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

| **FORM                10-KSB** |
|--------------------------------|
|                           |

**For      the fiscal year ended December 31, 2005**

**Commission      File Number 0032939 **

**Viper      Networks, Inc. **

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

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

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

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

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

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

**APPLICABLE      ONLY TO CORPORATE ISSUERS**

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**Documents      Incorporated by Reference: **

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

|                               |                                                                                                                                                              | **Page No.** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------|
| PART                I                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |              |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |              |
|           Item                1.                                                                    | DESCRIPTION                OF                BUSINESS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 3                 |
|           Item                1A.                                                                                            | FACTORS                THAT                MAY AFFECT FUTURE RESULTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 18                |
|           Item                2.                                                                                             | DESCRIPTION                OF PROPERTY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 24                |
|           Item                3.                                                                                             | LEGAL                PROCEEDINGS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 24                |
|           Item                4.                                                                                             | SUBMISSION                OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 25                |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |              |
| PART                II                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |              |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |              |
|           Item                5.                                                                                             | MARKET                FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 26                |
|           Item                6.                                                                                             | MANAGEMENT'S                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS                OF                OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 36                |
|           Item                7.                                                                                             | FINANCIAL                STATEMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 41                |
|           Item                8.                                                                                             | CHANGES                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL                DISCLOSURE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 41                |
|           Item                8A.                                                                                            | CONTROLS                AND                PROCEDURES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 41                |
|           Item                8B.                                                                                            | OTHER                INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 42                |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |              |
| PART III                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |              |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |              |
|           Item                9.                                                                                             | DIRECTORS,                EXECUTIVE OFFICERS AND CONTROL PERSON                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 43                |
|           Item                10.                                                                                            | EXECUTIVE                COMPENSATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 45                |
|           Item                11.                                                                                            | SECURITY                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND                MANAGEMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 48                |
|           Item                12.                                                                                            | CERTAIN                RELATIONSHIPS AND RELATED TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 48                |
|           Item                13.                                                                                            | EXHIBITS                AND REPORTS ON FORM 8-K                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 49                |
|           Item                14.                                                                                            | PRINCIPAL                ACCOUNTANT FEES AND SERVICES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 50                |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| SIGNATURES                                                                                                                                                                     | 52                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| INDEX                TO CONSOLIDATED FINANCIAL STATEMENTS                                                                                                                      | F-1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| REPORT                OF INDEPENDENT CERTIFIED PUBLIC                ACCOUNTANTS                                                                                               | F-2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

**Available      Information**

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**PART      I**

**ITEM      1.     DESCRIPTION OF      BUSINESS**

**BACKGROUND**

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**Business      of the Company**

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

**Industry      Background**

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**Our      Strategy**

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

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

**Our      Solution**

**Consumer      Products and Services **

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*no*

*vPhone*

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

*IP      Phone Adaptor (IPA)*

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

*Broadband      Phone Adaptor (BPA)*

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

*Wi-Fi      vPhone*

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

*IP      PBX*

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

*Calling      time*

*Wholesale      Operations*

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**Sales,      Marketing and Promotional Activities**

**Competition**

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**Operations**

**Suppliers**

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**Research      and Development**

**Industry      Overview**

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**     Voice      on Data Networks**

**     The      Economics of Internet Telephony**

**     Limitations      of Existing Internet Telephony Solutions**

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**     Increasing      Trends Toward Outsourcing Telephony Solutions**

**     Government      Regulation**

*United      States*
*.*

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

*International*
*.      *

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**     Certain      Other Regulations Affecting the Internet**

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

*International*
*.*

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

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

| ***2.******Current                  Financial Structure, Limited Equity, Limited Working Capital & Need                  for Additional Financing******.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| While                  the Company’s management believes that its financial policies have been                  prudent, the Company has relied, in large part, upon the use of                  common                  stock financing to provide a substantial portion of the Company’s                  financial needs. The Company anticipates that it will need to raise                  significant additional capital to implement is business plan. This                  dependence upon common equity financing has meant that we are reliant                  upon                  the price of our common stock in the public markets, which has                  dramatically declined over the past two years and there can be                  no                  assurance that the price of our common stock will recover. In addition,                  we                  have had only limited discussions with potential investors and                  there can                  be no guarantee that the Company will receive additional capital                  from any                  investors or, if it does receive sufficient additional capital,                  that it                  can obtain additional capital on terms that are reasonable in light                  of the                  Company’s current circumstances. We have limited equity and limited                  working capital. Further, the Company has not received any commitments                  or                  assurances from any underwriter, investment banker, venture capital                  fund,                  or other individual or institutional investor. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| ***3.******Auditor's                  Opinion: Going Concern******.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| The                  Company’s independent auditors, Armando C. Ibarra, CPA, P.C., have                  expressed substantial doubt about the Company's ability to continue                  as a                  going concern since the Company is an early-stage company and there                  exists                  only a limited history of operations and has continued operating                  losses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| ***4.******Subordinate                  to Existing and Future Debt & Authorized But Unissued Preferred                  Stock******.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| All                  of the Common Stock is subordinate to the claims of the Company's                  existing                  and future creditors and the holders of the Company's existing                  preferred                  stock and any that may be issued in the future.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| ***5.******Outstanding                  Convertible Non-Dilutive Debt to Current and Former                  Management***.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|  In                  August of 2005, we entered into agreements with certain of our                  current and                  former officers and directors. Under the terms of these agreements,                  these                  individuals returned an aggregate of 16,500,000 shares of our common                  stock                  previously awarded as bonuses in connection with their prior employment                  with the Company and in exchange, we issued an aggregate of 16,500,000                  common stock purchase warrants and an aggregate of $838,969.26                  in                  unsecured promissory notes. Each of the notes are convertible,                  at the                  option of each noteholder, into shares of the Company’s common stock                  (using the 52-week low trading range of the Company’s public common stock                  price) and the number of shares so issued in payment of all accrued                  and                  unpaid interest and principal cannot be reduced as a result of                  any reverse                  split of the Company’s common stock or any recapitalization. Further, the                  number of shares issuable to each                                                                                                                                                                                                                                                                                                                                                                                                            |

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| noteholder                  are described in each note as non-dilutive;                  that is the number of shares that may be purchased upon conversion                  any                  note will increase in direct proportion to any increase in the                  number of                  shares issued by the Company after the issuance of the notes. The                  warrants                  grant the holder the right to purchase our common stock at an exercise                  price of $0.25 per share and the warrants do not expire until August                  26,                  2009. While the Company believed at the time the issuance of the                  notes and                  warrants served to support the Company’s plans, the terms of the notes and                  the warrants may limit the ability to raise additional capital.                  Further,                  while the transactions involve the return of shares previously                  issued in                  connection with the Company’s payment of employment bonuses, the Company                  did not undertake any evaluation of whether the transactions do                  not expose                  the Company to potential claims under the California Labor Code                  and other                  state employment rules and regulations.                                                                              |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| ***6.******Conflicts                  of Interest***.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| As                  a small company, we are dependent, from time to time, upon one                  or more our                  officers and directors to assist us in meeting our financial obligations.                  In some cases, we may enter into an agreement with an officer or                  director                  who assists us in completing one or more transactions or in providing                  us                  with financing or other services. These transactions involve a                  conflict of                  interest. A conflict of interest arises whenever a party has an                  interest                  on both sides of a transaction. While we believe that we have and                  will                  continue to enter into such agreements with officers and directors                  on                  terms that are no different than that which we can obtain from                  independent                  third parties, there can be no assurance that we will always be                  successful                  in these efforts or that we can successfully resolve conflicts                  of interest                  to fully satisfy our obligations to our Company and our                  stockholders.                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| ***7.******Dependence                  & Reliance Upon Others******.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Some                  of our products and services may rely upon hardware, software,                  and                  communications systems provided by others. For this reason we may                  become                  dependent upon third parties which may materially and adversely                  affect our                  ability to offer distinct products and services which may result                  in                  adverse pricing pressures on our products with resulting adverse                  impact on                  our profits, if any.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
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| ***8.******Recent                  Acquisitions & Limited History of                  Operations******.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| During                  the fiscal year ending December 31, 2005, we generated $3,482,549 in                  net revenues, primarily through our acquisition of Coliance and                  Mid-Atlantic in 2003 and our acquisition of Adoria in 2004. We                  will need                  to further increase our revenues and successfully develop and implement                  our business strategy in an ever-changing and challenging marketplace                  if                  we are to succeed. In the event that we are not able to successfully                  develop and implement our business strategy, we may be subject                  to                  continuing significant risks and resulting financial volatility.                  Our                  limited history and the continuing technological and competitive                  challenges that we face are beyond our ability to control. For                  these and                  other reasons we may incur continuing and protracted losses with                  the                  result that an investor may lose all or substantially all of their                  investment.                                                                                                                                                                                                                                                                                         |
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| ***9.******Matter                  of 911 and Emergency Calling Services and Exposure to                  Liability******.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Both                  our emergency calling service and our E911 calling service are                  different,                  in significant respects, from the emergency calling services offered                  by                  traditional wireline telephone companies. In each case, those differences                  may cause significant delays, or even failures, in callers’ receipt of the                  emergency assistance they need. Traditional wireline telephone                  companies                  route emergency calls over a dedicated infrastructure directly                  to an                  emergency services dispatcher at the public safety answering point,                  or                  PSAP, in the caller’s area. Generally, the dispatcher automatically                  receives the caller’s phone number and actual location information. While                  our system being deployed is designed to route calls in a similar                  fashion                  to traditional wireline services, our 911 services are not yet                  available                  in all locations. Further to the extent that it is not available                  in a                  specific location or to the extent that a caller experiences delays                  in                  obtaining and accessing emergency calling services, we may face                  significant liability. |
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| ***10.******Matter                  of National Security Agency and Potential                  Liabilit******y.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| As                  a provider of telephone services, our company may be asked to provide                  information regarding our customer telephone records to the National                  Security Agency (NSA) and governmental agencies in connection with                  efforts                  taken by these agencies to fight the war against terror. In the                  event that                  we assist the NSA and other agencies in providing such information,                  we may                  be exposed to potential liability in violating the privacy rights                  of our                  customers. We may also face the loss of revenues and customer good                  will.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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| ***11.******Decreasing                  Pricing Trends******. ***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| Domestic                  and international telecommunications prices continue to decrease                  and we                  anticipate that this trend will continue. Further, users who select                  our                  services may switch to the services offered by our competitors                  to take                  advantage of lower priced services offered by them. Such continued                  competition or continued price decreases may                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

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| require                  us to lower our prices to remain competitive. This will serve to                  reduce                  our revenue and lead to loss of customers or a decrease in our                  growth and                  may delay or prevent us from achieving profitability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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| ***12.******Consumer                  Acceptance of VoIP Technology and Competitive                  Issues.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| The                  market for VoIP services continues to grow and develop. While we                  believe                  that a significant portion of this growth is due to customers who                  are                  “early adopters,” as this market segment utilizes VoIP services in larger                  numbers, if we are to achieve any growth in revenues, we will likely                  incur                  higher marketing expenses in attracting customers from other segments.                  For                  these reasons, we may experience lower growth and higher expenses                  than our                  larger competitors. Further, our larger competitors have entered                  into                  co-marketing agreements with other technology and internet companies                  and,                  in other cases, they are offering VoIP services bundled with other                  internet services that we do not offer and have no ability to offer.                  These                  and other competitive conditions will serve to severely limit our                  ability                  to compete effectively.                                                                                                                                                                                             |
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| ***13.******Flaws                  in Technology and Systems******.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| While                  we believe that our VoIP serve network offers a high level of system                  integrity, flaws in our technology and systems may arise which                  may create                  disruptions and other outages. Software and hardware malfunctions                  or                  problems with our network may arise. In addition, “hacker attacks” can                  occur from the Internet. As a result, if the reliability of our                  services                  is adversely perceived by our customers, we may have difficulty                  ion                  attracting and retaining customers and our reputation may                  suffer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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| ***14.******Losses                  Due to Customers Fraud******.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Customers                  have obtained access to the Company’s service without prepaying for the                  service (minutes) by submitting fraudulent credit card information.                  Losses                  from unauthorized credit card transactions and theft of service                  totaled                  $42,579 during the twelve months ending December 31, 2005. We have                  implemented new anti-fraud procedures in order to control losses                  relating                  to unauthorized credit card use, but these procedures may not be                  adequate                  to effectively limit our exposure in the future from customer fraud.                  If                  our procedures are not effective, consumer fraud and theft of service                  could be significant and have a material adverse effect on our                  business                  and operating results.                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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| ***15.******Price                  Competition on Certain Services******.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| The                  products and services that we intend to offer may, through changing                  technology and cost structures, become commodities which result                  in intense                  price competition. While we believe that we will be able to distinguish                  our products and services from competing products, services, and                  technologies offered by others, if we fail to distinguish ourselves                  from                  others, this could hinder market acceptance of our services, force                  reductions in contemplated sales prices for our products and services,                  and                  reduce our overall sales and gross margins. Potential customers                  may view                  price as the primary distinguishing characteristic between our                  products                  and services and those of our competitors. This could result in                  the                  Company incurring significant and protracted losses. Further, we                  are                  selling into a market that has a broad range of desired product                  characteristics and features which may make it difficult for us                  to develop                  products that will address a broad enough market to be commercially                  viable. |
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| ***16.******Absence                  of Barriers to Entry & Lack of Patent                  Protection******.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Our                  planned products and services are not unique and others could easily                  copy                  our strategy and provide the same or similar services since there                  are no                  significant barriers to entering the business of providing internet                  telephone services or VoIP networks and no significant barriers                  to entry                  are expected in the future. In addition, we do not hold and do                  not expect                  to hold any patent protection on any of our planned products or                  services.                  Our products and services primarily utilize the intellectual property                  rights of others. For these reasons we may face continuing financial                  losses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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| ***17.******Limited                  Customer Base******.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| While                  we seek to implement our plans, we have a limited customer base                  of                  approximately 20,000 accounts using our suite of VoIP products                  and there                  can be no assurance that we will grow and develop a sufficient                  customer                  base that generates sufficient sustainable revenues that provide                  stable                  profit margins. The absence of growth at pricing levels that can                  provide                  for sustainable revenues and profit margins may greatly inhibit                  our                  ability to attract additional capital and otherwise lead to volatile                  results from operations with consequent adverse and material impact                  on our                  financial condition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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| ***18.******Customers,                  Technology/Feature Options & Commercial                  Viability******.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| If                  we are able to implement our business plan, we will be selling                  our                  products and services into a marketplace that is experiencing a                  convergence of competing technologies. Typically, telecommunications                  providers desire extremely robust products with the expectation                  of a                  relatively long effective life. As a result and depending on the                  outcome                  of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

