIABILITIES AND STOCKHOLDERS' DEFICIT
                      -------------------------------------

CURRENT LIABILITIES:
         Accounts payable and accrued expenses                           $   942,016
         Accrued interest                                                     21,923
         Note payable - officers                                               9,590
         Note payable- others                                                 54,180

                                                                         -----------

                  Total current liabilities                                1,027,709

STOCKHOLDERS' DEFICIT:
         Preferred stock, $0.001 par value;
           10,000,000 shares authorized; 4,544 issued                        454,400
         Common stock, $0.001 par value;100,000,000 shares authorized;
         19,671,636 shares issued and outstanding                             19,672
         Additional paid in capital                                        1,253,856
         Less: Unamortized prepaid expenses                                 (168,828)
         Accumulated deficit                                              (2,577,040)
                                                                         -----------
                  Total stockholders' deficit                             (1,017,940)
                                                                         -----------

                                                                         $     9,769
                                                                         ===========
</TABLE>


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


                                       11
<PAGE>
<TABLE>
<CAPTION>

                      KING THOMASON, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  FOR THE YEARS ENDED DECEMBER 31, 2005 & 2004

                                                               2005            2004
                                                           ------------    ------------
<S>                                                        <C>             <C>
Net Revenues
Commission income                                          $     58,171    $     33,941
Consulting income                                                  --            40,000
                                                           ------------    ------------
            Net revenues                                         58,171          73,941

Operating Expenses
Consulting Expense                                              123,669         696,369
Impairment of investment                                           --            80,924
General & Administrative Expense                                149,402         319,345
                                                           ------------    ------------
            Total operating expenses                            273,071       1,096,638

                                                           ------------    ------------
Loss from operations                                           (214,900)     (1,022,697)

Non-operating income (expense):
            Interest expense                                    (76,388)        (38,962)
            Gain (loss) on settlement of debt                   362,894          (3,000)
            Miscellaneous                                          --             2,739
                                                           ------------    ------------
                    Total non-operating income (expense)        286,506         (39,223)

                                                           ------------    ------------
Income (loss) before income taxes                                71,606      (1,061,920)

Provision for income taxes                                        3,200           4,000

                                                           ------------    ------------
Net income (loss) before extraordinary item                      68,406      (1,065,920)
                                                           ------------    ------------

Extraordinary item - Gain (loss) on settlement of debt         (825,002)        825,002

                                                           ------------    ------------
Net loss                                                   $   (756,596)   $   (240,918)
                                                           ============    ============

Basic & diluted loss per share before extraordinary item   $       0.00    $      (0.05)

Extraordinary item per share                               $      (0.02)   $       0.04

                                                           ------------    ------------
Basic & diluted net loss per share                         $      (0.02)   $      (0.01)
                                                           ============    ============

Basic & diluted weighted average shares outstanding *        39,166,405      18,557,330
                                                           ============    ============
</TABLE>

*Weighted  average  number of shares used to compute  basic and diluted loss per
share for the years ended December 31, 2005 & 2004 are the same since the effect
of dilutive securities are anti-dilutive.


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


                                       12
<PAGE>
<TABLE>
<CAPTION>
                   KING THOMASON GROUP, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
                  FOR THE YEARS ENDED DECEMBER 31, 2005 & 2004

                                                                Common stock                    Preferred stock
                                                       ------------------------------    -----------------------------
                                                         Number of                         Number of
                                                          shares           Amount           shares          Amount
                                                       -------------    -------------    -------------   -------------
<S>                                                    <C>              <C>              <C>             <C>
Balance as of January 1, 2004                             16,184,829    $      16,185             --     $        --

Shares issued for cash                                       960,000              960             --              --

Shares issued for consulting and legal services            1,650,000            1,650             --              --

Shares issued to acquire media rights                        809,242              809             --              --

Shares issued for commitment                               1,204,013            1,204             --              --

Shares issued for services performed in prior year              --               --               --              --

Write off of subscription receivable                            --               --               --              --

Net loss for the year                                           --               --               --              --
                                                       -------------    -------------    -------------   -------------
Balance as of December 31, 2004                           20,808,084           20,808             --              --

Shares issued for cash                                        50,294               50             --              --

Shares issued for consulting and legal services               62,500               63             --              --

Shares issued for forbearance agreement                       60,000               60             --              --

Shares canceled                                           (1,309,242)          (1,309)            --              --

Preferred stock issued for settlement of debt                   --               --              4,544         454,400

Amortization of prepaid expenses                                --               --               --              --

Net loss for the year                                           --               --               --              --
                                                       -------------    -------------    -------------   -------------
Balance as of December 31, 2005                           19,671,636    $      19,672            4,544   $     454,400
                                                       =============    =============    =============   =============

                                                         Additional      Unamortized                          Total
                                                          capital         prepaid         Accumulated     stockholders'
                                                          paid in         expenses          deficit          deficit
                                                       -------------    -------------    -------------    -------------
Balance as of January 1, 2004                          $     638,532    $        --      $  (1,579,525)   $  (1,017,808)

Shares issued for cash                                       154,640             --               --            188,600

Shares issued for consulting and legal services              352,850          (22,508)            --            331,992

Shares issued to acquire media rights                         80,115             --               --             80,924

Shares issued for commitment                                 311,839         (286,956)            --             26,087

Shares issued for services performed in prior year              --               --               --               --

Write off of subscription receivable                            --               --               --             60,000

Net loss for the year                                           --               --           (240,918)        (240,918)
                                                       -------------    -------------    -------------    -------------
Balance as of December 31, 2004                            1,537,976         (309,464)      (1,820,443)        (571,123)

Shares issued for cash                                        39,950             --               --             40,000

Shares issued for consulting and legal services               14,688             --               --             14,751

Shares issued for forbearance agreement                        5,940             --               --              6,000

Shares canceled                                                1,309             --               --               --

Preferred stock issued for settlement of debt               (346,006)            --               --            108,394

Amortization of prepaid expenses                                --            140,636             --            140,636

Net loss for the year                                           --               --           (756,596)        (756,596)
                                                       -------------    -------------    -------------    -------------
Balance as of December 31, 2005                        $   1,253,856    $    (168,828)   $  (2,577,040)   $  (1,017,940)
                                                       =============    =============    =============    =============
</TABLE>
              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       13
<PAGE>
<TABLE>
<CAPTION>

                    KINGTHOMASON GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  FOR THE YEARS ENDED DECEMBER 31, 2005 & 2004

                                                                      2005         2004
                                                                    ---------    ---------
<S>                                                                 <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
       Net loss                                                      (756,596)   $(240,918)
       Adjustments to reconcile net loss to net cash used in
       operating activities:
             Depreciation                                               5,635        8,676
             Amortization of prepaid consulting expenses              140,636       23,087
             Bad debt expense                                            --         60,000
             (Gain) loss on settlement of debt                       (362,894)       3,000
             Impairment of investment                                    --         80,924
             (Gain) loss on extinguishment of debt                    825,002     (825,002)
             Shares issued for services & legal fees                   20,751      331,992
             (Increase) / decrease in current assets:
                    Commission receivable                                (255)         420
                    Prepaid expenses                                    3,975         (900)
             Increase in current liabilities:
                    Accounts Payable and Accrued expenses              55,666      403,171
                                                                    ---------    ---------
       Net cash used in operating activities                          (68,081)    (155,550)
                                                                    ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
             Payment of loans                                          (3,000)     (21,090)
             Proceeds from loans                                         --         21,090
             Proceeds from issuance of common stock                    40,000      188,600
                                                                    ---------    ---------
       Net cash provided by financing activities                       37,000      188,600
                                                                    ---------    ---------

NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS                    (31,081)      33,049

CASH & CASH EQUIVALENTS, BEGINNING BALANCE                             35,871        2,822

                                                                    ---------    ---------
CASH & CASH EQUIVALENTS, ENDING BALANCE                             $   4,790    $  35,871
                                                                    ---------    ---------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
             Cash paid during the period for:
                    Interest                                        $ 137,240    $     106
                                                                    =========    =========

                    Income taxes                                    $    --      $   1,347
                                                                    =========    =========
</TABLE>

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




                                       14
<PAGE>

                    KINGTHOMASON GROUP, INC. AND SUBSIDIARIES
               NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS


1.       DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

The KingThomason Group, Inc. (KTGI) was organized in accordance with the General
Corporation  Act of the State of Nevada on November 8, 2000,  for the purpose of
merging with  KingThomason,  Inc. (KT), a Nevada  corporation and  subsidiaries.
KTGI  had  no  business   operation   through   December  31,  2001  and  was  a
development-stage  company through  December 7, 2001,  organized for the merger.
KTGI effected a merger on December 7, 2001 with  KingThomason,  Inc. pursuant to
approving votes of the shareholders of both corporations.

