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

| **FORM 10-KSB/A**   |
|---------------------|
| **Amendment No. 2** |

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

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

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

**Commission File Number 0032939**

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

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

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

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

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

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

                Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yesx No  ̈

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

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

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

**APPLICABLE ONLY TO CORPORATE ISSUERS**

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

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**Documents Incorporated by Reference:**

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

**Explanatory Note**

                Viper Networks, Inc. (the “Company”) is filing this amendment to its Annual Report on Form 10-KSB for the year endedDecember 31, 2004 (the “Amendment”) to expand disclosures and restate the Consolidated Financial Statements in response to comments issued by the Securities and Exchange Commission (the “SEC”).  The revised document (items 1 - Descriptionof Business; 2 - Description of Property; 5 – Market for Common Equity and Related Stockholder Matters; 6 - Managements’ Discussion and Analysis of Financial Condition and Results of Operations); 8A – controls and Procedures; and, 9 –Directors, Executives, Officers, Promoters, and Control Persons; and restated financials address comments issued by the SEC as relates to the Company’s Forms 10-KSB Amendment 1 for the year ended December 31, 2004, and 10-QSB Amendment 1 for the quarters endedMarch 31, 2005 and June 30, 2005.  Any reference to facts and circumstances at a “current” date refer to such facts and circumstances as of such original filing date.

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

|                               |                                                                                                                                                              | **Page No.** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------|
| **PART I**                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                   |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                   |
|           Item 1.                                                                                   | DESCRIPTION OF BUSINESS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 3                 |
|           Item 1A.                                                                                                           | FACTORS THAT MAY AFFECT FUTURE RESULTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 17                |
|           Item 2.                                                                                                            | DESCRIPTION OF PROPERTY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 22                |
|           Item 3.                                                                                                            | LEGAL PROCEEDINGS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 22                |
|           Item 4.                                                                                                            | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 23                |
| ** **                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                   |
| **PART II**                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                   |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                   |
|           Item 5.                                                                                                            | MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 23                |
|           Item 6.                                                                                                            | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 34                |
|           Item 7.                                                                                                            | FINANCIAL STATEMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 37                |
|           Item 8.                                                                                                            | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 38                |
|           Item 8A.                                                                                                           | CONTROLS AND PROCEDURES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 38                |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                   |
| **PART III**                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                   |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                   |
|           Item 9.                                                                                                            | DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSON                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 40                |
|           Item 10.                                                                                                           | EXECUTIVE COMPENSATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 42                |
|           Item 11.                                                                                                           | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 44                |
|           Item 12.                                                                                                           | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 44                |
|           Item 13.                                                                                                           | EXHIBITS AND REPORTS ON FORM 8-K                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 45                |
|           Item 14.                                                                                                           | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 46                |
| ** **                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| SIGNATURES                                                                                                                                                                     | 47                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| INDEX TO CONSOLIDATED FINANCIAL STATEMENTS                                                                                                                                     | F-1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                                                                                                                             | F-2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

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**Available Information**

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

**PART I**

                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 (EXPRESSED OR IMPLIED) ASUMPTIONS AND OTHER STATEMENTS THAT ARE OTHER THAN HISTORICAL FACTS.  IN SOME CASES FORWARD-LOOKING STATEMENTS CANBE IDENTIFIED BY THE USE OF FORWARD-LOOKING WORDS SUCH AS "BELIEVES," "EXPECTS," "MAY," "WILL," "SHOULD," OR "ANTICIPATES," OR THE NEGATIVE OF THESE WORDS OR OTHER VARIATIONS OF THESE WORDS OR COMPARABLE WORDS, OR BY DISCUSSIONS OF PLANS OR STRATEGY THAT INVOLVERISKS AND 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 MATTERSTHAT 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 MOREPREDICTIONS 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 FACTORS THATMAY 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 HISTORYOF OPERATIONS, THE COMPARATIVELY LIMITED FINANCIAL RESOURCES OF THE COMPANY, THE INTENSE COMPETITION THE COMPANY FACES FROM OTHER ESTABLISHED COMPETITORS, TECHNOLOGICAL CHANGES THAT MAY LIMIT THE ABILITY OF THE COMPANY TO MARKET AND SELL ITS PRODUCTS AND SERVICES ORADVERSELY IMPACT THE PRICING OF THESE PRODUCTS AND 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 FUTURERESULTS 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 THEOCCURRENCE OF UNANTICIPATED OR OTHER SUBSEQUENT EVENTS.