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| unknown                trends in technology, market forces, and other variables, we may                not                attract a broad enough market to achieve commercial                viability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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| ***19.******New                Technologies May Be Developed******.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| New                products or new technologies may be developed that supplant or provide                lower-cost or better-performing alternatives to our planned products                and                services. This could negatively impact our financial results and                delay or                prevent us from achieving profitability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
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| ***20.******Absence                of Brand Name Recognition: Limited Ability to                Promote******.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| The                market for telecommunications services is intensely competitive;                brand                name recognition is critical to success. Many companies offer products                and                services like ours and many have a well established presence in major                metropolitan centers. We may not be able to compete successfully                with                these companies and others that may enter the market. Some of them                also                have substantially greater financial, distribution, and marketing                resources than we do. If we do not succeed in this competitive                marketplace, we will lose customers and our revenue will be substantially                reduced and our business, financial condition, and results of operations                may be materially and adversely affected.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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| ***21.                Domestic and Foreign******Government                Regulation******.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| We                incur significant additional costs to remain a public company and                to file                current and prior period past due original and amended periodic reports                (with the U.S. Securities and Exchange Commission) to meet our obligations                as a public company. Since September 22, 2004 (the date at which                we were                informed that our common stock was registered under Section 12(g)                of the                Securities Exchange Act of 1934), we have had to expend and divert                significant managerial and financial resources to address prior year                filing delinquencies and to meet our current year filing obligations                under                Section 13(a) of the Securities Exchange Act of 1934. While we have                made                significant progress in filing many periodic reports with the SEC,                we have                yet to complete work on: (A) amending certain previously filed reports                to                respond to comments from the staff at the SEC; and (B) completing                certain                other reports that need to be filed for certain prior periods, including,                for example, the filing of Form 10-QSB for the first quarter of 2006                through March 31, 2006. Our goal is to complete the filing of all                of our                past periodic reports, respond to SEC comments on all of prior and                current                periodic filings, and to file all of our current periodic reports                in a                timely manner. However, until we accomplish these and related objectives,                we cannot assure you that we have satisfy our obligations as a public                company. |
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| Our                planned operations will likely be subject to extensive                telecommunications-based regulation by the United States and foreign                laws                and international treaties. In the United States we are subject to                various                Federal Communications Commission ("FCC") rules and regulations.                Current                FCC regulations suggest that our VoIP will not be unduly burdened                by new                and expanded regulations. However, there can be no assurance that                the                occurrence of regulatory changes would not significantly affect our                operations by restricting our planned operations or increasing the                opportunity of our competitors. In the event that government regulations                change, there can be no assurance that the costs and burdens imposed                on us                will not materially and adversely impact our planned                business.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
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| ***22.******Loss                of Equipment******.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Equipment                located in a foreign country with a developing or emerging economy                may be                materially adversely affected by possible political or economic                instability. The risks include, but are not limited to rapid political                and                legal change, terrorism, military repression, or expropriation of                assets.                In the event that equipment is damaged or lost our ability to service                to                our customers will be substantially reduced and our business, financial                condition, and results of operations may be materially and adversely                affected.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

| ***23.******Control******.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
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| Our                current officers and directors directly and indirectly hold an aggregate                of 6,193,333 shares of the Company’s common stock (before including any                shares issuable upon exercise of any options, warrants, or the conversion                of certain convertible non-dilutive promissory notes issued on August                26,2005). This represents approximately 4.1% of the Company’s total                outstanding shares as of December 31, 2005 and thereby allows the                Company’s officers and directors to retain significant influence over the                Company. Further and due to our limited financial resources, in the                past                we have issued our common stock and granted common stock purchase                options                to our officers and directors in lieu of paying cash compensation                and we                anticipate that we may need to continue this practice in the future.                This                may further limit the ability of stockholders |
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| ***24.******Prior                Filing of Form 10-SB******.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| In                June of 2001 we prepared and filed a registration statement on Form                10-SB                with the U.S. Securities and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

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

| ***29.******Potential                Immediate and Substantial Dilution******.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Funding                of our planned business is likely to result in substantial and on-going                dilution of our existing stockholders. While there can be no guarantee                that we will be successful in raising additional capital, if we are                successful in obtaining any additional capital, existing stockholders                will                likely incur immediate and substantial dilution.                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| ***30.******Matter                of Public Market and Rule 144 Stock Sales******.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| As                of December 31, 2005, there were 93,824,016 shares of the Company’s Common                Stock that were “restricted securities” and which may be sold pursuant to                Rule 144. Since September 16, 2002, we have had a limited public                trading                market for our Common Stock in the “Pink Sheets” market. Since that date                trading volumes have been volatile with sporadic liquidity levels.                Further, our Common Stock is (as of the date of the filing of this                Report)                a “Penny Stock” and for this reason we face continuing difficulties in our                efforts to gain a liquid trading market and |

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| there                can be no assurance that any liquid trading market will ever develop                or,                if it does develop, that it can be maintained. In the event that                we are                able to complete the filing of all periodic reports (the “Periodic                Reports”) required by Section 13(a) of the Exchange Act, we may be able to                avoid any significant adverse enforcement action by the SEC arising                out of                our lack of compliance with the Exchange Act. Rule 144 provides that                a                person holding restricted securities for a period of one year may                thereafter sell in brokerage transactions, an amount not exceeding                in any                three month period 1% of our outstanding Common Stock. Further, unless                the                Company can complete all of the required Periodic Reports and remain                current in the filing of all future Periodic Reports, persons holding                restricted stock will not be able to avail themselves of the safe                harbor                provisions of Rule 144. Persons who are not affiliated with the Company                and who have held their restricted securities for at least two years                are                not subject to the volume limitation. In any trading market for our                Common                Stock, possible or actual sales of our Common Stock by present                shareholders under Rule 144 may have a depressive effect on the price                of                our Common Stock even if a liquid trading market                develops. |
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| ***31.******General                Risks of Low Priced Stocks******.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| In                any trading market for our Common Stock, we anticipate that our Common                Stock will be deemed a "Penny Stock" which will limit trading and                liquidity and thereby the retail market for the Common Stock. The                limitations are primarily due to the burdens that are imposed on                brokers                whose customers may wish to acquire our Common Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

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**ITEM      2.     DESCRIPTION OF      PROPERTY**

**Principal      Office**

**Hills      of Bajamar Commercial/Residential development**

| During                September 1998, the Company entered into an agreement with Tri-National,                a                related party, to purchase 50 acres of real property known as the                Hills of                Bajamar, located in Ensenada, Mexico (the “Land) that is valued at the                predecessor cost of $125,000. The Company intended, at the time,                to sell                lots for residential development and build a communications facility                for                residents in the surrounding area.                                                                                                                                                                                   |
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| As                consideration for the Land, the Company issued 3,000,000 shares of                its                series B Preferred Stock and stock warrants to purchase 1,000,000                shares                of Common Stock. During June 2001, the Company negotiated a settlement                and                release with the Class B preferred stockholder whereby the Preferred                Stock                and stock warrants were exchanged for 400,000 shares of the Company’s                Common Stock and the cumulative undeclared dividend was not declared.                During October 2001, Tri-National filed a voluntary bankruptcy petition;                the court appointed a Trustee in October 2002. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Because                consideration for the agreement (documented title) never was received                the                Company did not believe it was ever the owner of the Land. Accordingly,                the value of the Land had previously been classified as a stock                subscription receivable. .                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| During                January 2006, the Company and the court appointed Trustee entered                into a                settlement agreement whereby the 400,000 shares of the Company’s Common                Stock was released to the Trustee as an asset of the bankruptcy estate                and                the Company relinquished any claim in the Land. Accordingly, the                $125,000                previously held as a stock subscription receivable was charged against                earnings as a bad debt.                                                                                                                                                                                                               |

**ITEM      3.     LEGAL PROCEEDINGS**

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

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**PART      II**

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

As      of December 31, 2005, the Company's Common Stock traded in the      non-Over the Counter "Pink Sheets" listed in the National Daily Quotations      Service under the symbol, VPER. Trading in the stock commenced on September      16,      2002 and only a limited and volatile trading market exists with only sporadic      and limited interest by market makers.

Stockholders      who may seek to sell any Shares of the Common Stock will      not likely find any significant liquidity and therefore may not be able to      sell      any significant volume of the Company’s Common Stock. As of December 31, 2005,      the Company had 370 stockholders of record and several market makers.

The      following table reflects the high and low prices of the Company's      Common Stock for the two years ended December 31, 2005.

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

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

In      January 2004, the Company issued 2,100,000 shares of the Company’s      Common Stock to one purchaser in exchange for the Company’s receipt of $210,000      in cash. All of the shares were offered and sold under a claim of exemption      provided by Section 4(2) of the Securities Act of 1933 without the use of an      underwriter or NASD registered broker-dealer; no commissions were incurred      by      the Company in connection with the transaction. The purchaser was sophisticated      and experienced in financial, business, and investment matters and otherwise      able to evaluate the merits and risks associated with the purchase of the      Company’s securities. The purchaser was provided with, or given access to,      information about the Company and the offering, including, but not limited      to,      the Company’s financial statements, business plan, articles of incorporation,      by-laws, a description of how the proceeds were to be used, and additional      information to assist in understanding the merits and risks of the investment.      The purchaser was further provided the opportunity to ask questions of the      Company’s officers and directors and receive answers to their questions. The      purchaser was informed the securities purchased were restricted securities      and      they may have to hold them for an indefinite period of time.

In      early February 2004, the Company issued an aggregate of 1,800,000      shares of the Company’s Common Stock to one purchaser in exchange for the      Company’s receipt of $450,000 in cash. The shares were valued at $0.25 per      share. All of the shares were offered and sold under a claim of exemption      provided by Section 4(2) of the Securities Act of 1933 without the use of an      underwriter or NASD registered broker-dealer; no commissions were incurred      by      the Company in connection with the transaction. The purchaser was sophisticated      and experienced in financial, business, and investment matters and otherwise      able to evaluate the merits and risks associated with the purchase of the      Company’s securities. The purchaser was provided with, or given access to,      information about the Company and the offering, including, but not limited      to,      the Company’s financial statements, business plan, articles of incorporation,      by-laws, a description of how the proceeds were to be used, and additional      information to assist in understanding the merits and risks of the investment.      The purchaser was further provided the opportunity to ask questions of the      Company’s officers and directors and receive answers to their questions. The      purchaser was

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informed      the securities purchased were restricted securities and they      may have to hold them for an indefinite period of time.

In      early March 2004, in connection with the repurchase rights of      common stock issued pursuant to the acquisition of Mid-Atlantic in October,      2003      (see above), the Company reissued 1,802,000 shares of the Company’s Common Stock      to nine investors in connection with the acquisition of Mid-Atlantic. The shares      were accorded an aggregate value of $450,500. Of the 7,535,000 shares issued      at      the time of the Mid-Atlantic acquisition, 4,235,000 held a put option. In March,      2004 some of these shares (1,467,648) were repurchased by the Company at the      redemption price of $0.17 (a total of $249,500 was paid). Of the remaining      2,767,352 shares, 1,802,000 were reissued to the nine pre-acquisition investors      in Mid-Atlantic in accordance with the wishes of the former owner of      Mid-Atlantic. The remaining shares (965,353) were returned to treasury without      compensation and the put option expired. The re-issued 1,802,000 shares were      offered and sold under a claim of exemption provided by Section 4(2) of the      Securities Act of 1933 without the use of an underwriter or NASD registered      broker-dealer; no commissions were incurred by the Company in connection with      the transaction. The purchaser was sophisticated and experienced in financial,      business, and investment matters and otherwise able to evaluate the merits      and      risks associated with the purchase of the Company’s securities. The purchaser      was provided with, or given access to, information about the Company and the      offering, including, but not limited to, the Company’s financial statements,      business plan, articles of incorporation, by-laws, a description of how the      proceeds were to be used, and additional information to assist in understanding      the merits and risks of the investment. The purchaser was further provided      the      opportunity to ask questions of the Company’s officers and directors and receive      answers to their questions. The purchaser was informed the securities purchased      were restricted securities and they may have to hold them for an indefinite      period of time.

In      mid March 2004, the Company issued an aggregate of 5,000,000      shares of the Company’s Common Stock to five officers and directors of the      Company with each share valued at $0.04 per share. The share issuances were      as      follows: (1) 1,000,000 shares to Farid Shouekani; (2) 1,000,000 shares to Jason      A. Sunstein; (3) 1,000,000 shares to John L. Castiglione; (4) 1,000,000 shares      to Ronald G. Weaver; and (5) 1,000,000 shares to Stephen D. Young. All of the      shares were offered and sold under a claim of exemption provided by Section      4(2)      of the Securities Act of 1933 without the use of an underwriter or NASD      registered broker-dealer; no commissions were incurred by the Company in      connection with the transaction. The purchasers were each Accredited investors      as defined in Rule 501 of Regulation D of the Securities Act of 1933. The      purchasers were provided with, or given access to, information about the Company      and the offering, including, but not limited to, the Company’s financial      statements, business plan, articles of incorporation, by-laws, a description      of      how the proceeds were to be used, and additional information to assist them      in      understanding the merits and risks of the investment. The purchasers were      further provided the opportunity to ask questions of the Company’s officers and      directors and receive answers to their questions. The purchasers were informed      the securities purchased were restricted securities and they may have to hold      them for an indefinite period of time. 

Later,      in March 2004, the Company issued 2,500,000 shares of the      Company’s Common Stock in connection with the acquisition of Adoria      Communications. The shares were accorded an aggregate value of $3,074,500 and      were issued to one purchaser. All of the shares were offered and sold under      a      claim of exemption provided by Section 4(2) of the Securities Act of 1933      without the use of an underwriter or NASD registered broker-dealer; no      commissions were incurred by the Company in connection with the transaction.      The      purchaser was an Accredited investor as defined in Rule 501 of Regulation D      of      the Securities Act of 1933. The purchaser was provided with, or given access      to,      information about the Company and the offering, including, but not limited      to,      the Company’s financial statements, business plan, articles of incorporation,      by-laws, a description of how the proceeds were to be used, and additional      information to assist in understanding the merits and risks of the investment.      The purchaser was further provided the opportunity to ask questions of the      Company’s officers and directors and receive answers to their questions. The      purchaser was informed the securities purchased were restricted securities      and      they may have to hold them for an indefinite period of time. 