King  Thomason,  Inc. (KT) was  incorporated  in the state of Nevada on July 21,
2000. KT's activities from inception until December 31, 2000 consisted primarily
of reviewing possible business opportunities and developing the business model.

Pursuant to  reorganization  agreement  dated  December  31,  2000,  the Company
acquired  one  hundred   percent  (100%)  of  the  common  shares  of  following
subsidiaries:

(1) King Thomason, Inc. CA (KTI):

KTI was  incorporated in the state of California on September 11, 1998 to market
and sell the cash  security  retirement  plan and  personal  lines of  insurance
including  homeowners and automobile.  KTI's activities  consisted  primarily of
acting as a broker for insurance companies working on commission.

(2) King Thomason Financial Services, Inc. (KTFS):

KTFS was incorporated in the state of California on April 7, 1999, to market and
sell the financial and estate planning service,  assets management  services and
the sell of stocks, bond and mutual funds. The Company did not have any activity
since end of 2004.

(3) King Thomason Insurance Marketing, Inc. (KTIM):

KTIM was  incorporated  in the state of California on January 28, 2000 to market
and sell  insurance  policies.  The Company  began its  operations in the period
ended June 30, 2001. KTIM's activities consisted primarily of acting as a broker
for dental insurance companies working on commission.

(4) King Thomason Credit Card Services, Inc. (KTCC):

KTCC was  incorporated  in the  state  of  California  on  January  28,  2000 to
underwrite  and issue a private  label  credit card for use with its medical and
dental insurance products.

To date the Company has realized no revenues from this business.

(5) King Thomason Franchising, Inc. (KTFI):

KTFI was incorporated in the state of California on August 17, 2000 to franchise
a "Financial Center" to offer and sell various financial and insurance products.
The Company did not have any activity since its inception.


                                       15
<PAGE>

                    KINGTHOMASON GROUP, INC. AND SUBSIDIARIES
               NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Principles of Consolidation & Recapitalization

The accompanying  consolidated  financial statements for the year ended December
31,  2005  and  2004   include  the  accounts  of  KTGI  and  its  wholly  owned
subsidiaries,  KTI, KTFS, KTFI, KTCC & KTIM.  (collectively the "Company").  All
significant  inter-company  accounts and  transactions  have been  eliminated in
consolidation.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and cash equivalents

The Company considers all liquid  investments with a maturity of three months or
less from the date of purchase that are readily convertible into cash to be cash
equivalents.

Use of estimates

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

Property & equipment

Property and equipment are recorded at cost.  Depreciation is computed using the
straight-line  method  over useful  lives of 1.5 to 7 years.  The cost of assets
sold or retired and the related amounts of accumulated  depreciation are removed
from  the  accounts  in the  year of  disposal.  Any  resulting  gain or loss is
reflected in current  operations.  Assets held under capital leases are recorded
at the lesser of the present value of the future  minimum lease  payments or the
fair value of the leased property.  Expenditures for maintenance and repairs are
charged to operations as incurred.

Impairment of long-lived assets

Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards  No. 144,  "Accounting  for the  Impairment  or Disposal of Long-Lived
Assets" ("SFAS 144"), which addresses financial accounting and reporting for the
impairment  or  disposal  of  long-lived  assets and  supersedes  SFAS No.  121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," and the accounting and reporting  provisions of APB Opinion No.
30,  "Reporting  the  Results of  Operations  for a  Disposal  of a Segment of a
Business." The Company  periodically  evaluates the carrying value of long-lived
assets  to be held and used in  accordance  with  SFAS  144.  SFAS 144  requires
impairment  losses to be recorded on long-lived  assets used in operations  when
indicators of impairment are present and the  undiscounted  cash flows estimated
to be generated by those assets are less than the assets' carrying  amounts.  In
that  event,  a loss is  recognized  based on the  amount by which the  carrying
amount  exceeds  the  fair  market  value  of the  long-lived  assets.  Loss  on
long-lived  assets to be disposed of is determined in a similar  manner,  except
that fair market values are reduced for the cost of disposal.


                                       16
<PAGE>

                    KINGTHOMASON GROUP, INC. AND SUBSIDIARIES
               NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Basic and diluted net loss per share

Net loss per share is calculated  in accordance  with the Statement of financial
accounting  standards No. 128 (SFAS No. 128), "Earnings per share". SFAS No. 128
superseded  Accounting  Principles  Board  Opinion  No.15 (APB 15). Net loss per
share for all periods  presented  has been  restated to reflect the  adoption of
SFAS No. 128. Basic net loss per share is based upon the weighted average number
of  common  shares  outstanding.  Diluted  net  loss  per  share is based on the
assumption that all dilutive convertible shares and stock options were converted
or exercised.  Dilution is computed by applying the treasury stock method. Under
this method,  options and warrants are assumed to be exercised at the  beginning
of the period (or at the time of issuance,  if later),  and as if funds obtained
thereby were used to purchase  common  stock at the average  market price during
the period.

Stock-based compensation

The Company has adopted the disclosure provisions only of SFAS 123 and continues
to  account  for stock  based  compensation  using the  intrinsic  value  method
prescribed in accordance with the provisions of APB No. 25, Accounting for Stock
Issued  to  Employees,  and  related  interpretations.  Common  stock  issued to
employees  for  compensation  is accounted  for based on the market price of the
underlying stock, generally the average low bid price.

The Company accounts for stock-based  compensation  issued to non-employees  and
consultants  in  accordance  with the  provisions  of SFAS 123 and the  Emerging
Issues Task Force consensus in Issue No. 96-18 ("EITF  96-18"),  "Accounting for
Equity  Instruments  that are Issued to Other Than Employees for Acquiring or in
Conjunction   with  Selling,   Goods  or  Services".   Common  stock  issued  to
non-employees  in exchange for services is accounted for based on the fair value
of the services received.

Fair value of financial instruments

Statement of financial accounting standard No. 107, Disclosures about fair value
of financial  instruments,  requires that the Company  disclose  estimated  fair
values of financial instruments. The carrying amounts reported in the statements
of financial position for current assets and current  liabilities  qualifying as
financial instruments are a reasonable estimate of fair value.

Revenue recognition

The  Company's  revenue  recognition  policies  are  in  compliance  with  Staff
accounting  bulletin  (SAB)  104.  Revenue,   including   consulting  income  is
recognized when earned. Commission income is recognized as of the effective date
of the policy.  Any  adjustments  to  commissions  are recognized in the year in
which they occur.

Allowance for doubtful accounts

In determining the allowance to be maintained, management evaluates many factors
including  industry and historical loss  experience.  The allowance for doubtful
accounts is maintained at an amount management deems adequate to cover estimated
losses. The Company considers accounts receivable to be fully collectible.


                                       17
<PAGE>

                    KINGTHOMASON GROUP, INC. AND SUBSIDIARIES
               NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Advertising

The Company expenses  advertising  costs as incurred.  Advertising costs for the
years ended December 31, 2005 and 2004 were $4,137 and $9,200 respectively.