Later,      in March 2004, the Company issued an aggregate of 1,295,000      shares of the Company’s Common Stock to nine purchasers in exchange for the      Company’s receipt of an aggregate of $323,750 in cash. All of the shares were      offered and sold by the Company’s management without the use of an underwriter      or NASD registered broker-dealer, however all of the shares were offered and      sold under a claim of exemption provided by Section 4(2) of the Securities      Act      of 1933 without the use of an underwriter or NASD registered broker-dealer.      The      Company paid a finder’s fee equal to 8% of the aggregate amount received, with      7% paid in cash and 1% paid by the issuance of the Company’s Common Stock. Apart      from the payment of a finder’s fee, no commissions were incurred by the Company      in connection with the transaction. The purchasers were each sophisticated      and      experienced in financial,

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business,      and investment matters and otherwise able to evaluate the      merits and risks associated with the purchase of the Company’s securities. The      purchasers were provided with, or given access to, information about the Company      and the offering, including, but not limited to, the Company’s financial      statements, business plan, articles of incorporation, by-laws, a description      of      how the proceeds were to be used, and additional information to assist them      in      understanding the merits and risks of the investment. The purchasers were      further provided the opportunity to ask questions of the Company’s officers and      directors and receive answers to their questions. The purchasers were informed      the securities purchased were restricted securities and they may have to hold      them for an indefinite period of time.

In      late March 2004, the Company issued an aggregate of 1,669,184      shares of the Company’s Common Stock to 34 investors in exchange for the      Company’s receipt of an aggregate of $310,500 in cash. All of the shares were      offered and sold under a claim of exemption provided by Section 4(2) of the      Securities Act of 1933 without the use of an underwriter or NASD registered      broker-dealer. The Company paid 150,000 shares of the Company’s Common Stock as      a finder’s fee in connection with the Company’s issuance of 1,062,500 of these      shares. However, apart from the issuance of these shares to a finder, no other      fees or commissions were incurred by the Company in connection with the      transaction. The purchasers were each sophisticated and experienced in      financial, business, and investment matters and otherwise able to evaluate      the      merits and risks associated with the purchase of the Company’s securities. The      purchasers were provided with, or given access to, information about the Company      and the offering, including, but not limited to, the Company’s financial      statements, business plan, articles of incorporation, by-laws, a description      of      how the proceeds were to be used, and additional information to assist them      in      understanding the merits and risks of the investment. The purchasers were      further provided the opportunity to ask questions of the Company’s officers and      directors and receive answers to their questions. The purchasers were informed      the securities purchased were restricted securities and they may have to hold      them for an indefinite period of time.

In      early April 2004, the Company issued 95,000 shares of the      Company’s Common Stock to three purchasers in exchange for the Company’s receipt      of an aggregate of $17,500 in cash. All of the shares were offered and sold      under a claim of exemption provided by Section 4(2) of the Securities Act of      1933 without the use of an underwriter or NASD registered broker-dealer. The      Company paid a finder’s fee equal to 8% of the aggregate amount received, with      7% paid in cash and 1% paid by the issuance of the Company’s Common Stock. Apart      from the payment of a finder’s fee, no commissions were incurred by the Company      in connection with the transaction. The purchasers were each sophisticated      and      experienced in financial, business, and investment matters and otherwise able      to      evaluate the merits and risks associated with the purchase of the Company’s      securities. The purchasers were provided with, or given access to, information      about the Company and the offering, including, but not limited to, the Company’s      financial statements, business plan, articles of incorporation, by-laws, a      description of how the proceeds were to be used, and additional information      to      assist them in understanding the merits and risks of the investment. The      purchasers were further provided the opportunity to ask questions of the      Company’s officers and directors and receive answers to their questions. The      purchasers were informed the securities purchased were restricted securities      and      they may have to hold them for an indefinite period of time.

Later      in April 2004, the Company issued additional shares of the      Company’s Common Stock as follows:

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

All      of the shares were offered and sold under a claim of exemption      provided by Section 4(2) of the Securities Act of 1933 without the use of an      underwriter or NASD registered broker-dealer. In each transaction, the Company      paid a finder’s fee equal to 8% of the aggregate amount received, with 7% paid      in cash and 1% paid by the issuance of the Company’s Common Stock. The finder      merely introduced the Company to each purchaser and apart from the payment      of a      finder’s fee no commissions were incurred by the Company in connection with the      transaction. The purchasers were each sophisticated and experienced in      financial, business, and investment matters and otherwise able to evaluate      the      merits and risks associated with the purchase of the Company’s securities. The      purchasers were provided with, or given access to, information about the Company      and the offering, including, but not limited to, the Company’s financial      statements, business plan, articles of incorporation, by-laws, a description      of      how the proceeds were to be used, and additional information to assist them      in      understanding the merits and risks of the investment. The purchasers were      further provided the opportunity to ask questions of the Company’s officers and      directors and receive answers to their questions. The purchasers were informed      the securities purchased were restricted securities and they may have to hold      them for an indefinite period of time.

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In      May 2004, the Company issued an aggregate of 610,000 shares of the      Company’s Common Stock to five investors in exchange for the Company’s receipt      of an aggregate of $152,500 in cash. All of the shares were offered and sold      under a claim of exemption provided by Section 4(2) of the Securities Act of      1933 without the use of an underwriter or NASD registered broker-dealer. The      Company paid a finder’s fee equal to 13% of the aggregate amount received, with      7% paid in cash and 6% paid by the issuance of the Company’s Common Stock. The      finder merely introduced the Company to each purchaser and apart from the      payment of a finder’s fee no commissions were incurred by the Company in      connection with the transaction. The purchasers were each sophisticated and      experienced in financial, business, and investment matters and otherwise able      to      evaluate the merits and risks associated with the purchase of the Company’s      securities. The purchasers were provided with, or given access to, information      about the Company and the offering, including, but not limited to, the Company’s      financial statements, business plan, articles of incorporation, by-laws, a      description of how the proceeds were to be used, and additional information      to      assist them in understanding the merits and risks of the investment. The      purchasers were further provided the opportunity to ask questions of the      Company’s officers and directors and receive answers to their questions. The      purchasers were informed the securities purchased were restricted securities      and      they may have to hold them for an indefinite period of time.

In      late June 2004, the Company issued 575,000 shares of the Company’s      Common Stock to one investor in exchange for the Company’s receipt of $115,000      in cash. All of the shares were offered and sold under a claim of exemption      provided by Section 4(2) of the Securities Act of 1933 without the use of an      underwriter or NASD registered broker-dealer; no commissions were incurred      by      the Company in connection with the transaction. The purchaser was sophisticated      and experienced in financial, business, and investment matters and otherwise      able to evaluate the merits and risks associated with the purchase of the      Company’s securities. The purchaser was provided with, or given access to,      information about the Company and the offering, including, but not limited      to,      the Company’s financial statements, business plan, articles of incorporation,      by-laws, a description of how the proceeds were to be used, and additional      information to assist in understanding the merits and risks of the investment.      The purchaser was further provided the opportunity to ask questions of the      Company’s officers and directors and receive answers to their questions. The      purchaser was informed the securities purchased were restricted securities      and      they may have to hold them for an indefinite period of time.

Later      in June 2004, the Company issued 2,000,000 shares of the      Company’s Common Stock in connection with the acquisition of a 37.5% interest in      Brasil Communications, LLC. The shares were valued at $0.46 per share. All      of      the shares were offered and sold under a claim of exemption provided by Section      4(2) of the Securities Act of 1933 without the use of an underwriter or NASD      registered broker-dealer; no commissions were incurred by the Company in      connection with the transaction. The purchaser was an Accredited investor as      defined in Rule 501 of Regulation D of the Securities Act of 1933. The purchaser      was provided with, or given access to, information about the Company and the      offering, including, but not limited to, the Company’s financial statements,      business plan, articles of incorporation, by-laws, a description of how the      proceeds were to be used, and additional information to assist in understanding      the merits and risks of the investment. The purchaser was further provided      the      opportunity to ask questions of the Company’s officers and directors and receive      answers to their questions. The purchaser was informed the securities purchased      were restricted securities and they may have to hold them for an indefinite      period of time. 

In      July 2004, the Company issued 187,500 shares of the Company’s      Common Stock to one purchaser in consideration of the Company’s receipt of cash      of $9,375. All of the shares were offered and sold under a claim of exemption      provided by Section 4(2) of the Securities Act of 1933 without the use of an      underwriter or NASD registered broker-dealer; no commissions were incurred      by      the Company in connection with the transaction. The purchaser was sophisticated      and experienced in financial, business, and investment matters and otherwise      able to evaluate the merits and risks associated with the purchase of the      Company’s securities. The purchaser was provided with, or given access to,      information about the Company and the offering, including, but not limited      to,      the Company’s financial statements, business plan, articles of incorporation,      by-laws, a description of how the proceeds were to be used, and additional      information to assist in understanding the merits and risks of the investment.      The purchaser was further provided the opportunity to ask questions of the      Company’s officers and directors and receive answers to their questions. The      purchaser was informed the securities purchased were restricted securities      and      they may have to hold them for an indefinite period of time.

In      early August 2004, the Company issued an aggregate of 545,000      shares of the Company’s Common Stock to five investors in exchange for the      Company’s receipt of cash of $136,250. All of the shares were offered and sold      under a claim of exemption provided by Section 4(2) of the Securities Act of      1933 without the use of an

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underwriter      or NASD registered broker-dealer. The Company paid a      finder’s fee equal to 13% of the aggregate amount received, with 7% paid in cash      and 6% paid by the issuance of the Company’s Common Stock. The finder merely      introduced the Company to each purchaser and apart from the payment of a      finder’s fee no commissions were incurred by the Company in connection with the      transaction. The purchasers were each sophisticated and experienced in      financial, business, and investment matters and otherwise able to evaluate      the      merits and risks associated with the purchase of the Company’s securities. The      purchasers were provided with, or given access to, information about the Company      and the offering, including, but not limited to, the Company’s financial      statements, business plan, articles of incorporation, by-laws, a description      of      how the proceeds were to be used, and additional information to assist them      in      understanding the merits and risks of the investment. The purchasers were      further provided the opportunity to ask questions of the Company’s officers and      directors and receive answers to their questions. The purchasers were informed      the securities purchased were restricted securities and they may have to hold      them for an indefinite period of time.

Later      in August 2004, the Company issued 1,800,000 shares of the      Company’s Common Stock to one investor in exchange for the Company’s receipt of      $180,000 in cash. All of the shares were offered and sold under a claim of      exemption provided by Section 4(2) of the Securities Act of 1933 without the      use      of an underwriter or NASD registered broker-dealer; no commissions were incurred      by the Company in connection with the transaction. The purchaser was      sophisticated and experienced in financial, business, and investment matters      and      otherwise able to evaluate the merits and risks associated with the purchase      of      the Company’s securities. The purchaser was provided with, or given access to,      information about the Company and the offering, including, but not limited      to,      the Company’s financial statements, business plan, articles of incorporation,      by-laws, a description of how the proceeds were to be used, and additional      information to assist in understanding the merits and risks of the investment.      The purchaser was further provided the opportunity to ask questions of the      Company’s officers and directors and receive answers to their questions. The      purchaser was informed the securities purchased were restricted securities      and      they may have to hold them for an indefinite period of time.

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

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

All      of the shares were offered and sold by the Company’s management      under a claim of exemption provided by Section 4(2) of the Securities Act of      1933 without the use of an underwriter or NASD registered broker-dealer; no      commissions were incurred by the Company in connection with the transaction.      The      purchasers were each Accredited investors as defined in Rule 501 of Regulation      D      of the Securities Act of 1933. The purchasers were provided with, or given      access to, information about the Company and the offering, including, but not      limited to, the Company’s financial statements, business plan, articles of      incorporation, by-laws, a description of how the proceeds were to be used,      and      additional information to assist them in understanding the merits and risks      of      the investment. The purchasers were further provided the opportunity to ask      questions of the Company’s officers and

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directors      and receive answers to their questions. The purchasers were      informed the securities purchased were restricted securities and they may have      to hold them for an indefinite period of time.

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

In      January 2005, the Company issued 1,500,000 shares of the Company’s      Common Stock to one purchaser in exchange for the Company’s receipt of an      aggregate of $50,000 in cash. All of the shares were offered and sold under      a      claim of exemption provided by Section 4(2) of the Securities Act of 1933      without the use of an underwriter or NASD registered broker-dealer; no      commissions were incurred by the Company in connection with the transaction.      The      purchaser was sophisticated and experienced in financial, business, and      investment matters and otherwise able to evaluate the merits and risks      associated with the purchase of the Company’s securities. The purchaser was      provided with, or given access to, information about the Company and the      offering, including, but not limited to, the Company’s financial statements,      business plan, articles of incorporation, by-laws, a description of how the      proceeds were to be used, and additional information to assist in understanding      the merits and risks of the investment. The purchaser was further provided      the      opportunity to ask questions of the Company’s officers and directors and receive      answers to their questions. The purchaser was informed the securities purchased      were restricted securities and they may have to hold them for an indefinite      period of time.

In      February 2005, the Company issued 3,000,000 shares of the      Company’s Common Stock to one purchaser in exchange for the Company’s receipt of      an aggregate of $180,000 in cash. All of the shares were offered and sold under      a claim of exemption provided by Section 4(2) of the Securities Act of 1933      without the use of an underwriter or NASD registered broker-dealer; no      commissions were incurred by the Company in connection with the transaction.      The      purchaser was sophisticated and experienced in financial, business, and      investment matters and otherwise able to evaluate the merits and risks      associated with the purchase of the Company’s securities. The purchaser was      provided with, or given access to, information about the Company and the      offering, including, but not limited to, the Company’s financial statements,      business plan, articles of incorporation, by-laws, a description of how the      proceeds were to be used, and additional information to assist in understanding      the merits and risks of the investment. The purchaser was further provided      the      opportunity to ask questions of the Company’s officers and directors and receive      answers to their questions. The purchaser was informed the securities purchased      were restricted securities and they may have to hold them for an indefinite      period of time.

In      February 2005, the Company entered into five stock subscription      agreements for an aggregate of 33,333,335 shares of the Company’s Common Stock      in exchange for $5,000,000 in US Treasury Bonds, with both the Company’s shares      and the $5,000,000 being placed into escrow.  On August 8, 2005, by mutual      agreement, the five subscription agreements and all associated agreements (as      described below) were rescinded; the escrow was closed with the 33,333,335      shares of the Company’s Common Stock and the $5,000,000 in US Treasury Bonds      returned to the Company and the five subscribers, respectively. Concurrent      with      the execution of the agreements, the Company purchased from Cogent Capital      for      $1 a call option to repurchase at the end of two years 80% of the shares of      Common Stock sold at the then current market price.  Also concurrent with      the agreements, the Company entered into an equity swap arrangement with Cogent      Capital for $50,000 and 3,333,333 shares of the Company’s Common Stock that      entitles the Company to receive and obligate the Company to pay the price return      of 75% of the shares issued in two years, or sooner if the shares are registered      for sale under the Securities Act of 1933.  The equity swap also provides      for the exchange of certain cash flows, as defined in the agreement. All of      the      shares were offered and sold under a claim of exemption provided by Section      4(2)      of the Securities Act of 1933 without the use of an underwriter or NASD      registered broker-dealer; no commissions were incurred by the Company in      connection with the transaction. The purchasers were each sophisticated and      experienced in financial, business, and investment matters and otherwise able      to      evaluate the merits and risks associated with the purchase of the Company’s      securities. The purchasers were provided with, or given access to, information      about the Company and the offering, including, but not limited to, the Company’s      financial statements, business plan, articles of incorporation, by-laws, a      description of how the proceeds were to be used, and additional information      to      assist them in understanding the merits and risks of the investment. The      purchasers were further provided the opportunity to ask questions of the      Company’s officers and directors and receive answers to their questions. The      purchasers were informed the securities purchased were restricted securities      and      they may have to hold them for an indefinite period of time.

In      March 2005, the Company issued a total of 300,000 shares of the      Company’s Common Stock to Paul Atkiss, an officer and director of the Company,      in payment for services. All of the shares were offered and      sold

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under      a claim of exemption provided by Section 4(2) of the Securities      Act of 1933 without the use of an underwriter or NASD registered broker-dealer;      no commissions were incurred by the Company in connection with the transaction.      The purchaser was an Accredited investor as defined in Rule 501 of Regulation      D      of the Securities Act of 1933. The purchaser was provided with, or given access      to, information about the Company and the offering, including, but not limited      to, the Company’s financial statements, business plan, articles of      incorporation, by-laws, a description of how the proceeds were to be used,      and      additional information to assist in understanding the merits and risks of the      investment. The purchaser was further provided the opportunity to ask questions      of the Company’s officers and directors and receive answers to their questions.      The purchaser was informed the securities purchased were restricted securities      and they may have to hold them for an indefinite period of      time.

In      March 2005, the Company issued 55,173 shares of the Company’s      Common Stock to IBC Radio in payment for six month of advertising services.      All      of the shares were offered and sold under a claim of exemption provided by      Section 4(2) of the Securities Act of 1933 without the use of an underwriter      or      NASD registered broker-dealer; no commissions were incurred by the Company      in      connection with the transaction. The purchaser was sophisticated and experienced      in financial, business, and investment matters and otherwise able to evaluate      the merits and risks associated with the purchase of the Company’s securities.      The purchaser was provided with, or given access to, information about the      Company and the offering, including, but not limited to, the Company’s financial      statements, business plan, articles of incorporation, by-laws, a description      of      how the proceeds were to be used, and additional information to assist in      understanding the merits and risks of the investment. The purchaser was further      provided the opportunity to ask questions of the Company’s officers and      directors and receive answers to their questions. The purchaser was informed      the      securities purchased were restricted securities and they may have to hold them      for an indefinite period of time.

In      March 2005, the Company issued 1,250,000 shares of the Company’s      Common Stock to Rhino Capital in payment for twelve months of business      consulting services (Rhino Capital was retained to coordinate a fund raising      effort soliciting equity or debt financing). All of the shares were offered      and      sold under a claim of exemption provided by Section 4(2) of the Securities      Act      of 1933 without the use of an underwriter or NASD registered broker-dealer;      no      commissions were incurred by the Company in connection with the transaction.      The      purchaser was sophisticated and experienced in financial, business, and      investment matters and otherwise able to evaluate the merits and risks      associated with the purchase of the Company’s securities. The purchaser was      provided with, or given access to, information about the Company and the      offering, including, but not limited to, the Company’s financial statements,      business plan, articles of incorporation, by-laws, a description of how the      proceeds were to be used, and additional information to assist in understanding      the merits and risks of the investment. The purchaser was further provided      the      opportunity to ask questions of the Company’s officers and directors and receive      answers to their questions. The purchaser was informed the securities purchased      were restricted securities and they may have to hold them for an indefinite      period of time.

In      May 2005, the Company issued 1,400,000 shares of the Company’s      Common Stock to two purchases in a cashless exercise of previously issued Common      Stock Purchase Warrants (“Warrants”) in a prior private placement. The Warrants      were exercised at a price of $0.195 each. All of the shares were offered and      sold under a claim of exemption provided by Section 4(2) of the Securities      Act      of 1933 without the use of an underwriter or NASD registered broker-dealer;      no      commissions were incurred by the Company in connection with the transaction.      The      purchasers were each sophisticated and experienced in financial, business,      and      investment matters and otherwise able to evaluate the merits and risks      associated with the purchase of the Company’s securities. The purchasers were      provided with, or given access to, information about the Company and the      offering, including, but not limited to, the Company’s financial statements,      business plan, articles of incorporation, by-laws, a description of how the      proceeds were to be used, and additional information to assist them in      understanding the merits and risks of the investment. The purchasers were      further provided the opportunity to ask questions of the Company’s officers and      directors and receive answers to their questions. The purchasers were informed      the securities purchased were restricted securities and they may have to hold      them for an indefinite period of time.

In      May 2005, the Company issued a total of 25,000 shares of the      Company’s Common Stock to Uzi Yair, an Advisory Board member of the Company, in      payment for services. All of the shares were offered and sold under a claim      of      exemption provided by Section 4(2) of the Securities Act of 1933 without the      use      of an underwriter or NASD registered broker-dealer; no commissions were incurred      by the Company in connection with the transaction. The purchaser was an      Accredited investor as defined in Rule 501 of Regulation D of the Securities      Act      of 1933. The purchaser was provided with, or given access to, information about      the Company and the offering, including, but not limited to, the Company’s      financial statements, business plan, articles of incorporation, by-laws, a      description of how the proceeds were to be used, and additional information      to      assist in understanding the merits and

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risks      of the investment. The purchaser was further provided the      opportunity to ask questions of the Company’s officers and directors and receive      answers to their questions. The purchaser was informed the securities purchased      were restricted securities and they may have to hold them for an indefinite      period of time.

In      May 2005, the Company issued a total of an aggregate of 150,000      shares of the Company’s Common Stock to HF Solutions and CEO Solutions,      consultants for the Company, in payment for services. All of the shares were      offered and sold under a claim of exemption provided by Section 4(2) of the      Securities Act of 1933 without the use of an underwriter or NASD registered      broker-dealer; no commissions were incurred by the Company in connection with      the transaction. The purchasers were each sophisticated and experienced in      financial, business, and investment matters and otherwise able to evaluate      the      merits and risks associated with the purchase of the Company’s securities. The      purchasers were provided with, or given access to, information about the Company      and the offering, including, but not limited to, the Company’s financial      statements, business plan, articles of incorporation, by-laws, a description      of      how the proceeds were to be used, and additional information to assist them      in      understanding the merits and risks of the investment. The purchasers were      further provided the opportunity to ask questions of the Company’s officers and      directors and receive answers to their questions. The purchasers were informed      the securities purchased were restricted securities and they may have to hold      them for an indefinite period of time.

In      June 2005, the Company issued 3,055,554 shares of the Company’s      Common Stock to four purchasers in exchange for the Company’s receipt of an      aggregate of $275,000 in cash. All of the shares were offered and sold under      a      claim of exemption provided by Section 4(2) of the Securities Act of 1933      without the use of an underwriter or NASD registered broker-dealer; no      commissions were incurred by the Company in connection with the transaction.      The      purchasers were each sophisticated and experienced in financial, business,      and      investment matters and otherwise able to evaluate the merits and risks      associated with the purchase of the Company’s securities. The purchasers were      provided with, or given access to, information about the Company and the      offering, including, but not limited to, the Company’s financial statements,      business plan, articles of incorporation, by-laws, a description of how the      proceeds were to be used, and additional information to assist them in      understanding the merits and risks of the investment. The purchasers were      further provided the opportunity to ask questions of the Company’s officers and      directors and receive answers to their questions. The purchasers were informed      the securities purchased were restricted securities and they may have to hold      them for an indefinite period of time.

In      July 2005, the Company issued 1,021,500 shares of the Company’s      Common Stock to five purchasers in exchange for the Company’s receipt of an      aggregate of $57,621 in cash. All of the shares were offered and sold under      a      claim of exemption provided by Section 4(2) of the Securities Act of 1933      without the use of an underwriter or NASD registered broker-dealer; no      commissions were incurred by the Company in connection with the transaction.      The      purchasers were each sophisticated and experienced in financial, business,      and      investment matters and otherwise able to evaluate the merits and risks      associated with the purchase of the Company’s securities. The purchasers were      provided with, or given access to, information about the Company and the      offering, including, but not limited to, the Company’s financial statements,      business plan, articles of incorporation, by-laws, a description of how the      proceeds were to be used, and additional information to assist them in      understanding the merits and risks of the investment. The purchasers were      further provided the opportunity to ask questions of the Company’s officers and      directors and receive answers to their questions. The purchasers were informed      the securities purchased were restricted securities and they may have to hold      them for an indefinite period of time.

In      July 2005, the Company issued an aggregate of 4,938,300 shares of      the Company’s Common Stock to several subscribers of a previous private      placement aggregating 4,717,000 share for $1,179,250 conducted during 2004,      upon      the final calculation of the subscribers' purchase price. No additional      proceeds were received. All of the shares were offered and sold under a claim      of      exemption provided by Section 4(2) of the Securities Act of 1933 without the      use      of an underwriter or NASD registered broker-dealer; no commissions were incurred      by the Company in connection with the transaction. The purchasers were each      sophisticated and experienced in financial, business, and investment matters      and      otherwise able to evaluate the merits and risks associated with the purchase      of      the Company’s securities. The purchasers were provided with, or given access to,      information about the Company and the offering, including, but not limited      to,      the Company’s financial statements, business plan, articles of incorporation,      by-laws, a description of how the proceeds were to be used, and additional      information to assist them in understanding the merits and risks of the      investment. The purchasers were further provided the opportunity to ask      questions of the Company’s officers and directors and receive answers to their      questions. The purchasers were informed the securities purchased were restricted      securities and they may have to hold them for an indefinite period of      time.

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In        July 2005, the Company issued shares of the Company’s Common Stock        in payment for services received as follow:

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

All      of the shares were offered and sold under a claim of exemption      provided by Section 4(2) of the Securities Act of 1933 without the use of an      underwriter or NASD registered broker-dealer; no commissions were incurred      by      the Company in connection with the transaction. The purchasers were each      Accredited investors as defined in Rule 501 of Regulation D of the Securities      Act of 1933. The purchasers were provided with, or given access to, information      about the Company and the offering, including, but not limited to, the Company’s      financial statements, business plan, articles of incorporation, by-laws, a      description of how the proceeds were to be used, and additional information      to      assist them in understanding the merits and risks of the investment. The      purchasers were further provided the opportunity to ask questions of the      Company’s officers and directors and receive answers to their questions. The      purchasers were informed the securities purchased were restricted securities      and      they may have to hold them for an indefinite period of time.

In      July 2005, the Company cancelled 1,375,000 shares of the Company’s      Common Stock previously issued in June 2004 to an Accredited Investor is      connection with the May 2005 agreement to eliminate the Company’s 50% ownership      interest in Brasil Communications, LLC. All of the shares were originally      offered and sold under a claim of exemption provided by Section 4(2) of the      Securities Act of 1933 without the use of an underwriter or NASD registered      broker-dealer; no commissions were incurred by the Company in connection with      the transaction. The purchasers were each Accredited investors as defined in      Rule 501 of Regulation D of the Securities Act of 1933. The purchasers were      provided with, or given access to, information about the Company and the      offering, including, but not limited to, the Company’s financial statements,      business plan, articles of incorporation, by-laws, a description of how the      proceeds were to be used, and additional information to assist them in      understanding the merits and risks of the investment. The purchasers were      further provided the opportunity to ask questions of the Company’s officers and      directors and receive answers to their questions. The purchasers were informed      the securities purchased were restricted securities and they may have to hold      them for an indefinite period of time.

In      August 2005, the Company issued 500,000 shares of the Company’s      Common Stock to one purchaser in exchange for the Company’s receipt of an      aggregate of $25,300 in cash. All of the shares were offered and sold under      a      claim of exemption provided by Section 4(2) of the Securities Act of 1933      without the use of an underwriter or NASD registered broker-dealer; no      commissions were incurred by the Company in connection with the transaction.      The      purchaser was sophisticated and experienced in financial, business, and      investment matters and otherwise able to evaluate the merits and risks      associated with the purchase of the Company’s securities. The purchaser was      provided with, or given access to, information about the Company and the      offering, including, but not limited to, the Company’s financial statements,      business plan, articles of incorporation, by-laws, a description of how the      proceeds were to be used, and additional information to assist in understanding      the merits and risks of the investment. The purchaser was further provided      the      opportunity to ask questions of the Company’s officers and directors and receive      answers to their questions. The purchaser was informed the securities purchased      were restricted securities and they may have to hold them for an indefinite      period of time.