Income taxes

Deferred income tax assets and liabilities are computed annually for differences
between the financial  statements and tax basis of assets and  liabilities  that
will result in taxable or deductible amounts in the future based on enacted laws
and rates  applicable  to the periods in which the  differences  are expected to
affect taxable income (loss).  Valuation allowance is established when necessary
to reduce deferred tax assets to the amount expected to be realized.

Shares issued to acquire goods and services from non-employees

The Company accounts for the issuance of equity instruments to acquire goods and
services  based on the fair value of the goods and services or the fair value of
the  equity  instrument  at the time of  issuance,  whichever  is more  reliably
measurable.

Research and development costs

Expenditures for research & development are expensed as incurred. Such costs are
required  to be  expensed  until the point  that  technological  feasibility  is
established.  The period between  achieving  technological  feasibility  and the
general availability of such development is short. Consequently, costs otherwise
capitalizable after technological feasibility is achieved are generally expensed
because  they are  insignificant.  The  Company did not incur any  research  and
development cost during the year ended December 31, 2005 and 2004.

Reclassifications

Certain items in the prior year financial  statements have been reclassified for
comparative  purposes to conform to the  presentation  in the  current  period's
presentation.  These reclassifications have no effect on the previously reported
income (loss).

Recent Pronouncements

In  September  2006,  FASB issued SFAS 158  `Employers'  Accounting  for Defined
Benefit Pension and Other Postretirement  Plans--an amendment of FASB Statements
No. 87, 88, 106,  and 132(R)' This  Statement  improves  financial  reporting by
requiring an employer to recognize  the  overfunded or  underfunded  status of a
defined  benefit  postretirement  plan (other than a  multiemployer  plan) as an
asset or  liability  in its  statement  of  financial  position and to recognize
changes in that  funded  status in the year in which the changes  occur  through
comprehensive  income of a business entity or changes in unrestricted net assets
of  a  not-for-profit  organization.  This  Statement  also  improves  financial
reporting by requiring an employer to measure the funded  status of a plan as of
the  date  of  its  year-end  statement  of  financial  position,  with  limited
exceptions.  An employer with publicly  traded equity  securities is required to
initially  recognize the funded status of a defined benefit  postretirement plan
and to provide the required  disclosures as of the end of the fiscal year ending
after December 15, 2006. An employer without  publicly traded equity  securities
is required to recognize the funded status of a defined  benefit  postretirement


                                       18
<PAGE>

                    KINGTHOMASON GROUP, INC. AND SUBSIDIARIES
               NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

plan and to provide the  required  disclosures  as of the end of the fiscal year
ending after June 15, 2007.  However, an employer without publicly traded equity
securities  is required to disclose the  following  information  in the notes to
financial  statements  for a fiscal year ending after  December  15,  2006,  but
before June 16, 2007,  unless it has applied the recognition  provisions of this
Statement in preparing those financial statements:

     a.   A brief description of the provisions of this Statement
     b.   The date that adoption is required
     c.   The date the employer  plans to adopt the  recognition  provisions  of
          this Statement, if earlier.

The  requirement to measure plan assets and benefit  obligations as of
the date of the employer's  fiscal year-end  statement of financial  position is
effective  for fiscal years ending after  December 15, 2008.  The  management is
currently evaluating the effect of this pronouncement on financial statements.

In  September  2006,  FASB  issued  SFAS 157  `Fair  Value  Measurements'.  This
Statement  defines fair value,  establishes a framework for measuring fair value
in generally accepted  accounting  principles  (GAAP),  and expands  disclosures
about fair value  measurements.  This Statement  applies under other  accounting
pronouncements that require or permit fair value measurements,  the Board having
previously  concluded in those accounting  pronouncements that fair value is the
relevant measurement attribute. Accordingly, this Statement does not require any
new fair value measurements. However, for some entities, the application of this
Statement  will  change  current  practice.  This  Statement  is  effective  for
financial  statements issued for fiscal years beginning after November 15, 2007,
and interim  periods  within those fiscal  years.  The  management  is currently
evaluating the effect of this pronouncement on financial statements.

In March 2006 FASB  issued  SFAS 156  'Accounting  for  Servicing  of  Financial
Assets' this Statement  amends FASB Statement No. 140,  Accounting for Transfers
and  Servicing of Financial  Assets and  Extinguishments  of  Liabilities,  with
respect  to the  accounting  for  separately  recognized  servicing  assets  and
servicing liabilities. This Statement:

     1. Requires an entity to recognize a servicing asset or servicing liability
     each time it  undertakes  an  obligation  to service a  financial  asset by
     entering into a servicing contract.

     2.  Requires  all  separately  recognized  servicing  assets and  servicing
     liabilities to be initially measured at fair value, if practicable.

     3.  Permits  an entity  to  choose  'Amortization  method'  or 'Fair  value
     measurement  method'  for each  class of  separately  recognized  servicing
     assets and servicing liabilities.

     4.  At  its  initial  adoption,  permits  a  one-time  reclassification  of
     available-for-sale  securities  to  trading  securities  by  entities  with
     recognized servicing rights, without calling into question the treatment of
     other available-for-sale  securities under Statement 115, provided that the
     available-for-sale  securities  are identified in some manner as offsetting
     the  entity's  exposure  to changes in fair  value of  servicing  assets or
     servicing  liabilities  that a servicer elects to  subsequently  measure at
     fair value.

     5.  Requires  separate  presentation  of  servicing  assets  and  servicing
     liabilities  subsequently  measured  at  fair  value  in the  statement  of
     financial position and additional disclosures for all separately recognized
     servicing assets and servicing liabilities.  This Statement is effective as
     of the  beginning  of the  Company's  first  fiscal year that begins  after
     September 15, 2006. Management believes that this statement will not have a
     significant impact on the consolidated financial statements.


                                       19
<PAGE>

                    KINGTHOMASON GROUP, INC. AND SUBSIDIARIES
               NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

In February  2006,  FASB issued SFAS No.  155,  "Accounting  for Certain  Hybrid
Financial  Instruments".  SFAS  No.  155  amends  SFAS No 133,  "Accounting  for
Derivative  Instruments and Hedging  Activities",  and SFAF No. 140, "Accounting
for  Transfers  and  Servicing  of  Financial  Assets  and   Extinguishments  of
Liabilities".  SFAS No. 155,  permits  fair value  remeasurement  for any hybrid
financial  instrument that contains an embedded  derivative that otherwise would
require  bifurcation,  clarifies which  interest-only  strips and principal-only
strips are not  subject  to the  requirements  of SFAS No.  133,  establishes  a
requirement  to evaluate  interest in securitized  financial  assets to identify
interests  that  are  freestanding  derivatives  or that  are  hybrid  financial
instruments that contain an embedded derivative requiring bifurcation, clarifies
that concentrations of credit risk in the form of subordination are not embedded
derivatives,  and  amends  SFAS No.  140 to  eliminate  the  prohibition  on the
qualifying special-purpose entity from holding a derivative financial instrument
that pertains to a beneficial  interest other than another derivative  financial
instrument.  This statement is effective for all financial  instruments acquired
or issued  after the  beginning of the  Company's  first fiscal year that begins
after  September  15,  2006.  The Company has not  evaluated  the impact of this
pronouncement its financial statements.

In May  2005,  the FASB  issued  SFAS No.  154,  "Accounting  Changes  and Error
Corrections."  This  statement  applies to all  voluntary  changes in accounting
principle and requires  retrospective  application to prior  periods'  financial
statements   of  changes  in   accounting   principle,   unless  this  would  be
impracticable.  This statement also makes a distinction  between  "retrospective
application"  of an  accounting  principle  and the  "restatement"  of financial
statements to reflect the  correction of an error.  This  statement is effective
for accounting  changes and corrections of errors made in fiscal years beginning
after  December  15,  2005.  We are  evaluating  the effect the adoption of this
interpretation  will have on its financial  position,  cash flows and results of
operations.