In      August 2005, the Company’s officers, as part of management’s      Mutual Release and Restructuring Agreement, returned all bonuses previously      paid      in the form of Common Stock in exchange for warrants for an equal amount of      common stock purchase warrants at a price of $0.25 (expiration August 26, 2009)      and a Promissory Note (unsecured; variable interest equal to 30-day U.S.      Treasury notes; payable in full on December 1, 2006) for all unpaid loans,      salaries and expenses. The Notes are convertible at the option of the holder      into shares of the Company’s common stock at a price equal to 50% of the 52-week      low trading range. Any so-issued shares are non-dilutive. A total of 16,500,000      shares of the Company’s Common Stock were returned as treasury stock by the      following officers:

| (1) | 4,400,000                  shares by Ronald G. Weaver originally issued: (a)                  2,200,000 October 2003, (b) 1,100,000 March 2004, and (c) 1,100,000                  September 2004; |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | 4,400,000                  shares by John L. Castiglione originally issued: (a)                  2,200,000 October 2003, (b) 1,100,000                                                             |

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

All      of these shares were originally valued at $0.0364 per share      (adjusted for the September 2004 10% stock dividend). All of the shares were      offered and sold under a claim of exemption provided by Section 4(2) of the      Securities Act of 1933 without the use of an underwriter or NASD registered      broker-dealer; no commissions were incurred by the Company in connection with      the transaction. The purchasers were each Accredited investors as defined in      Rule 501 of Regulation D of the Securities Act of 1933. The purchasers were      provided with, or given access to, information about the Company and the      offering, including, but not limited to, the Company’s financial statements,      business plan, articles of incorporation, by-laws, a description of how the      proceeds were to be used, and additional information to assist them in      understanding the merits and risks of the investment. The purchasers were      further provided the opportunity to ask questions of the Company’s officers and      directors and receive answers to their questions. The purchasers were informed      the securities purchased were restricted securities and they may have to hold      them for an indefinite period of time.

In      September 2005, the Company issued an aggregate of 3,492,063      shares of the Company’s Common Stock to one purchaser in exchange for the      Company’s receipt of an aggregate of $300,000 in cash. All of the shares were      offered and sold under a claim of exemption provided by Section 4(2) of the      Securities Act of 1933 without the use of an underwriter or NASD registered      broker-dealer; no commissions were incurred by the Company in connection with      the transaction. The purchaser was sophisticated and experienced in financial,      business, and investment matters and otherwise able to evaluate the merits      and      risks associated with the purchase of the Company’s securities. The purchaser      was provided with, or given access to, information about the Company and the      offering, including, but not limited to, the Company’s financial statements,      business plan, articles of incorporation, by-laws, a description of how the      proceeds were to be used, and additional information to assist in understanding      the merits and risks of the investment. The purchaser was further provided      the      opportunity to ask questions of the Company’s officers and directors and receive      answers to their questions. The purchaser was informed the securities purchased      were restricted securities and they may have to hold them for an indefinite      period of time.

In      September 2005, the Company issued 1,500,000 shares of the      Company’s Common Stock to Investor Relations International, Inc. in payment for      twelve month of investor relation and public relation services. The shares      were      valued at $0.10 per share. All of the shares were offered and sold under a      claim      of exemption provided by Section 4(2) of the Securities Act of 1933 without      the      use of an underwriter or NASD registered broker-dealer; no commissions were      incurred by the Company in connection with the transaction. The purchaser was      an      Accredited investor as defined in Rule 501 of Regulation D of the Securities      Act      of 1933. The purchaser was provided with, or given access to, information about      the Company and the offering, including, but not limited to, the Company’s      financial statements, business plan, articles of incorporation, by-laws, a      description of how the proceeds were to be used, and additional information      to      assist in understanding the merits and risks of the investment. The purchaser      was further provided the opportunity to ask questions of the Company’s officers      and directors and receive answers to their questions. The purchaser was informed      the securities purchased were restricted securities and they may have to hold      them for an indefinite period of time.

In        November 2005, the Company issued shares of the Company’s Common        Stock in payment for services received as follow:

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

All      of the shares were offered and sold under a claim of exemption      provided by Section 4(2) of the Securities Act of 1933 without the use of an      underwriter or NASD registered broker-dealer; no commissions were incurred      by      the Company in connection with the transaction. The purchasers were each      Accredited investors as defined in Rule 501 of Regulation D of the Securities      Act of 1933. The purchasers were provided with, or given

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access      to, information about the Company and the offering, including,      but not limited to, the Company’s financial statements, business plan, articles      of incorporation, by-laws, a description of how the proceeds were to be used,      and additional information to assist them in understanding the merits and risks      of the investment. The purchasers were further provided the opportunity to      ask      questions of the Company’s officers and directors and receive answers to their      questions. The purchasers were informed the securities purchased were restricted      securities and they may have to hold them for an indefinite period of      time.

In      November 2005, the Company issued an aggregate of 4,700,002 shares      of the Company’s Common Stock to four purchasers in exchange for the Company’s      receipt of an aggregate of $300,000 in cash.  All of the shares were      offered and sold under a claim of exemption provided by Section 4(2) of the      Securities Act of 1933 without the use of an underwriter or NASD registered      broker-dealer. The Company paid 100,000 shares of the Company’s Common Stock as      a finder’s fee in connection with the Company’s issuance of 3,500,002 of these      shares.  However, apart from the issuance of these shares to a finder, no      other fees or commissions were incurred by the Company in connection with the      transaction. The purchasers were each sophisticated and experienced in      financial, business, and investment matters and otherwise able to evaluate      the      merits and risks associated with the purchase of the Company’s securities. The      purchasers were provided with, or given access to, information about the Company      and the offering, including, but not limited to, the Company’s financial      statements, business plan, articles of incorporation, by-laws, a description      of      how the proceeds were to be used, and additional information to assist them      in      understanding the merits and risks of the investment. The purchasers were      further provided the opportunity to ask questions of the Company’s officers and      directors and receive answers to their questions. The purchasers were informed      the securities purchased were restricted securities and they may have to hold      them for an indefinite period of time.

The      following table summarizes the 2000 Equity Plan and 2002 Employee      Compensation Plan as of December 31, 2005:

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

*      Approved by security holders 

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

The      Company’s discussion and analysis of its financial condition and      results of operations are based upon its consolidated financial statements,      which have been prepared in conformity with accounting principles generally      accepted in the United States of America. The preparation of these financial      statements requires management to make estimates and assumptions that affect      the      reported amounts of assets, liabilities, revenues, and expenses and related      disclosures of contingent liabilities. On an ongoing basis, management evaluates      its estimates, including, but not limited to, those related to bad debts,      product returns, warranties, inventory reserves, long-lived assets, income      taxes, litigation, and other contingencies. Management bases its estimates      on      historical experience and various other assumptions that are believed to be      reasonable under the circumstances, the results of which form the basis for      making judgments about the carrying value of assets and liabilities that are      not      readily apparent from other sources. Although, we believe our judgments and      estimates are appropriate, actual future results may be different; if      different

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assumptions      or conditions were to prevail, the results could be      materially different from our reported results. If actual results significantly      differ from management's estimates, the Company's financial condition and      results of operations could be materially impaired.

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

During      the fiscal year ending December 31, 2005 (“Fiscal 2005”), we      recorded $3,482,549 as net revenues. This compares to the fiscal year ending      December 31, 2004 ("Fiscal 2004") when we recorded $4,612,783 as net      revenue. Net revenues of consumer products and services (“Consumer”) grew      approximately 190%, increasing from $222,941 in 2004 to $646,375 in 2005. This      increase was the result of increased market acceptance of the Company’s VoIP      products and services. Wholesale operations (“Wholesale”) net revenues (on a      consolidated basis) decreased from $4,389,843 to $2,836,175, or approximately      35%. Both the former Adoria and Mid-Atlantic operations saw revenue decreases,      though that for the Mid-Atlantic operations (-69%) was much more significant      than that for the Adoria operations (-15%). The decrease in Mid-Atlantic      revenues was the result of a redirection in staff efforts away from      Mid-Atlantic’s wholesale business and toward the testing and quality management      of Consumer products and services. The decrease in Adoria revenues resulted      from      limitations imposed by cash shortages that proved insufficient to support prior      revenue levels.

During      Fiscal 2005, our Cost of revenues was $3,136,285 which      resulted in a gross margin as a percentage of net sales revenues of      approximately 10%. This compares to Fiscal 2004 where our Cost of revenues      was      $4,108,185 which resulted in a gross margin percentage of net sales revenues      was      approximately 11%. Consumer cost of revenues as a percentage of net sales      revenues decreased from 117% in 2004 to 97% in 2005, the result of improved      purchasing efficiencies associated with the larger sales volumes in 2005.      Wholesale cost of revenues as a percentage of revenues increased from 88% to      89%, the result of lower margins in the Adoria operation (which represented      a      much higher percentage of wholesale revenues in 2005 compared to 2004).      Competitive conditions, product and sales mix, and technology trends impacted      our gross margin in both of these years. Net revenues and cost of revenues      resulted in gross margins as a percentage of sales diminishing from 11% in      2004      to 10% in 2005 (Consumer margins improved from -17% to 3% while Wholesale      margins decreased from 11% to 10%, respectively).

During      Fiscal 2005 we incurred $2,810,055 in general and      administrative expenses. This compares to Fiscal 2004 when we incurred      $3,660,801 in general and administrative expenses. General and administrative      expenses as a percent of net revenues decreased for the Consumer operations      (1,207% in 2004; 274% in 2005) and decreased on an absolute basis by 34%.      However, General and administrative expenses as a percent of revenues increased      for the Wholesale operations (22% in 2004; 37% in 2005) and increased on an      absolute basis by 7%. The improvement in Consumer operations was due to better      absorption of marketing expenses in 2005 as revenues increased and the reversal      of $600,000 in executive bonuses paid in prior years and cancelled in Fiscal      2005 The adverse change in Wholesale operations was the result of both decreased      revenues in the Mid-Atlantic operation coupled with increased expenses there.      Overall, general and administrative expenses were primarily made up of wages      and      salaries, office expenses, fees and costs incurred for legal and accounting      services, and other administrative costs.

The      single largest factor distinguishing profitability in 2005      compared to 2004 was the result of impairments taken against purchased      intangibles and purchased assets. In 2004 we incurred a charge against income      for impairment of purchased intangibles of $3,396,138 (related to the Adoria      acquisition) and a charge against income for impairment of purchased assets      of      1,092,100 (related to the Brasil, LLC investment). Both charges resulted from      a      post-acquisition or post-investment analysis of the fair market value of the      purchased intangibles or assets which showed them to be worth significantly      less      than their book value. By contrast, in 2005 we incurred a much smaller charge      against income for impairment of purchased intangibles of $275,000 (again      associated with the Adoria acquisition), and recognized a gain on the disposal      of purchased assets of $615,216 when the dissolution of the Brasil LLC      investment led to a partial recovery of the Company’s common stock issued for      the acquisition.

During      Fiscal 2005, we had bad debt expense of $26,845 compared to      Fiscal 2004 when we had a Bad debt expense of $83,712 (in 2005 the Consumer      operations incurred a Bad debt expense of $65,605 which was partially offset      by      a recovery of $38,760 in Wholesale operations). Changes were enacted mid-year      in      2005 to curb what were deemed to be excessive and unsustainable bad debt losses      from Consumer operations’ customer fraud. Also during Fiscal 2005, we recorded      an equity loss from unconsolidated subsidiaries of $46,329 compared to Fiscal      2004 when we recorded a loss of $181,067 (associated with the Brasil LLC      investment).

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As      a result of these margins and expenses, we incurred an operating      loss of $2,196,748 in 2005 compared to an operating loss of $7,909,220 in 2004.      Most of the loss in 2005 ($1,522,390) was within the Consumer operations, which      incurred the bulk of the general and administrative costs. As a percent of      sales, the operating loss in Consumer operations decreased from 3,336% to 236%,      while the loss in Wholesale operations increased from 11% to      24%.

During      Fiscal 2005 we had $392,034 in realized gain on marketable      securities from the sale of NextPhase Wireless, Inc. (“NextPhase”) shares held      by the Company. compared to a Fiscal 2004 gain of $15,761. In addition, in      Fiscal 2005 we incurred interest expense of $128,412 compared to $73,060 in      Fiscal 2004. The increase in interest expense in 2005 occurred in the      Mid-Atlantic operation ($26,568 in 2004 compared to $82,132 in      2005)

As      a result, during Fiscal 2005 we had a net loss of $1,929,685      compared to Fiscal 2004 when we had a net loss of $7,964,192. The improvement      in      net loss was predominantly within Consumer (the 2004 net loss of $7,465,493      improved to a loss of $1,171,885). The operating loss in Wholesale operations      increased from $498,699 (11% of revenues) in 2004 to $757,800 (27% of revenues)      in 2005.

Basic      loss per share for Fiscal 2005 was $.01 compared to Fiscal 2004      when we had a basic loss per share of $.08. During Fiscal 2005, we had      130,766,267 weighted average shares outstanding. By comparison, during Fiscal      2004 we had 101,961,298 weighted average shares outstanding.

**Liquidity      and Capital Resources**

At      December 31, 2005, we had $33,430 in cash, down 29% from 2004      ($46,945). At the same time, we had $119,039 in net accounts receivable      (compared to $121,948 in 2004), $74,959 in inventories (compared to $72,020      in      2004), and $426,301 in total current assets (a 38% increase from 2004 Current      assets of $305,248). We expect inventory needs to grow in proportion to product      sales growth; cash will be negatively impacted by this need. Net fixed assets      decreased 64% from $497,226 in 2004 to $179,640 in 2005. Total assets decreased      41% from $1,273,848 in 2004 to $755,482 in 2005.

In      contrast, as of December 31, 2005, our Total current liabilities      were $1,471,943 compared to $1,216,775 at the same time in 2004. During this      time Accounts payable grew from $375,564 in 2004 to $589,918 in 2005, loans      at      the end of 2005 remained generally unchanged at $606,490, General liabilities      increased from $15,163 (2004) to $84,492 (2005), and Deferred revenues increased      from $82,103 in 2004 to $185,293 in 2005.

Net      Working Capital as of December 31, 2005 was ($1,045,643) compared      to ($911,527) at the same time in 2004, a decrease of 15%. Total assets less      Liabilities decreased between the end of 2004 and 2005 from ($34,478) to      ($716,461) - a decrease of ($681,983).

During      Fiscal 2005, our cash needs were met primarily by the sale of      common stock and loans from certain of our shareholders. Cash flows from      operations was ($1,551,430); comprised of ($1,195,744) for Consumer and      ($355,606) for Wholesale.. These cash requirements were funded in part from      the      sale of NextPhase common stock, loans from shareholders, and the sale of the      Company’s common stock. The Company anticipates that it will consume cash within      Consumer as revenues increase, products are added to inventories, and we      implement our business plan. In addition, Wholesale will consume cash as it      competes against lower gross margins and it supports implementation of our      business plan. We can not be assured that we will continue to obtain funds      from      these or any other sources to meet our need for additional capital      resources.