3.       PROPERTY AND EQUIPMENT

Property and equipment consisted of following on December 31, 2005:

                  Furniture, fixture and Equipment             $ 64,641
                  Less: Accumulated depreciation                 59,917
                                                               --------
                                                               $  4,724
                                                               ========

4.       ACCOUNTS PAYABLE & ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following on December 31,
2005:

                        Accounts payable                       $ 50,129
                        Accrued expenses                         58,084
                        Accrued expenses (recovery of debt)     825,003
                        Accrued taxes                             8,800
                                                               --------
                                                               $942,016
                                                               ========


                                       20
<PAGE>

                    KINGTHOMASON GROUP, INC. AND SUBSIDIARIES
               NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

5.       NOTE PAYABLE - OTHER

The Company has a note  payable to a vendor  amounting to $54,180 as of December
31,  2005.  The  note was due  December  15,  2004  and has not been  paid as of
December 31, 2005.  The note payable is unsecured  and bears an interest rate of
5.8% per year.  Per agreement,  the note was to be adjusted  against the rebates
the Company would have received from the vendor,  subject to the Company meeting
certain  production  requirements.  The  note was to be  adjusted  at 20% of the
original balance per year against the rebates earned. However, in June 2002, the
Company  ceased the  association  with the  entity.  Therefore,  pursuant to the
agreement  on the  note,  entire  amount  of the note is due and  recorded  as a
current liability. Interest for this note for the years ending December 31, 2005
and 2004 were $3,140.

6.       NOTES PAYABLE - OFFICERS

The notes  payable  amounting  $9,590 are due on demand,  unsecured and bears an
interest rate of 6% per year.  The interest  expense  accrued on these notes was
$575 and $665 for the year ended December 31, 2005 and 2004, respectively.

7.       GAIN ON SETTLEMENT OF DEBT

On July 15,  2002,  the Company  issued  $90,000  worth of 12%,  18-month  term,
Convertible Debentures (the "Debentures"),  on July 18, 2002, the Company issued
an additional  $100,000 worth of the  Debentures  with 12%, 18 month term and on
October  30,  2002,  the  Company  issued  an  additional  $20,000  worth of the
Debentures with 12%, 18 month term.

The holder may extend the term for an additional 18 months with a written notice
at least 30 days before the end of the term.  The extended  note will bear 12.5%
interest  rate per year.  When the note is extended,  two  additional  extension
options may be made by the holder with a written  notice.  Each extension of the
note will increase its interest rate by 0.5%. Therefore, effective interest rate
will be as follows;  Term one-12%,  Term  two-12.5%,  Term  three-13%,  and Term
four-13.5%.  The interests are payable quarterly starting October 2002. Interest
for the year ended  December  31, 2005 and 2004  amounted to $28,350 and $26,250
respectively.

Attached to the  Debentures,  the Company granted  non-transferable  Warrants to
purchase,  at a purchase price of $0.25 a share,  four shares of common stock of
the Company for each dollar of the  principal  amount of the note.  The warrants
expire  on the due  dates of the  notes.  The fair  value  of the  warrants  was
calculated  using Black Schole module was zero at the date of issuance using the
following assumptions:

Volatility 0
Interest rate: 5%
Expected life: 18 months
Dividend: zero

Accordingly no proceeds were allocated to the warrants.

The above  mentioned  $210,000  convertible  debentures and accrued  interest of
$116,  240 were  converted to 3,046  shares of  preferred  stock on December 31,
2005.  Each share of preferred  stock has par value of $100 and each share would
be  eligible  to be  converted  into  1,000  shares of common  stock.  A gain of
$250,395 for the conversion was recorded.


                                       21
<PAGE>

                    KINGTHOMASON GROUP, INC. AND SUBSIDIARIES
               NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note payable of $39,000 and related  accrued  interest of $21,100 was settled by
issuing  601 shares of  preferred  stock on  December  31,  2005.  Each share of
preferred  stock has a par value of $100 and each share  would be eligible to be
converted  into  1,000  shares  of  common  stock.  A gain  of  $45,135  for the
settlement of debt was recorded.

Note payable of $49,000 and related  accrued  interest of $32,568 was settled by
issuing  897 shares of  preferred  stock on  December  31,  2005.  Each share of
preferred  stock has a par value of $100 and each share  would be eligible to be
converted into 1,000 shares of common stock. The preferred stock will carry a 5%
interest paid  semi-annually.  A gain of $67,365 for the  settlement of debt was
recorded.

8.       STOCKHOLDERS' DEFICIT

On May 17, 2005,  the Company issued 37,500 shares of common stock to an officer
in lieu of interest accrued on a note payable of $3,000.  The shares were valued
at $7,500  based on the market price of $0.20 per share at the date of issuance.
Interest expense of $7,500 was booked accordingly.

On July 7,  2005,  the  Company  issued  25,000  shares  of  common  stock  to a
consulting  company in lieu of consulting  service provided from January 1, 2005
to June 30, 2005.  The shares were valued at $7,250 based on the average  market
price of $0.29 per share during the period when the service was provided.

On August 16,  2005,  the  Company  issued  60,000  shares of common  stock to a
consulting company according to a Forbearance Agreement.  The consulting company
provided service to the Company in 2002.  Disputes arose between the two parties
with respect to the exchange for consideration.  Per the Forbearance  Agreement,
the  consulting  company will dismiss and forbear from re-filing for a period of
six  months  from  and  including  the  date  of  execution  of the  Forbearance
Agreement.  The shares were valued at $6,000  based on the market price of $0.10
per share at the date of issuance.

On January  23,  2004,  the  company  entered  into a Media  Transfer  and Stock
Purchase  agreement  with  Digital  Alliance  Group,  LLC (Media  Provider)  and
Millennium Capital Quest Corp.  (Agent).  On the closing date, the Media Provide
conveyed,  assigned  and  transferred  all  right,  title and  interest  without
encumbrance  of any kind Media Credits  representing  Fifty  Million  Dollars in
retail rate card media credits,  per the agreement,  to the company. The company
issued 809,242 shares of its common stock valued at $80,924 for the  acquisition
of the Media  rights.  According  to the  agreement,  the  common  stock will be
redeemable by the Company for an aggregate price of One Dollar ($1.00)  provided
that certain terms are not met. On May 23, 2005 the Company  purchased  back the
809,242 shares issued to Millennium  Capital Quest by paying $1. The shares were
returned for non-performance and were officially cancelled on December 31, 2005.

On December 31, 2005 the Company cancelled 500,000 shares issued to a consultant
for non performance (Note 13).

During the year ended December 31, 2004, the company issued  1,000,000 shares of
common stock for prepaid consulting service amounting $184,500. Through December
31, 2005, the Company has amortized prepaid services amounting $7,089.

On September 30, 2005, the Company issued 50,294 shares of common stock for cash
for $40,000 in relation to the stock purchase agreement with Fusion Capital LLC.
On October 14, 2004, the Company entered into a common stock purchase  agreement
to sell  Fusion  Capital  Fund II, LLC (FCF) up to $6  million  of newly  issued


                                       22
<PAGE>

                    KINGTHOMASON GROUP, INC. AND SUBSIDIARIES
               NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Company's common stock over a period of up to 30 months. Specifically, after the
Securities  &  Exchange   Commission  has  declared   effective  a  registration
statement,  each month the Company has the right to sell to FCF  $200,000 of its
common stock at a purchase price based upon the market price of its common stock
on the date of each sale without any fixed discount to the market price.  At the
Company's  sole  option,  Fusion  Capital can be required to purchase  lesser or
greater  amounts of common stock each month up to $6.0 million in the aggregate.
The  Company has the right to control the timing and the amount of stock sold to
FCF.  The Company  also has the right to  terminate  the  agreement  at any time
without any  additional  cost.  In  connection  with this,  the  Company  issued
1,204,013 shares of common stock to FCF as commitment shares. This was valued at
$313,043 based on the market price at the date of issuance.  The prepaid funding
is being  amortized over the terms of the  agreement.  The Company has amortized
prepaid funding amounting to $151,304 through December 31, 2005.

9.       UNAMORTIZED PREPAID EXPENSES

Unamortized Prepaid Expenses consisted of following on December 31, 2005:

                  Prepaid Consulting Expenses                  $  7,089
                  Prepaid Funding Expenses                      161,739
                                                               --------
                                                               $168,828
                                                               ========

10.      COMMITMENTS

On March 15, 2004, the company entered into a consulting agreement for six month
period with Newport Capital Consultants, Inc. to provide financial management of
the  Company's  business  including but not limited to investor  relations.  The
company  issued 700,000  shares of its common stock.  When issued,  will be duly
authorized,  validly issued,  fully paid and  non-assessable,  and shall be free
from any liens, encumbrances of restrictions.

On March 22, 2004, the company entered into a consulting  agreement for one year
period with Venture Street  Capital  Partners,  LLC (VS). To provides  telephone
consultation, strategic advisement and referral services. The Company issued the
company's common stock for 150,000 shares by Rule 144. In addition,  The Company
shall pay to VS a nonrefundable  retainer fee of Commission of ten percent (10%)
cash USD of all  transactions  of  financing's  from any referral made by VS. In
regards to 144 securities  the  corporation  will furnish a restriction  lifting
opinion  letter from  corporate  counsel with the  restriction to be lifted in 1
year.

On October 14, 2004, the Company entered into a common stock purchase  agreement
to sell  Fusion  Capital  Fund II, LLC (FCF) up to $6  million  of newly  issued
Company's common stock over a period of up to 30 months. Specifically, after the
Securities  &  Exchange   Commission  has  declared   effective  a  registration
statement,  each month the Company has the right to sell to FCF  $200,000 of its
common stock at a purchase price based upon the market price of its common stock
on the date of each sale without any fixed discount to the market price.  At the
Company's  sole  option,  Fusion  Capital can be required to purchase  lesser or
greater  amounts of common stock each month up to $6.0 million in the aggregate.
The  Company has the right to control the timing and the amount of stock sold to
FCF.  The Company  also has the right to  terminate  the  agreement  at any time
without any  additional  cost.  In  connection  with this,  the  Company  issued
1,204,013 shares of common stock to FCF as commitment shares. This was valued at
$313,043  based on the market  price at the date of  issuance.  The  Company has
amortized prepaid funding amounting to $26,087 through December 31, 2004.


                                       23
<PAGE>

                    KINGTHOMASON GROUP, INC. AND SUBSIDIARIES
               NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

11.      EARNING PER SHARE

Earnings per share for the year ended December 31, 2005 and 2004 were determined
by dividing  net income for the periods by the weighted  average  number of both
basic  and  diluted  shares  of  common  stock  and  common  stock   equivalents
outstanding.  Stocks to be issued are regarded as common stock  equivalents  and
are considered in diluted earnings per share calculations.

12.      EXTRAORDINARY  ITEM - GAIN (LOASS) ON EXTINGUISHMENT OF DEBT AND DUE TO
         CONSULTANT

On February 1, 2002 the Company entered into a consulting agreement for 36-month
period  with a  consultant  to provide  debt  management,  collections,  capital
markets,  financial and related advice. The Company paid $75,000 pursuant to the
consulting  agreement in 2002 and accrued  $825,002  through  July 31, 2004.  In
August  25,  2004,  the  Company  amended  the  consulting  agreement  with  the
consultant.  The  amended  agreement  provides  for the  waiver  of all  accrued
consulting  fees.  This amount had been carried on the balance  sheet as part of
accrued liabilities. The waiver of the accrued liabilities has been reflected in
the accompanying  financial  statements as "Extraordinary  item - Gain (loss) on
extinguishment  of debt"  amounting  to $825,002  for the year ended  2004.  The
amended  agreement  also  provides for payment of $30,000  payable by August 25,
2004 followed by payments equal to $5,000 per month beginning on October 1, 2004
and continuing  each month through June 31, 2011, and issuance of 500,000 shares
of common stock of the Company to be issued no later than  October 1, 2004.  The
Company paid $30,000 to the consultant and issued 500,000 shares of common stock
of the Company valued at $130,000, as agreed under the amended agreement.  As of
December  31,  2004,  accrued  consulting  fees for this  consultant  amounts to
$15,000.  The  company  stops  paying  the  consultant  from  February  2005 and
cancelled  the 500,000  shares issued to the  consultant.  According to the debt
restoration  agreement,  once the  payment  is past due,  the debt that has been
forgiven  will be restored  immediately.  Accordingly,  the Company has incurred
"Extra  ordinary  item - Gain (loss) on  extinguishment  of debt"  amounting  to
$825,002  for the year ended 2005 and has  recorded an amount due to  consultant
amounting $825,002.

13.      SUPPLEMENTAL DISCLOSURE OF CASH FLOWS

The Company  prepares its statements of cash flows using the indirect  method as
defined under the Financial Accounting Standard No. 95.

The  Company  paid $0 for  income  tax and  $137,240  for  interest  by  issuing
preferred  stock  during the year ended  December 31, 2005 and $1,347 for income
tax and $106 interest for the year ended December 31, 2004.

Cash from financing and operating activities exclude the effect of settlement of
debt of  $298,000  and accrued  interest  of  $173,288 by issuance of  Preferred
stock.

14.      GOING CONCERN

The  accompanying  consolidated  financial  statements  have  been  prepared  in
conformity  with generally  accepted  accounting  principles  which  contemplate
continuation  of the  company as a going  concern.  However,  the Company has an
accumulated  deficit of $2,577,040 as of December 31, 2005  including  losses of
$756,596 for the years ended December 31, 2005. The Company's total  liabilities
exceed its total assets by $1,017,940.  In view of the matters  described above,
recoverability  of a major  portion of the recorded  asset  amounts shown in the
accompanying  consolidated  balance sheet is dependent upon continued operations
of the company,  which in turn is dependent upon the Company's  ability to raise


                                       24
<PAGE>

                    KINGTHOMASON GROUP, INC. AND SUBSIDIARIES
               NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

additional capital,  obtain financing and succeed in its future operations,  The
financial   statements   do  not  include  any   adjustments   relating  to  the
recoverability  and  classification  of  recorded  asset  amounts or amounts and
classification  of  liabilities  that might be  necessary  should the Company be
unable to continue as a going concern.

Management has taken the following steps to revise its operating and financial
requirements, which it believes are sufficient to provide the Company with the
ability to continue as a going concern. The Company is actively pursuing
additional funding and potential merger or acquisition candidates and strategic
partners, which would enhance stockholders' investment. Management believes that
the above actions will allow the Company to continue operations through the next
fiscal year.





















                                       25
<PAGE>
<TABLE>
<CAPTION>

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

     During the two most recent  fiscal years or any later interim  period,  our
principal  independent  accountant  has not  resigned,  declined  to  stand  for
reelection or been dismissed.

ITEM 8A. CONTROLS AND PROCEDURES.

     Evaluation of disclosure controls and procedures. The Company's management,
with the  participation  of the  Company's  Chief  Executive  Officer  and Chief
Financial Officer,  has evaluated the effectiveness of the Company's  disclosure
controls and procedures as of December 31, 2005. Based on this  evaluation,  the
Company's Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures are effective.


     The  registrant  made no changes in its  internal  control  over  financial
reporting  that  occurred  during  its fourth  fiscal  quarter  that  materially
affected,  or is reasonably likely to materially  affect,  its internal controls
over financial reporting.


ITEM 8B. OTHER INFORMATION

     There is no  information  that was  required  to be  disclosed  on Form 8-K
during the fourth quarter of 2005 that was not reported.