The      Companies’ cash as of December 31, 2005 ($33,430) is insufficient      to continue operations for more than a very short period of time; the Company      will need to raise significant capital for both its continuing operations and      to      implement its business plan. As of December 31, 2005, the Company expects that      it will need to raise at least $2,004,000 in cash to cover our anticipated      operating expenses for the twelve month period thereafter. 

Overall,      our liquidity and access to capital is very limited. We have      not received any commitment for additional financing and given the size of      our      company, we may be limited to loans and other cash infusions from officers,      directors, existing stockholders, and persons affiliated or associated with      one      or more of them. If we are to implement our business plan, we will need to      raise      significant amounts of additional capital and during the period ending December      31, 2005 we had not received any commitment that any such additional financing      would be forthcoming or, if could be obtained, that it can be obtained on      reasonable terms in light of our circumstances at that

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time.      In addition, if any financing should be obtained, existing      shareholders will likely incur substantial, immediate, and permanent dilution      of      their existing investment. 

**Critical      Accounting Policies**

The      preparation of our consolidated financial statements in      conformity with accounting principles generally accepted in the United States      of      America, requires us to make estimates and assumptions that affect the reported      amounts of assets and liabilities and disclosure of contingent assets and      liabilities at the date of the financial statements; and the reported amounts      of      revenues and expenses during the reporting periods. We are required to make      judgments and estimates about the effect of matters that are inherently      uncertain. .Although, we believe our judgments and estimates are appropriate,      actual future results may be different; if different assumptions or conditions      were to prevail, the results could be materially different from our reported      results. 

On      an on-going basis, we evaluate our estimates, including, but not      limited to, those related to bad debts, product returns, warranties, inventory      reserves, long-lived assets, income taxes, litigation, and other contingencies.      We base our estimates on historical experience and various other assumptions      we      believe to be reasonable under the circumstances, the results of which form      the      basis for making judgments about the carrying value of assets and liabilities      that are not readily apparent from other sources.

The      Company recognizes revenues and the related costs for voice, data      and other services along with product sales when persuasive evidence of an      arrangement exists, delivery and acceptance has occurred or service has been      rendered, the price is fixed or determinable, and collection of the resulting      receivable is probable and not contingent. Service revenue from monthly and      per      minute fee agreements is recognized gross, consistent with Emerging Issues      Task      Force (EITF) No. 99-19 “Reporting Revenues Gross as a Principal Versus Net as an      Agent”, as the Company is the primary obligor in its transaction, has all credit      risk, maintains all risk and rewards, and established pricing. Amounts invoiced      or collected in advance of product delivery or providing services are recorded      as deferred revenue. The Company accrues for warranty costs, sales returns,      bad      debts and other allowances based on its historical experience.

The      Company’s property and equipment and purchased intangible assets      represent a significant component of our consolidated assets. We depreciate      property and equipment on a straight-line basis over the estimated useful life      of the assets. Changes in the remaining useful lives of assets as a result      of      technological change or other changes in circumstances, including competitive      factors in the VoIP market, can have a significant impact on asset balances,      recoverability, or depreciation expense. Purchased intangible assets with      indefinite useful lives are not amortized but are evaluated for impairment      at      least annually, as required by Statement of Financial Accounting Standards,      No.142 “Goodwill and Other Intangible Assets”. Any impairment loss is determined      by comparing the fair value of the Intangible Assets with the carrying value.      Fair value is estimated using discounted future cash flows. There is inherent      subjectivity involved in estimating discounted future cash flows, which can      have      a material impact on the amount of any impairment.

**Forward-Looking      Statements**

This      Form 10-KSB contains forward-looking statements. Forward-looking      statements are statements concerning plans, objectives, goals, strategies,      expectations, intentions, projections, developments, future events, performance      or products, underlying (express or implied) assumptions and other statements      which are other than historical facts. In some cases forward-looking statements      can be identified by the use of forward-looking words such as “believes”,“expects”, "ma,", "will", "should", "could", "intends", "plan,", "anticipates",      "contemplates", "estimates", "predicts", "projects", and other similar      terminology or the negative of these terms or by discussions of plans or      strategy that involve risks or uncertainties Management wishes to caution the      reader that these forward-looking statements including, but not limited to,      statements regarding the Company’s marketing -plans, goals, competitive and      technology trends, and other matters that are not historical facts are only      predictions. No assurances can be given that such predictions will prove correct      or that the anticipated future results will be achieved. Actual events or      results may differ materially either because one or more predictions prove      to be      erroneous or as a result of other risks facing the Company. Forward-looking      statements should be read in light of the cautionary statements and important      factors described in this Form 10-KSB, including, but not limited to, the      Sections titled “The Factors That May Affect Future Results” shown as Item 1A      and in “Management’s Discussion and Analysis of Financial Condition and Results      of Operations”. The risks include, but are not limited to, the risks associated      with an early-stage company that has only a limited history of operations,      the      comparatively limited financial resources of the Company, the intense      competition the Company faces from other established competitors, technological      changes

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that      may limit the ability of the company to market and sell its      products and services or adversely affect the pricing of these products or      services, and management that has only limited experience in developing systems      and management practices. Any one or more of these or other risks could cause      actual results to differ materially from the future results indicated,      expressed, or implied in such forward-looking statements. We undertake no      obligation to update or revise any forward-looking statement to reflect events,      circumstances, or new information after the date of this Form 10-KSB or to      reflect the occurrence of unanticipated or other subsequent events, and we      disclaim any such obligation.

**Impact      of Inflation**

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

**Recent      Accounting Pronouncements**

In      November 2004, the Financial Accounting Standards Board (“FASB”)      issued Statement of Financial Accounting Standard (“SFAS”) No. 151, Inventory      Costs - an amendment of ARB No. 43, Chapter 4. This Statement amends the      guidance in ARB No. 43, Chapter 4, “Inventory Pricing,” to clarify the      accounting for abnormal amounts of idle facility expense, freight, handling      costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4,      previously stated that “... under some circumstances, items such as idle facility      expense, excessive spoilage, double freight, and rehandling costs may be so      abnormal as to require treatment as current period charges...” This Statement      requires that those items be recognized as current-period charges regardless      of      whether they meet the criterion of “so abnormal.” In addition, this Statement      requires that allocation of fixed production overheads to the costs of      conversion be based on the normal capacity of the production facilities. The      provisions of this Statement will be effective for the Company beginning with      its fiscal year ending November 30, 2006. Management believes that the adoption      of this Statement will not have any immediate material impact on the      Company.

In      December 2004, the FASB issued SFAS No. 152, “Accounting for Real      Estate Time-Sharing Transactions—an amendment of FASB Statements No. 66 and 67”(“SFAS 152) This Statement amends FASB Statement No. 66, “Accounting for Sales      of Real Estate”, to reference the financial accounting and reporting guidance      for real estate time-sharing transactions that is provided in AICPA Statement      of      Position (“SOP”) 04-2, and Statement No. 67, “Accounting for Costs and Initial      Rental Operations of Real Estate Projects”, to state that the guidance for (a)      incidental operations and (b) costs incurred to sell real estate projects does      not apply to real estate time-sharing transactions. The accounting for those      operations and costs is subject to the guidance in SOP 04-2. This Statement      is      effective for financial statements for fiscal years beginning after June 15,      2005, with earlier application encouraged. The Company believes that the      implementation of this standard will not have a material impact on its financial      position, results of operations or cash flows.

In      December 2004, the FASB issued SFAS No. 123 (revised 2004)“Share-Based Payment” (“SFAS 123R”). This Statement requires that the cost      resulting from all share-based transactions be recorded in the financial      statements. The Statement establishes fair value as the measurement objective      in      accounting for share-based payment arrangements and requires all entities to      apply a fair-value-based measurement in accounting for share-based payment      transactions with employees. The Statement also establishes fair value as the      measurement objective for transactions in which an entity acquires goods or      services from non-employees in share-based payment transactions. The Statement      replaces SFAS 13 “Accounting for Stock-Based Compensation” and supersedes APB      Opinion No. 25 “Accounting for Stock Issued to Employees”. The provisions of      this Statement will be effective for the Company beginning with its fiscal      year      ending December 31, 2006. The Company believes that the implementation of this      standard will not have a material impact on its financial position, results      of      operations or cash flows.

In      March 2005, the Securities and Exchange Commission (SEC) issued      Staff Accounting Bulletin (“SAB”) No. 107 which provides guidance regarding the      interaction of SFAS 123R and certain SEC rules and regulations. The new guidance      includes the SEC’s view on the valuation of share-based payment arrangements for      public companies and may simplify some of SFAS 123R‘s implementation challenges      for registrants and enhance the information investors receive.

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In      March 2005, the FASB issued FASB Interpretation No. 47 (“FIN 47”),“Accounting for Conditional Asset Retirement Obligations”, which clarifies that      the term ‘conditional asset retirement obligation’ as used in SFAS No. 143,“Accounting for Asset Retirement Obligations”, refers to a legal obligation to      perform an asset retirement activity in which the timing and/or method of      settlement are conditional on a future event that may or may not be within      the      control of the entity. FIN 47 requires an entity to recognize a liability for      the fair value of a conditional asset retirement obligation if the fair value      can be reasonably estimated. FIN 47 is effective no later than the end of the      fiscal year ending after December 15, 2005. The Company does not believe that      FIN 47 will have a material impact on its financial position or results from      operations.

In      May 2005, the FASB issued SFAS No. 154, "Accounting Changes and      Error Corrections: a Replacement of Accounting Principles Board Opinion No.      20      and FASB Statement No. 3" ("SFAS No. 154"). SFAS No. 154 requires retrospective      application for voluntary changes in accounting principle unless it is      impracticable to do so or another methodology is required by the standard.      Retrospective application refers to the application of a different accounting      principle to previously issued financial statements as if that principle had      always been used. SFAS No. 154's retrospective application requirement replaces      APB No. 20's ("Accounting Changes") requirement to recognize most voluntary      changes in accounting principle by including in net income (loss) of the period      of the change the cumulative effect of changing to the new accounting principle.      This statement defines retrospective application as the application of a      different accounting principle to prior accounting periods as if that principle      had always been used or as the adjustment of previously issued financial      statements to reflect a change in the reporting entity. SFAS No. 154 also      redefines restatement as the revising of previously issued financial statements      to reflect the correction of an error. The requirements are effective for      accounting changes made in fiscal years beginning after December 15, 2005 and      will only impact the consolidated financial statements in periods in which      a      change in accounting principle is made.  The Company does not expect that      the adoption of SFAS No. 154 in the first quarter of fiscal 2006 will have      a      material impact on its results of operations and financial      condition.

In      November 2005, the FASB issued FASB Staff Position (“FSP”) FSP      115-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to      Certain Investments” (“FSP 115-1”), which provides guidance on determining when      investments in certain debt and equity securities are considered impaired,      whether that impairment is other-than-temporary, and on measuring such      impairment loss. FSP 115-1 also includes accounting considerations subsequent      to      the recognition of an other-than-temporary impairment. The Company expects      to      adopt FSP 115-1 effective for the quarter beginning January 1, 2006, and the      adoption is not expected to have a material impact on our results of operations      or financial condition.

**ITEM      7.     FINANCIAL      STATEMENTS**

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

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

**ITEM      8A.     CONTROLS AND      PROCEDURES**

*Disclosure      Controls and Procedures*

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*Changes      in Internal Controls Over Financial Reporting*

*Management’s      Report on Internal Control Over Financial Reporting*

**ITEM      8B. OTHER INFORMATION**

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

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

**Directors      and Executive Officers**

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

*Securities      Act of 1933*

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

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

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

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

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**Advisory      Board Member**

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

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

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

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

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**ITEM      10.     EXECUTIVE      COMPENSATION**

**SUMMARY      COMPENSATION TABLE**

|                                                                                                                          | **Annual                Compensation** | **Long-Term                Compensation**                                                                 |                                                   |
|-------------------------------------------------------------------------------------------------------------------------------|----------------------------------------|-----------------------------------------------------------------------------------------------------------|--------------------------------------------------------|
|                                                                                                                          |                                   |                                                                                                      |                                                   |   | **Awards               Payouts** |   |
| **Name                and****Principal****Position****(a)**                                                                   | **Year****(b)**                        | **Salary****($)(c)**                                                                                      | **Bonus****($)(d)**                                    | **Other****Annual****Compen-****sation(1)****($)(e)** | **Restricted****Stock****Awards(2)****(s)($)(f)** | **Securities****Underlying****Options/****SARs****(#)(g)** | **LTIP****Payouts****($)(h)** | **All                Other****Compen-****sation(3)****($)(i)** |
| Ronald                G. Weaver,Chairman(4)                                                                                   | 200320042005                           | $                  13,846 $ 140,885$                109,269                           | $                0$                0$                0 | $          0$   9,000$                10,527 | $                80,000 $                80,000$          0                  | 750,00000 | $                0$                0$                0 | $                       0$                       0$                   389 |
| John                L. Castiglione,V.P.                Marketing, Treasurer, and Director(5)                                  | 200320042005                           | $  13,846$140,885$100,038                                                                       | $                0$                0$                0 | $        0$ 9,000$ 7,332 | $167,875$                80,000$                         0 | 250,00000 | $                0$                0$                0 | $                       0$                       0$                4,246 |
| Farid                Shouekani,President,                CEO and Director (6)                                                 | 200320042005                           | $ 24,000 $120,000$120,000                                                                       | $                0$                0$                0 | $1,831$8,787$7,930 | $                        0$80,000$                        0 | 0250,0000 | $                0$                0$                0 | $                        0$                        0$74,570 |
| Jason                A. Sunstein, V.P.                Finance, Secretary&                Director(7)                      | 200320042005                           | $                 13,846$140,885$100,038                                                             | $                0$                0$                0 | $        0$                9,000$                7,534 | $167,875$                80,000$                         0 | 250,000250,0000 | $                0$                0$                0 | $                       0$                       0$ 4,187 |
| Paul                E. Atkiss,CFO                & Director (8)                                                           | 200320042005                           | $           0$                 75,077$100,000 | $                0$                0$                0 | $        0$        0$ 1,058 | $                         0$                76,750$120,750 | 01,000,0004,000,000 | $                0 | $                       0$                       0$                   181 |
| James                R. BalestraciChief                of InternationalWholesale                Operations & Director (9) | 200320042005                           | $           0$132,353$120,000                      | $                0$                0$                0 | $        0$        0$20,928 | $                         0$                40,000$          0 | 001,150,000 | $                0$                0$                0 | $                       0$                6,753$                   765 |
|                                                                                                                          |                                   |                                                                                                      |                                                   |   |   |   |   |   |
| All                Directorsas                a Group(6                persons)                                               | 200320042005                           | $  65,538$750,085$649,346                                                                       | $                0$                0$                0 | $   1,831$35,787$53,309 | $415,750$436,750$120,750 | 1,500,0001,000,0005,150,000 | $                0$                0$                0 | $        0$                6,753$84,337 |

| (1) | The                  amounts shown as “Other Annual Compensation” includes for 2004 payments                  made as auto allowance or auto leases and for 2005 payments made                  as auto                  allowance or auto leases and employee medical/dental/vision insurance                  net                  of employee copayment. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