                                    PART III

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

Directors, Executive Officers and Significant Employees.
--------------------------------------------------------

     Set forth below are the names and terms of office of each of the directors,
executive  officers and significant  employees of the KingThomason  Group and of
its  subsidiaries  and a description  of the business  experience  of each.  The
directors of the company are elected annually by the shareholders.  The officers
serve at the pleasure of the board of directors.  The directors do not presently
receive fees or other remuneration for their services.

            The KingThomason Group, Inc. (the Nevada holding company)

--------------------------------------- --------------------------------- ------------------ ----------------
<S>                                     <C>                               <C>                <C>
                                                                             Office Held         Term of
                Person                               Office                     Since            Office
--------------------------------------- --------------------------------- ------------------ ----------------
T.E. King III, 37                       President,                              7-00              12-06
                                        Chief Financial Officer and             7-00              12-06
                                        Director                                7-00              12-06
--------------------------------------- --------------------------------- ------------------ ----------------
Hume A. "Tom" Thomason, 63              Secretary and                           7-00              12-06
                                        Director                                7-00              12-06
--------------------------------------- --------------------------------- ------------------ ----------------
William T. Walker, Jr., 68              Director                                4-02              12-06
--------------------------------------- --------------------------------- ------------------ ----------------


                                       26
<PAGE>

                         KingThomason, Inc. (California)

--------------------------------------- -------------------------------- ------------------- ----------------
                                                                            Office Held          Term of
                Person                              Office                     Since             Office
--------------------------------------- -------------------------------- ------------------- ----------------
T.E. King III, 37                       Chief Financial Officer,                9-98              12-06
                                        Secretary and                           9-98              12-06
                                        Director                                9-98              12-06
                                                                                9-98              12-06
--------------------------------------- -------------------------------- ------------------- ----------------
Hume A. "Tom" Thomason, 63              President, Director                     9-98              12-06
--------------------------------------- -------------------------------- ------------------- ----------------


                      KingThomason Financial Services, Inc.

--------------------------------------- -------------------------------- ------------------- ----------------
                                                                            Office Held          Term of
                Person                              Office                     Since             Office
--------------------------------------- -------------------------------- ------------------- ----------------
Hume A. "Tom" Thomason, 63              Director                                4-99              12-06
--------------------------------------- -------------------------------- ------------------- ----------------
T.E. King III, 37                       Chief Financial Officer,                4-99              12-06
                                        Secretary and                           4-99              12-06
                                        Director                                4-99              12-06
--------------------------------------- -------------------------------- ------------------- ----------------


                    KingThomason Credit Cards Services, Inc.

--------------------------------------- -------------------------------- ------------------- ----------------
                                                                            Office Held          Term of
                Person                              Office                     Since             Office
--------------------------------------- -------------------------------- ------------------- ----------------
Hume A. "Tom" Thomason, 63              Director                                1-00              12-06
--------------------------------------- -------------------------------- ------------------- ----------------
T.E. King III, 37                       President,                              1-00              12-06
                                        Chief Financial Officer,                1-00              12-06
                                        Secretary and                           1-00              12-06
                                        Director                                1-00              12-06
--------------------------------------- -------------------------------- ------------------- ----------------
</TABLE>


     Business Experience:

     Thomas  "Tim"  King.  Mr.  King  received a  bachelor-of-science  degree in
business  administration in 1990 at the University of Southern California.  From
July 1990 until January 1992 he was a representative of Amplicon Financial, Inc.
of Santa Ana, California,  a company that leased high-tech hardware and software
systems.  From  January  1992  until  July 1992 he was a  representative  of his
father's investment banking company, King & Associates of Los Angeles. From July
1992 until September 1993 he was a foreign exchange  department manager of Tokyo
International  Investments,  Ltd. of San Francisco,  California.  From September
1993 until April 1996 he was a  co-founder,  director and vice  president of G-5
Global Investments of San Francisco,  California, a private hedge fund active in


                                       27
<PAGE>

the currency  markets.  From April 1996 until May 1998 he was a district manager
of  SunAmerica  Securities,  Inc. of Concord,  California,  a securities  market
financial consulting firm. In May 1998 he co-founded  KingThomason,  Inc. of San
Ramon,  California  and has served as a  director  and its  president  since its
inception.  Mr.  King  devotes  100  percent  of his  time  to the  business  of
KingThomason.

     Hume A. (Tom) Thomason. Mr. Thomason received a bachelor-of-science  degree
in 1965 from Arizona State University.  He subsequently pursued graduate studies
at the  University  of Southern  California  and attended  extension  courses at
LaSalle  University and management  courses at Harvard College.  From 1977 until
1981 he was a vice president of new business  development  of Angelo,  Hawkins &
Thomason of  Sacramento,  California,  a property,  casualty and life  insurance
agency.  From 1981  until  1983 he was vice  president  of  marketing  of Thomas
Underly Development Company of Sacramento,  California, a commercial real estate
development company.  From 1984 until 1986 he was an independent insurance agent
in  Orange  County,  California,  and sold  commercial  property  and  casualty,
benefits,  pension  and  life  insurance  products  to  commercial  accounts  he
developed.  From 1987 until 1991 he sold the same type of insurance  products to
new  corporate  clients  for  Sedgwick  James and RBH  Insurance  Brokers of Los
Angeles,  California. From 1991 until 1994 he was again an independent insurance
agent  selling the same types of  insurance  products  out of his offices in Los
Angeles, California. From 1994 until 1997 he was the vice president of marketing
and sales of America China Enterprises, Inc. of San Ramon, California, a company
that  sells  a  portfolio  of  insurance  products  and  financial  services  in
California and in foreign markets. In 1998 he co-founded KingThomason,  Inc. and
has served as a director and its corporate  secretary  since its inception.  Mr.
Thomason devotes 100 percent of his time to the business of KingThomason.

     William  T.  Walker  Jr. - Board of  Directors.  Bill  Walker is an outside
director  with  extensive  experience  in the  investment  banking and corporate
management arena. During his career he has run his own investment-banking  firm,
Walker  Associates.  Additionally,  he has served as Executive  Vice  President,
Manager  Investment  Banking,  Member  of the  Board  and  Executive  Committee,
Chairman  of the  Underwriting  Committee  at BATEMAN  EICHLER,  HILL  RICHARDS,
Partner, Manager of the Syndicate Department and Supervisor of the Institutional
Department in the New York  headquarters  for GLORE FORGAN,  WILLIAM R. STAATS &
CO.  He has been  directly  involved  with  and  responsible  for the  financial
planning,  direction and performance of both the Corporate  Finance  Departments
and the Syndicate Departments. He has consulted with corporations in preparation
for public and  private  offerings  and  private  financing  as well as assisted
public companies with their financial public  relations.  He holds a degree from
Stanford  University,  Palo Alto California and Culver Military Academy,  Culver
Indiana.  He also  served in the  United  States  Air Force and  California  Air
National Guard.


Audit Committee and Audit Committee Financial Expert

     Our directors  serve as our audit  committee.  There is no audit  committee
financial  expert serving on the audit committee.  However,  the audit committee
has the authority to hire a financial expert any time it has the need for expert
financial advice.


                                       28
<PAGE>
<TABLE>
<CAPTION>

Code of Ethics

     We have  adopted  a Code of Ethics  that  applies  to our  chief  executive
officer,  chief  financial  officer,  and - should we acquire  such -  principal
accounting officer or controller or persons performing similar functions. A copy
of the Code of Ethics  was filed as an exhibit  to Form 8-K  Current  Report for
10-14-02 (Exhibit 14 incorporated herein by reference).

Compliance With Section 16(a) of the Exchange Act.
--------------------------------------------------

     Our  securities  are  not  registered  with  the  Securities  and  Exchange
Commission  under Section 12(b) or 12(g) of the Exchange Act.  Accordingly,  our
officers,  directors and beneficial owners of 10 percent or more of any class of
stock are not subject to Section 16(a) of the Exchange Act.