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

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

----

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

| **SUMMARY                - EXECUTIVE OPTION HOLDINGS, 12/31/05** |   |
|------------------------------------------------------------------|--------|
|                                                             |   | OUTSTANDING |   |   |   |  IN                THE MONEY |   |    |   |
|                                                             |   | as                of |   |   |   |  EXERCISE |   |  MARKET |   |
| NAME                                                             |   | 12/31/05 |   |   |   |  COST |   |  VALUE* |   |
| Ron                Weaver                                        |   |   | 750,000 |   |   | 500,000 |   | $ | 17,000 |   | $ | 47,500 |   |
| Farid                Shouekani                                   |   |   | 250,000 |   |   | 0 |   | $ | 0 |   | $ | 0 |   |
| Paul                Atkiss                                       |   |   | 5,000,000 |   |   | 0 |   | $ | 0 |   | $ | 0 |   |
|                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL                                                            |   |   | 6,000,000 |   |   | 500,000 |   | $ | 17,000 |   | $ | 47,500 |   |
| *                At the 12/31/05closing price of $0.095          |   |   |   |   |   |   |   |   |

----

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

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

| (1) | "Beneficial                  Owner" means having or sharing, directly or indirectly (i) voting                  power,which                  includes the power to vote or to direct the voting, or (ii) investment                  power, which includes the power to dispose or to direct the disposition,                  of shares of the common stock of an issuer. The definition of beneficial                  ownership includes shares underlying options or warrants to purchase                  common stock, or other securities convertible into common stock,                  that                  currently are exercisable or convertible or that will become exercisable                  or convertible within 60 days. Unless otherwise indicated, the                  beneficial                  owner has sole voting and investment power.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Percentages                  are based on 151,048,582 shares outstanding on December 31, 2004                  and an                  aggregate of 12,600,000 shares purchasable upon exercise of certain                  Common                  Stock Purchase Options and Warrants granted to the Company’s officers and                  directors, including 10,600,000 granted in fiscal 2005. The amounts                  and                  percentages shown include the effect of the exercise of: (a) an                  option to                  purchase 5,150,000 common shares held by Ronald G. Weaver, (b)                  an option                  to purchase 2,450,000 shares held by Mr. Farid Shouekani, (c) an                  option to                  purchase 5,000,000 shares held by Mr. Paul E. Atkiss, and do not                  include                  the effect of the conversion of certain unsecured promissory notes                  -                  $71,832 issued to Mr. Weaver and $380,276 issued to Mr. Shouekani                  pursuant                  to the “Bonus Return Agreements” as described elsewhere in this Form                  10-KSB. (See “Option/SAR Grants in Last Fiscal Year” table shown                  above). |

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

----

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

| (a)                                                                            | The                  following Exhibits are attached or incorporated by reference, as                  stated                  below.                                          |
|--------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|               |                                                                                                                                                                           |
|  3.1(a)                                                                   | Articles                  of Amendment to Articles of Incorporation of Tinglefoot Mining,                  Inc.*                                                               |
|  3.1(b)                                                                   | Articles                  of Amendment to Articles of Incorporation of Mexico Investment                  Corporation*                                                         |
|  3.1(c)                                                                   | Articles                  of Amendment to the Articles of Incorporation of Baja Pacific                  International, Inc.*                                                  |
|  3.1(d)                                                                   | Articles                  of Incorporation of Taig Ventures, Inc.**                                                                                                            |
|  3.1(e)                                                                   | Articles                  of Incorporation for Coliance Communications, Inc.#*                                                                                                 |
|  3.1(f)                                                                   | Articles                  of Incorporation for Mid-Atlantic International, Inc.#*                                                                                              |
|  3.1(g)                                                                   | Articles                  of Organization for Adoria Communications, LLC#**                                                                                                    |
|  3.3                                                                      | By-Laws                  for Viper Networks, Inc.*                                                                                                                             |
|  3.3(a)                                                                   | By-Laws                  for Coliance Communications, Inc. #**                                                                                                                 |
|  3.3(b)                                                                   | By-Laws                  for Mid-Atlantic International, Inc. #**                                                                                                              |
| 10.1                                                                           | Securities                  Purchase Agreement and Plan of Reorganization*                                                                                                     |
| 10.2                                                                           | Viper                  Networks, Inc. 2000 Equity Incentive Plan*                                                                                                              |
| 10.3                                                                           | Employment                  Agreement (Wray)*                                                                                                                                  |
| 10.4                                                                           | Employment                  Agreement (Castiglione)*                                                                                                                           |
| 10.5                                                                           | Employment                  Agreement (Sunstein)*                                                                                                                              |
| 10.6                                                                           | Agreement                  of Purchase and Sale of Assets (between Viper Networks, Inc. And                  Tri-National Development Corporation)*                            |
| 10.7                                                                           | Addendum                  to the Agreement of Purchase and Sale of Assets Between Viper Networks,                  Inc. And Tri-National Development Corporation*              |
| 10.8                                                                           | Settlement                  Agreement And General Release of Claims (between Viper Networks,                  Inc. And                  Tri-National Development Corporation)* |
| 10.9                                                                           | Month-to-Month                  Industrial Lease**                                                                                                                             |
| 10.10                                                                          | Month-to-Month                  Industrial Lease***                                                                                                                            |

----

| 10.11 | Securities                  Merger Agreement (Mid-Atlantic)#**                                                                                                                                                      |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.12 | Amendment                  to Securities Merger Agreement (Mid-Atlantic) #**                                                                                                                                        |
| 10.13 | Securities                  Merger Agreement (Adoria) #**                                                                                                                                                           |
| 10.14 | Push                  to Talk Services Reseller Billing Direct Agreement with ITXC,                  Inc.                                                                                                           |
| 14    | Code                  of business Conduct and Ethics                                                                                                                                                                |
| 23.1  | Consent                  of Independent Accountants, Armando C. Ibarra, C.P.A.,                  P.C.                                                                                                               |
| 31.1  | Certification                  Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as                  Adopted                  Pursuant to Section 302 of the Sarbanes-Oxley Act of                  2002 |
| 31.2  | Certification                  Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as                  Adopted                  Pursuant to Section 302 of the Sarbanes-Oxley Act of                  2002 |
| 32.1  | Certification                  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section                  906 of                  the Sarbanes-Oxley Act of 2002                                           |
| 32.2  | Certification                  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section                  906 of                  the Sarbanes-Oxley Act of 2002                                           |

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

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

**Audit      Fees**

**Tax      Fees**

**Other      Fees**

**Audit      Committee Charter**

----

**Audit      Committee Report**

----

**SIGNATURES**

| **Viper                Networks, Inc.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                       |                              |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                       |                              |
| By:  /s/                *Farid                Shouekani*Farid                ShouekaniChief                Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                 |                                 | Date:                June 1, 2006 |
|                                                                                           |                                                                                                                                                                                       |                              |
| By:  /s/*Paul E. Atkiss*Paul                E. AtkissChief                Financial Officer/Principal Accounting Officer                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                       | Date:                June 1, 2006 |

| By:  /s/                *Farid                Shouekani*Farid                ShouekaniChief                Executive Officer & Director                                                                                                                                                                                                                                                                                                                                                                                                  |                                 | Date:                June 1, 2006 |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------|
|                                                                                           |                                                                                                                                                                                       |                              |
| By:  /s/*Paul E. Atkiss*Paul                E. AtkissChief                Financial Officer, Secretary & Director                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                       | Date:                June 1, 2006 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                       |                              |
| By:  /s/                *Ronald                G. Weaver*Ronald                G. WeaverChief                Executive Officer & Director                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                       | Date:                June 1, 2006 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                       |                              |

----

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

----

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

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

----

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

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

----

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

|                                                           |   | Year                  Ended December 31, |        |
|----------------------------------------------------------------|--------|------------------------------------------|-------------|
|                                                           |   | 2005                                     |        | 2004 |   |
|                                                           |   |                                     |        |   |   |
| Net                  Revenues                                  |   | $                                        | 3,482,549   |   | $ | 4,612,783 |   |
| Cost                  of revenues                              |   |                                     | 3,136,285   |   |   | 4,108,185 |   |
| Gross                  Margin                                  |   |                                     | 346,265     |   |   | 504,598 |   |
|                                                           |   |                                     |        |   |   |   |   |
|                                                           |   |                                     |        |   |   |   |   |
| Operating                  Expenses                            |   |                                     |        |   |   |   |   |
| General                  and administrative                    |   |                                     | 2,810,055   |   |   | 3,660,801 |   |
| Bad                  debt (recovery) expense                   |   |                                     | 26,845      |   |   | (0 | ) |
| Equity                  loss from unconsolidated subsidiaries  |   |                                     | 46,329      |   |   | 181,067 |   |
| Impairment                  of purchased intangibles           |   |                                     | 275,000     |   |   | 3,396,138 |   |
| Gain                  on sale of purchased assets              |   |                                     | (615,216    | ) |   | 1,092,100 |   |
| Total                  Operating Expenses                      |   |                                     | 2,543,012   |   |   | 8,330,106 |   |
|                                                           |   |                                     |        |   |   |   |   |
|                                                           |   |                                     |        |   |   |   |   |
| Gain                  (Loss) from operations                   |   |                                     | (2,196,748  | ) |   | (7,825,508 | ) |
|                                                           |   |                                     |        |   |   |   |   |
| Other                  income (expenses)                       |   |                                     |        |   |   |   |   |
| Realized                  gain on marketable securities        |   |                                     | 392,034     |   |   | 15,761 |   |
| Interest                  expense                              |   |                                     | (128,412    | ) |   | (123,302 | ) |
| Other                  income (expense)                        |   |                                     | 3,441       |   |   | (4,624,595 | ) |
| Total                  other income (expenses)                 |   |                                     | 267,063     |   |   | (4,732,135 | ) |
|                                                           |   |                                     |        |   |   |   |   |
|                                                           |   |                                     |        |   |   |   |   |
|                                                           |   |                                     |        |   |   |   |   |
| Net                  loss                                      |   | $                                        | (1,929,685  | ) | $ | (12,557,644 | ) |
|                                                           |   |                                     |        |   |   |   |   |
| Basic                  loss per share                          |   | $                                        | (0.01       | ) | $ | (0.12 | ) |
|                                                           |   |                                     |        |   |   |   |   |
| Weighted                  average number of shares outstanding |   |                                     | 130,766,267 |   |   | 101,961,298 |   |

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

----

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

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

----

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

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | Year                  Ended December 31,                                                                                                                     |       |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 2005                                                                                                                                                         |       | 2004 |   |
|                                                                                                      |   |                            |       |                            |   |
| Cash                  flows from operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                                                                         |       |   |   |   |   |
| Net                  loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $                                                                                                                                                            | (1,929,684 | ) | $ | (7,964,192 | ) |
| Adjustments                  to reconcile net loss to net cash used in operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                                                                                                                                         |       |   |   |   |   |
| Depreciation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                                                                                                                         | 285,763    |   |   | 291,549 |   |
| Allowance                  for doubtful accounts and sales returns                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                                                                                                                                                         | (20,062    | ) |   | 76,272 |   |
| Allowance                  for inventory obsolescence                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                                                                         | 31,175     |   |   |   |   |
| Allowance                  for warranty returns                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                                         | 2,000      |   |   |   |   |
| Amortization                  of stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                                         | 54,943     |   |   | 65,931 |   |
| Amortization                  of stock-based interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                                                                         | -          |   |   | 19,944 |   |
| Loss                  (gain) on sale of property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                                                         | (588,902   | ) |   | - |   |
| Equity                  loss from unconsolidated subsidiaries, net of cash                  contributions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                                         | 32,115     |   |   | 181,067 |   |
| Impairment                  of purchased intangibles                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                                                                                         | 275,000    |   |   | 3,396,138 |   |
| Impairment                  of purchased assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                                         | -          |   |   | 1,092,100 |   |
| Stock                  based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                                         | (76,961    | ) |   | 948,163 |   |
| Interest                  accrual                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                                         | 106,832    |   |   | (1,446 | ) |
| (Gain)                  on sale of marketable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                         | (392,034   | ) |   | (15,761 | ) |
| Changes                  in assets and liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                                                                                                         |       |   |   |   |   |
|  Accounts                  receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                                         | 31,522     |   |   | (52,736 | ) |
|  Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                                         | (34,114    | ) |   | (72,020 | ) |
|  Prepaid                  expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                         | (7,323     | ) |   | 739 |   |
|  Other                  current assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                                         | (18,505    | ) |   | (35,039 | ) |
|  Accounts                  payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                         | 247,285    |   |   | 240,061 |   |
|  Accrued                  liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                                         | 345,204    |   |   | 22,268 |   |
|  Taxes                  payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                                                                                         | 1,126      |   |   | (885 | ) |
|  Deferred                  revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                         | 103,190    |   |   | 79,625 |   |
|  Net                  cash used in operating activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                                                                                                                         | (1,551,430 | ) |   | (1,728,222 | ) |