ITEM 10. EXECUTIVE COMPENSATION.

     The  directors  of  KingThomason  Group  and its  subsidiaries  receive  no
compensation for their services as directors. The officers of KingThomason Group
and its subsidiaries received from it an aggregate of $32,000 of compensation in
the last fiscal year for their services in all capacities.

     Mr. King, our president, received a salary in 2005 of $16,000.

     The following sets forth the remuneration received in the last three fiscal
years by Mr. King, the president of KingThomason,  in all capacities. No officer
or employee has received total  remuneration  of $100,000 or more in any of such
years.

                                              Awards
                                    ------------------------
        Annual Compensation                       Securities
----------------------------------                ----------
                                                  Underlying         Payout
                                                  ----------  ---------------------
                      Other Annual  Restricted    Options/    LTIP     All Other
                      ------------  ----------    -------     ----     ---------
Year  Salary   Bonus  Compensation  Stock Awards  SARS(#)     Payouts  Compensation
----  ------   -----  ------------  ------------  -------     -------  ------------
<S>   <C>      <C>    <C>           <C>           <C>         <C>      <C>

2005  $16,000      0             0             0        0           0             0
2004  $19,750      0             0             0        0           0             0
2003  $ 5,500      0             0             0  200,000           0             0
</TABLE>

     Employment Contracts.
     ---------------------

     We have no employment contracts.

     Stock Options.
     --------------

     We have a stock  option  plan,  the major  provisions  of which Plan are as
follows:

     Options granted under the plan may be "employee incentive stock options" as
defined under Section 422 of the Internal  Revenue Code or  non-qualified  stock
options,  as determined by the option committee of the board of directors at the
time of grant of an option.  The plan enables the option  committee of the board
of  directors  to  grant  up to two  million  stock  options  to  employees  and
consultants  from time to time. The option committee before fiscal year 2005 had


                                       29
<PAGE>
<TABLE>
<CAPTION>

granted 811,250 options to management employees exercisable over the next two to
seven years.

         The following table shows each exercise of stock options during 2005 by
the named executive officers and the fiscal year-end value of their unexercised
options:

----------------------------------------------------------------------------------------------------------------------
                   Aggregate Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
----------------------------------------------------------------------------------------------------------------------
<S>                       <C>         <C>         <C>                                  <C>
                            Shares                  Number of Securities Underlying     Value of Unexercised In-the-
                           Acquired                   Unexercised Options/SARs at        Money Options/SARs at FY-
                              On        Value                 FY-End (#)                          End ($)
        Name of            Exercise    Realized
   Executive Officer         (#)          ($)          Exercisable/Unexercisable         Exercisable/Unexercisable
------------------------- ----------- ----------- ------------------------------------ -------------------------------
T.E. King III                 0           $0                   100,000/0                         $19,000/0
------------------------- ----------- ----------- ------------------------------------ -------------------------------
T.E. King III                 0           $0                   200,000/0                         $38,000/0
------------------------- ----------- ----------- ------------------------------------ -------------------------------
Hume A. Thomason              0           $0                   200,000/0                         $38,000/0
------------------------- ----------- ----------- ------------------------------------ -------------------------------
Hume A. Thomason              0           $0                   100,000/0                         $19,000/0
------------------------- ----------- ----------- ------------------------------------ -------------------------------
William T Walker              0           $0                   100,000/0                         $19,000/0
------------------------- ----------- ----------- ------------------------------------ -------------------------------
</TABLE>


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

     The following table shows  information as of March 16, 2006 with respect to
each beneficial owner of more than five percent of each class of voting stock of
KingThomason  Group,  and to each of the officers and directors of  KingThomason
Group individually and as a group:


                                                     No. of Shares    % of Class
                                                     -------------    ----------

T.E. King III                                         6,393,464(1)         32.5%
309 Avenue H, Suite C
Redondo Beach, CA 90277

Hume A. ("Tom") Thomason                              5,793,463(1)         29.5%
309 Avenue H, Suite C
Redondo Beach, CA 90277

William T. Walker, Jr.                                  150,000(2)             *
P. O. Box 10684
Beverly Hills, CA 90213

Officers and Directors as a Group (4 persons)     12,336,927(1)(2)         62.7%

     --------------------
     (1)  Includes  300,000 shares which this person could purchase  through the
          exercise of warrants.
     (2)  Includes  100,000 shares which this person could purchase  through the
          exercise of warrants.
     *    Less than 1 percent.


                                       30
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     There have been no  transactions  during the last two  years,  or  proposed
transactions,  to  which  we  were  or are to be a  party  in  which  any of the
following persons had or is to have a direct or indirect material interest:

     o    the officers and directors;

     o    any nominees for election as a director;

     o    any beneficial owners of more than 5 percent of our voting securities;

     o    any member of the immediate family of any of the above persons.

ITEM 13. EXHIBITS.

     The following exhibits are filed, by incorporation by reference, as part of
this Form 10-KSB:

 3.1      -    Articles of Incorporation of The KingThomason Group, Inc.*

 3.1.1    -    Certificate of Amendment to Articles of Incorporation pursuant to
               NRS 78.385 and 78.390  (increasing  the  authorized  capital  and
               designating Series A Convertible, Voting Preferred Stock)*+

 3.2      -    Bylaws of The KingThomason Group, Inc.*

10.3      -    Royalty  Agreement for Association  Program between  KingThomason
               Financial   Services,   Inc.,  a  California   corporation,   and
               California Restaurant  Association,  a California  not-for-profit
               corporation.*

10.4      -    Payor  Agreement   between   KingThomason,   Inc.,  a  California
               corporation, and California Foundation for Medical Care.*

10.5      -    Executive General Agent Agreement between KingThomason  Insurance
               Company, Inc. and Jefferson Pilot Life Insurance Company.*

10.6      -    Payor Agreement between KingThomason,  Inc. (National Limo Group)
               and California Foundation for Medical Care.*

10.7     -    2001 Stock Option Plan adopted by The KingThomason Group, Inc.**

10.8      -    Strategic   Marketing  Agreement  of  January  1,  2004,  between
               KingThomason  Credit  Card  Services,   Inc.  and  Debt  Alliance
               Services, LLC.***


                                       31
<PAGE>

10.9      -    Common Stock  Purchase  Agreement  between  registrant and Fusion
               Capital Fund II, LLC dated October 14, 2005.+

10.10     -    Registration  Rights  Agreement  between  registrant  and  Fusion
               Capital Fund II, LLC dated October 14, 2005.+

14        -    Code of  Ethics  for  the  Chief  Executive  Officer  and  Senior
               Financial Officers.++

19        -    Letter to the Shareholders.++

20.1      -    Audit Committee Charter.++

20.2      -    Compensation Committee Charter.++

20.3      -    Governance and Nominating Committee Charter.++

20.4      -    Corporate Governance Principles.++

31        -    Certification  of Chief Executive  Officer  pursuant to 18 U.S.C.
               Section  1350,  as  adopted   pursuant  to  Section  302  of  the
               Sarbanes-Oxley Act of 2002.

31.1      -    Certification  of Chief Financial  Officer  pursuant to 18 U.S.C.
               Section  1350,  as  adopted   pursuant  to  Section  302  of  the
               Sarbanes-Oxley Act of 2002.

32        -    Certification  of Chief Executive  Officer  pursuant to 18 U.S.C.
               Section  1350,  as  adopted   pursuant  to  Section  906  of  the
               Sarbanes-Oxley Act of 2002.

32.1      -    Certification  of Chief Financial  Officer  pursuant to 18 U.S.C.
               Section  1350,  as  adopted   pursuant  to  Section  906  of  the
               Sarbanes-Oxley Act of 2002.