----

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

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

----

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

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

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

| NOTE                1 -                                                                                                  | ORGANIZATION                AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
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|                                                                                                                     | d.  Estimates                (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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|                                                                                                                     | uncertain.                Although, we believe our judgments and estimates are appropriate,                actual                future results may be different; if different assumptions or conditions                were to prevail, the results could be materially different from our                reported results.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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|                                                                                                                     | On                an on-going basis, the Company evaluates our estimates, including,                but not                limited to, those related to bad debts, product returns, warranties,                inventory reserves, long-lived assets, income taxes, litigation,                and other                contingencies. The Company bases our estimates on historical experience                and various other assumptions we believe to be reasonable under the                circumstances, the results of which form the basis for making judgments                about the carrying value of assets and liabilities that are not readily                apparent from other sources.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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|                                                                                                                     | e.  Property                and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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|                                                                                                                     | Property                and equipment are stated at cost and are depreciated over their estimated                useful lives using the straight-line method. Useful lives range from                three                to five years for office furniture and equipment. Additions to property                and equipment together with major renewals and betterments are                capitalized. Maintenance, repairs and minor renewals and betterments                are                charged to expense as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
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|                                                                                                                     | f.  Goodwill                and Other Intangible Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
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|                                                                                                                     | Goodwill                represents the excess of the cost of businesses acquired over the                fair                value of the identifiable net assets at the date of acquisition.                Goodwill                and intangible assets acquired in a purchase business combination                and                determined to have an indefinite useful lives are not amortized,                but                instead are evaluated for impairment annually and if events or changes                in                circumstances indicate that the carrying amount may be impaired per                Statement of Financial Accounting Standards, No.142 (“SFAS 142”),                “Goodwill and Other Intangible Assets”. An impairment loss would generally                be recognized when the carrying amount of the reporting unit’s net assets                exceeds the estimated fair value of the reporting unit. The estimated                fair                value is determined using a discounted cash flow analysis. SFAS 142                also                requires that intangible assets with estimable useful lives be amortized                over their respective estimated useful lives to their estimated residual                values, and reviewed for impairment in accordance with SFAS No. 144,                “Accounting for Impairment or Disposal of Long-Lived                Assets”. |
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|                                                                                                                     | g.  Long                lived assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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|                                                                                                                     | Long-lived                assets, such as property and equipment and purchased intangibles                subject                to amortization, are evaluated for impairment whenever events or                changes                in circumstances indicate that the carrying amount of the asset may                not be                recoverable per SFAS 144, “Accounting for Impairment or Disposal of                Long-Lived Assets”. Recoverability of assets is measured by a comparison                of the carrying amount of an asset to estimated undiscounted future                cash                flows expected to be generated by an asset. If the carrying amount                of an                asset exceeds its estimated future cash flows, an impairment charge                is                recognized as the amount by which the carrying amount exceeds the                estimated fair value of the asset. The estimated fair value is determined                using a discounted cash flow analysis. Any impairment in value is                recognized as an expense in the period when the impairment                occurs.                                                                                                                                                                                                                                                                                                               |
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| **VIPER                NETWORKS, INC. AND SUBSIDIARIES**      |
|---------------------------------------------------------------|
| Notes                to the Consolidated Financial Statements |
| As                of December 31, 2005                        |

| NOTE                1 -                                                                                                  | ORGANIZATION                AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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|                                                                                                                     | h.  Revenue                recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
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|                      | The                Company recognizes revenues and the related costs for voice, data                and                other services along with product sales when persuasive evidence                of an                arrangement exists, delivery and acceptance has occurred or service                has                been rendered, the price is fixed or determinable, and collection                of the                resulting receivable is reasonably assured. Service revenue from                monthly                and per minute fee agreements is recognized gross, consistent with                Emerging Issues Task Force (EITF) No. 99-19 “Reporting Revenues Gross as a                Principal Versus Net as an Agent”, as the Company is the primary obligor                in its transaction, has all credit risk, maintains all risk and rewards,                and establishes pricing. Combined product and service agreements                are                allocated consistent with EITF No. 00-21 “Accounting for Revenue                Arrangements with Multiple Deliverables” with the multiple deliverables                divided into separate units of accounting. Revenue is allocated among                the                separate units of accounting based on their relative fair value.                Support                and maintenance sales are recognized over the contract term. Amounts                invoiced or collected in advance of product delivery or providing                services                are recorded as deferred revenue. |
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|                                                                                                                     | The                Company accrues for warranty costs, sales returns, bad debts, and                other                allowances based on its historical experience.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
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|                                                                                                                     | i.  Stock-based                compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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|                                                                                                                     | Statement                of Financial Accounting Standards No. 123 (“SFAS 123”), “Accounting for                Stock-Based Compensation”, provides for the use of a fair value based                method of accounting for stock-based compensation. However, SFAS                123                allows the measurement of compensation cost for stock options granted                to                employees using the intrinsic value method of accounting prescribed                by                Accounting Principles Board Opinion No. 25 (“APB 25”), “Accounting for                Stock Issued to Employees”, which only requires charges to compensation                expense for the excess, if any, of the fair value of the underlying                stock                at the date a stock option is granted (or at an appropriate subsequent                measurement date) over the amount the employee must pay to acquire                the                stock. The Company has elected to account for employee stock options                using                the intrinsic value method under APB 25. By making that election,                the                Company is required by SFAS 123 to provide pro forma disclosures                of net                loss as if a fair value based method of accounting had been                applied.                                                                                                                                                                                                  |
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|                                                                                                                     | In                accordance with the provisions of SFAS 123, all other issuances of                stock,                stock options or other equity instruments to employees and non-employees                as the consideration for goods or services received by the Company                are                accounted for based on the fair value of the equity instrument issued.                During the year ended December 31, 2005 and 2004, the Company recognized                $351,176 and $171,863 and $323,005 and $549,557 of gross expense                relating                to the grant of common stock to non-employees and employees, respectively,                for services which are included in the accompanying consolidated                statements of operations. The value of these shares was determined                based                upon over the counter closing prices. Additionally during the year                ended                December 31, 2005, the Company recognized a $600,000 benefit relating                to                the return of stock previously granted to Officers of $360,000 and                $240,000 during the years ended December 31, 2004 and 2003,                respectively.                                                                                                                                                                                                                                                                                                                                                                      |

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

| NOTE                1 -                                                                                                  | ORGANIZATION                AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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|                                                                                                                     | j.  Income                taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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|                                                                                                                     | Current                income tax expense (benefit) is the amount of income taxes expected                to be                payable (receivable) for the current year. A deferred tax asset and/or                liability is computed for both the expected future impact of differences                between the financial statement and tax bases of assets and liabilities                and for the expected future tax benefit to be derived from tax loss                and                tax credit carry forwards. Deferred income tax expense is generally                the                net change during the year in the deferred income tax asset and liability.                Valuation allowances are established when necessary to reduce deferred                tax                assets to the amount expected to be “more likely then not” realized in                future tax returns. Tax rate changes are reflected in income in the                period                such changes are enacted. |
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|                                                                                                                     | k.  Net                loss per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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|                                                                                                                     | Basic                net loss per share is computed using the weighted average number                of common                shares outstanding during the periods presented. Diluted loss per                share                has not been presented because the assumed exercise of the Company’s                outstanding options and warrants would have been antidilutive. Options                and/or warrants will have a dilutive effect only when the average                market                price of the common stock during the period exceeds the exercise                price of                the options and/or warrants. There were options to purchase 7,250,000                shares of common stock and 34,951,346 warrants potentially issuable                at                December 31, 2002 which were not included in the computation of net                loss                per share.                                                                                                          |

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

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

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

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

----

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

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

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

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

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

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

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

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

|                      | Since                  the Company determined this to be other than a temporary impairment,                  a                  charge against earnings was taken in the amount of $1,092,100 for                  Impairment of Purchased Assets. Following this charge, the book                  value of                  Brasil LLC investment was $227,900. For the years ended December                  31, 2005                  and 2004 the Company recorded $46,329 and $181,067 as its 50% equity                  share                  in Brasil LLC operating loss subsequent to the Company’s investment,                  respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                      | In                  June, 2005 SII, Brasil LLC, and the Company reached a settlement                  agreement                  and release to terminate the Company’s 50% ownership in Brasil LLC arising                  from a disagreement between SII and the Company over responsibility                  for                  operating cash calls by, the management of, and the operation of                  Brasil                  LLC. The Company assigned its 50% interest in Brasil LLC to SII,                  and SII                  returning to the Company 1,375,000 shares of the Company’s Common Stock                  previously issued to them as part of the original purchase price                  paid for                  the Brasil LLC acquisition (inclusive of the Company’s subsequent 10%                  stock dividend). The aggregate value of the Company’s Common Stock                  returned ($637,500) was allocated as follows: 1) $7,567 to open                  accounts                  receivable; 2) $14,718 to zero out the remaining book investment                  in                  unconsolidated business; and, 3) $615,216 as a gain on the disposal                  of the                  purchased assets. At December 31, 2005 the Company had no equity                  investment in Brasil LLC. |

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

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

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

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

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

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

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

----

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

| NOTE                7 -                                                                                                  | RELATED                PARTY TRANSACTIONS (Continued)                                                                                                                                                                                                                                                                    |
|--------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                     | During                Fiscal 2005, certain of the Company’s shareholders advanced the Company                $371,873 under short term promissory notes. At December 31, 2005,                outstanding advances plus accrued interest from these shareholders                were                $528,077. |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                     | During                Fiscal 2004, certain of the Company’s shareholders advanced the Company                $753,041 under short term promissory notes. At December 31, 2004,                outstanding advances plus accrued interest from these shareholders                were                $607,094. |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                     | The                following shareholders advanced cash funds to the Company in                2005:                                                                                                                                                                                                                     |

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

|                                                                                                                     | In                addition to the above cash advances certain unpaid salaries, benefits,                and                previous salary deferrals were added to the loan and are included                in the                above outstanding balances at December 31, 2005. The loans from Messrs                Atkiss, Shouekani, and Weaver totaling $460,052 are classified on                the                balance sheet as loans from related party and the loans from the                former                employees Castiglione and Sunstein have been reclassified on the                balance                sheet as part of short term debt. |
|--------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                      | The                terms of the unsecured Notes carried full payment of principal and                accrued                interest as of the end of the following fiscal year. Interest on                the Notes                accrued at a rate equal to the Treasury Bills annual rate of interest                announced monthly by the U.S. Government for one year Treasury Constant                Maturities or at the .lenders cost of funs rate.                                                                                                                                                                                                          |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                     | During                November 2005, Messrs Castiglione and Sunstein each converted $176,000                of                their loan balance into 4,400,000 shares of the Company’s Common Stock,                During February 2006, Messrs Shouekani and Weaver converted their                loan                balances into 27,342,080 and 2,409,822 of the Company’s Common Stock,                respectively                                                                                                                                                                                                                                    |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| NOTE                8 -                                                                                                  | INCOME                TAXES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                     | Due                to the Company’s net loss position from inception on September 14, 2000 to                December 31, 2005, there was no provision for income taxes recorded.                The                following is a reconciliation of the statutory federal income tax                rate to                the Company’s effective tax rate:                                                                                                                                                                                                                                                                                                  |

----

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

| NOTE                8 - | INCOME                TAXES (continued) |
|-------------------------|-----------------------------------------|

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

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

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

|                                                                                                                     | As                a result of the Company’s losses to date, there exists doubt as to the                ultimate realization of the deferred tax assets. Accordingly, a valuation                allowance equal to the total deferred tax assets has been recorded                at                December 31, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                     | At                December 31, 2005, the Company had federal and state net operating                loss                carryforwards for tax purposes of approximately $10,390,385 and $9,471,875                which may be available to offset future taxable income and which,                if not                used, begin to expire in 2011 and 2013, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| NOTE 9 -                                                                                                       | COMMITMENTS                AND CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                     | Operating                Lease Obligation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                     | In                July, 2004 the Company entered into a twenty-four month lease agreement                for office space housing its corporate headquarters and sales; monthly                rent for this space is $1,736. During November 2005 the Irvine office                was                consolidated in with the San Diego office and the building management                subsequently placed a subtenant in the space; the Company remains                obligated for any unpaid rents through the July 2006 lease termination.                In                August, 2004 the Company entered into a forty month lease agreement                for                administrative and warehouse space; monthly rent for this space is                $4,387.                Rent expense for the year ended December 31, 2005 and 2004 was $77,337                and                $43,328, respectively. Future minimum rental commitments are $64,799                in                2006 and $52,644 in 2007. |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                     | Equity                Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                     | In                December 2000, the Company’s shareholders adopted the 2000 equity                incentive plan (the “2000 Plan”) for the benefit of employees, directors,                advisors and consultants of the Company. In December 2002, the Company’s                shareholders increased the shares authorized within the 2000 Plan                by                10,500,000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

----

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

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

----

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

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

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

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

|                           |                                                                                                               |                           | Options                Outstanding                                                                                 |                                                           | Options                Exercisable                                                                                 |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------|--------------------------------|--------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------|
| Exercise                prices |                                                                                                               | NumberOutstanding              |                                                                                                               | Weightedaverageremainingcontractuallife                (years) |                                                                                                               | Weightedaverageexerciseprice |   | Numberexercisable |   | Weightedaverageexerciseprice |
|                           |                     |       |                     |                                       |                     |       |   |                     |       |                     |       |   |                     |
| $                              | 0.034                                                                                                              |                           | 500,000                                                                                                            |                                                           | 2.6                                                                                                                |   | $ | 0.034 |   | 500,000 |   | $ | 0.034 |
| $                              | 0.200                                                                                                              |                           | 5,250,000                                                                                                          |                                                           | 9.1                                                                                                                |   | $ | 0.200 |   | 5,250,000 |   | $ | 0.200 |
| $                              | 0.248                                                                                                              |                           | 500,000                                                                                                            |                                                           | 7.9                                                                                                                |   | $ | 0.248 |   | 500,000 |   | $ | 0.248 |
| $                              | 0.450                - 0.526                                                                                       |                           | 1,000,000                                                                                                          |                                                           | 8.6                                                                                                                |   | $ | 0.488 |   | 1,000,000 |   | $ | 0.488 |
|                           |                                                                                                               |                           | 7,250,000                                                                                                          |                                                           | 9.0                                                                                                                |   | $ | 0.232 |   | 7,250,000 |   | $ | 0.232 |

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

----

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

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

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

| NOTE 13 -                                                                                                      | SUBSEQUENT                EVENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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|                                                                                                                     | On                May 1, 2006, the Company's Board of Directors approved the designation                of                up to 100,000 shares of newly-designated Series A Convertible Preferred                Stock.  Each share of the Series A Preferred Stock is                convertible into 100 shares of the Company's common stock at any                time                after ten days from the date at which the Company's shareholders                approve an amendment to the Company's Articles of Incorporation increasing                the number of shares of the Company's common stock to an amount which                would allow the Series A Preferred Stock to be converted into common                stock.  The Series A Preferred Stock convertible into 10,000,000                shares of the Company’s common stock is to be issued to the Company's                President and CEO, Farid Shouekani, as a retention bonus and for                past                services to the Company.  The Company plans to file a Certificate of                Designation of Preferences with the Nevada Secretary of State and                to adopt                further resolutions consistent with this resolution prior to the                issuance                of the Series A Preferred Stock. |