99.1      -    Registrant's press release dated October 18, 2005.+


*    Previously filed with Amendment No. 1 on Form S-4 to Form SB-2,  Commission
     File  #333-60980,  EDGAR Accession  #0001060830-01-500046  on May 22, 2001;
     incorporated herein.

**   Previously  filed with Form 10-QSB  09-30-01,  Commission File  #333-60880,
     EDGAR Accession  #0001060830-01-500136  on November 13, 2001;  incorporated
     herein.

***  Previously  filed with Form 10-KSB  12-31-02,  Commission File  #333-60880,
     EDGAR  Accession  #0001060830-03-000065  on March  31,  2004;  incorporated
     herein.

+    Previously filed with Form 8-K 10-14-04,  Commission File #333-60880, EDGAR
     Accession #0001060830-04-000344 on October 20, 2005; incorporated herein.


                                       32
<PAGE>

*+   Previously filed with Form 8-K 11-16-04,  Commission File #333-60880, EDGAR
     Accession #0001060830-04-000405 on December 01, 2005; incorporated herein.

++   Previously filed with Form 8-K 02-14-05,  Commission File #333-60880, EDGAR
     Accession #0001060830-05-000090- on February 24, 2005; incorporated herein.


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

     Audit Fees. Our principal independent accountant billed us, for each of the
last two  fiscal  years,  the  following  aggregate  fees  for its  professional
services rendered for the audit of our annual financial statements and review of
financial  statements  included  in our Form  10-QSB  reports or other  services
normally  provided  in  connection  with  statutory  and  regulatory  filings or
engagements for those two fiscal years:

                  Fiscal Year ended December 31, 2005         $12,000
                  Fiscal Year ended December 31, 2004         $32,000

     Audit-Related  Fees. Our principal  independent  accountant  billed us, for
each of the last two fiscal years,  the following  aggregate  fees for assurance
and  related  services  reasonably  related to the  performance  of the audit or
review of our financial statements and not reported above under "Audit Fees":

                  Fiscal Year ended December 31, 2005         $-0-
                  Fiscal Year ended December 31, 2004         $-0-

     Tax Fees. Our principal  independent  accountant billed us, for each of the
last two fiscal years, the following  aggregate fees for  professional  services
rendered for tax compliance, tax advice and tax planning:

                  Fiscal Year ended December 31, 2005         $-0-
                  Fiscal Year ended December 31, 2004         $-0-

     All Other Fees. Our principal independent accountant billed us, for each of
the last two  fiscal  years,  the  following  aggregate  fees for  products  and
services  provided by it,  other than the  services  reported in the above three
categories:

                  Fiscal Year ended December 31, 2005         $-0-
                  Fiscal Year ended December 31, 2004         $-0-

     Pre-Approval of Audit and Non-Audit  Services.  The Audit Committee charter
requires that the committee  pre-approve  all audit,  review and attest services
and non-audit services before such services are engaged.


                                       33
<PAGE>

                                   SIGNATURES

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


Date:  October 19, 2006                           The KingThomason Group, Inc.



                                                     /s/ Thomas E. King III
                                                  By
                                                    ----------------------------
                                                    T.E. King III, President

In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.



                                        /s/ Thomas E. King III
Date:  October 19, 2006
                               -------------------------------------------------
                               T.E. King III, President, Chief Financial Officer
                                        and Director


                                        /s/ Hume A. Tom Thomason
Date:  October 19, 2006
                               -------------------------------------------------
                               Hume A. "Tom" Thomason, Secretary and Director


                                        /s/ William T. Walker, Jr.
Date:  October 19, 2006
                               -------------------------------------------------
                               William T. Walker, Jr., Director






                                       34
<PAGE>

                          The KingThomason Group, Inc.
                          Commission File No. 333-60880

                                  EXHIBIT INDEX


                         Amendment No. 1 to Form 10-KSB

                       For the Fiscal Year Ended 12-31-05

     The following exhibits are filed, by incorporation by reference, as part of
this Form 10-KSB:

 3.1      -    Articles of Incorporation of The KingThomason Group, Inc.*

 3.1.1    -    Certificate of Amendment to Articles of Incorporation pursuant to
               NRS 78.385 and 78.390  (increasing  the  authorized  capital  and
               designating Series A Convertible, Voting Preferred Stock)*+

 3.2      -    Bylaws of The KingThomason Group, Inc.*

10.3      -    Royalty  Agreement for Association  Program between  KingThomason
               Financial   Services,   Inc.,  a  California   corporation,   and
               California Restaurant  Association,  a California  not-for-profit
               corporation.*

10.4      -    Payor  Agreement   between   KingThomason,   Inc.,  a  California
               corporation, and California Foundation for Medical Care.*

10.5      -    Executive General Agent Agreement between KingThomason  Insurance
               Company, Inc. and Jefferson Pilot Life Insurance Company.*

10.6      -    Payor Agreement between KingThomason,  Inc. (National Limo Group)
               and California Foundation for Medical Care.*

10.7     -    2001 Stock Option Plan adopted by The KingThomason Group, Inc.**

10.8      -    Strategic   Marketing  Agreement  of  January  1,  2004,  between
               KingThomason  Credit  Card  Services,   Inc.  and  Debt  Alliance
               Services, LLC.***

10.9      -    Common Stock  Purchase  Agreement  between  registrant and Fusion
               Capital Fund II, LLC dated October 14, 2005.+


                                       1
<PAGE>

10.10     -    Registration  Rights  Agreement  between  registrant  and  Fusion
               Capital Fund II, LLC dated October 14, 2005.+

14        -    Code of  Ethics  for  the  Chief  Executive  Officer  and  Senior
               Financial Officers.++

19        -    Letter to the Shareholders.++

20.1      -    Audit Committee Charter.++

20.2      -    Compensation Committee Charter.++

20.3      -    Governance and Nominating Committee Charter.++

20.4      -    Corporate Governance Principles.++

31        -    Certification  of Chief Executive  Officer  pursuant to 18 U.S.C.
               Section  1350,  as  adopted   pursuant  to  Section  302  of  the
               Sarbanes-Oxley Act of 2002.

31.1      -    Certification  of Chief Financial  Officer  pursuant to 18 U.S.C.
               Section  1350,  as  adopted   pursuant  to  Section  302  of  the
               Sarbanes-Oxley Act of 2002.

32        -    Certification  of Chief Executive  Officer  pursuant to 18 U.S.C.
               Section  1350,  as  adopted   pursuant  to  Section  906  of  the
               Sarbanes-Oxley Act of 2002.

32.1      -    Certification  of Chief Financial  Officer  pursuant to 18 U.S.C.
               Section  1350,  as  adopted   pursuant  to  Section  906  of  the
               Sarbanes-Oxley Act of 2002.

99.1      -    Registrant's press release dated October 18, 2005.+


*    Previously filed with Amendment No. 1 on Form S-4 to Form SB-2,  Commission
     File  #333-60980,  EDGAR Accession  #0001060830-01-500046  on May 22, 2001;
     incorporated herein.

**   Previously  filed with Form 10-QSB  09-30-01,  Commission File  #333-60880,
     EDGAR Accession  #0001060830-01-500136  on November 13, 2001;  incorporated
     herein.

***  Previously  filed with Form 10-KSB  12-31-02,  Commission File  #333-60880,
     EDGAR  Accession  #0001060830-03-000065  on March  31,  2004;  incorporated
     herein.

+    Previously filed with Form 8-K 10-14-04,  Commission File #333-60880, EDGAR
     Accession #0001060830-04-000344 on October 20, 2005; incorporated herein.

*+   Previously filed with Form 8-K 11-16-04,  Commission File #333-60880, EDGAR
     Accession #0001060830-04-000405 on December 01, 2005; incorporated herein.

++   Previously filed with Form 8-K 02-14-05,  Commission File #333-60880, EDGAR
     Accession #0001060830-05-000090- on February 24, 2005; incorporated herein.


                                       2