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

**BACKGROUND**

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

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

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

                In November 2000, the Company entered into a Securities Purchase Agreement and Plan of Reorganization (the "California Reorganization")with Viper Networks, Inc., a California corporation ("Viper-CA").  Viper-CA was formed on September 14, 2000. Under the terms of the California Reorganization, the Company exchanged 36,000,000 shares of its Common Stock for all of the then-outstanding commonshares of Viper-CA and Viper-CA became a wholly-owned subsidiary of the Company.  Viper-CA’s business was that of an application service provider.  The Company then changed its name to Viper Networks, Inc. and the Company effected a complete change ofthe Company and its Board of Directors and officers to position the Company to execute a new business strategy as described below.

                With these changes, the Company re-focused its attention on providing internet telephony services, the development of an infrastructurefor providing services to its Web-based customers (the "Graphic User Interface") and, eventually, the construction of Voice-over-Internet Protocol ("VoIP") network for business, institutions, and Internet Service Providers ("ISPs").  The Company’smanagement team and Board of Directors determined that the goals for use of the Mexico property purchased from Tri-National and construction of telecommunications facilities to service the Hills of Bajamar resort were not within the Company’scapabilities.  Since consideration for the agreement (documented title to the Mexico property) has never been received the Company does not believe it is the owner of the Land and accordingly considers the agreement to be null and void.

                In July 2003, the Company acquired Coliance Communications (“Coliance”) in exchange for the Company’s issuance of anaggregate of 17,000,000 shares of the Company’s Common Stock and 450,000 shares of the Company’s Preferred Stock (aggregate purchase price $750,005). All of the Preferred Stock was later converted into notes payable. Coliance was a reseller of USB-enabledVoIP hardware; through this acquisition the Company hoped to acquire knowledge of available VoIP products and suppliers (the vPhone and Internet Phone Adapter were gained through the acquisition), and also management talent relating to the procurement and sale ofsuch products.  As a result of this acquisition, Stephen D. Young and Ronald G. Weaver from Coliance became Directors of the Company as Chairman and President and as Chief Executive Officer, respectively. 

                On October 15, 2003, the Company entered into a Securities Merger Agreement (the “Mid-Atlantic Agreement”) with FaridShouekani in connection with the purchase of all the common stock (the “Mid-Atlantic Shares”) of Mid-Atlantic International, Inc., a Michigan corporation (“Mid-Atlantic”) from Farid Shouekani.  Under the terms of the Mid-AtlanticAgreement, the Company acquired all of Mr. Shouekani’s Mid-Atlantic Shares in exchange for: (1) $50,000 cash within 21 days of Closing; and (2) an aggregate of 7,235,000 shares of the Company’s Common Stock with 4,235,000 of these shares (the“Special Shares”) subject to certain redemption rights (the “Redemption Rights”), at the option of Mr. Shouekani at a redemption price of $0.17 per Special Share as provided by the Mid-Atlantic Agreement (aggregate purchase price $779,700).All of the Redemption Rights expire on January 15, 2003 and are secured by Mid-Atlantic’s assets.  As of December 31, 2004, Mr. Shouekani exercised his Redemption Rights over 1,802,000 Special Shares. The remaining 2,433,000 Special Shares were canceledand returned to treasury.  Mid-Atlantic owned and operated a global VoIP network, with strong routing capabilities in the Middle East and Africa.  In addition, Mid-Atlantic owned the billing servers and associated hardware, plus switching hardware andsoftware, required of a consumer VoIP system provider.  Through this acquisition, the Company hoped to quickly establish the network infrastructure needed for it’s consumer VoIP network, acquire the technical talent needed to manage and improve thiscapability, and obtain and existing revenue stream.  As a result of this acquisition, Mr. Shouekani became Chief Technical Officer and a Director of the Company.

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                On January 30, 2004, the Company entered into a Securities Merger Agreement (the “Adoria Agreement”) with James R.Balestraci, the sole holder of the membership interests of Adoria Communications, LLC, a Delaware limited liability company (“Adoria”).  Under the terms of the Adoria Agreement, the Company acquired all of Mr. Balestraci’s membership interestsin Adoria in exchange for: (1) cash payments totaling $500,000 and (2) the Company’s issuance of 2,500,000 shares of the Company’s Common Stock with 500,000 of these shares (the “Performance Shares”) of the Company’s Common Stock subjectto the condition that Adoria’s financial results in 2004 must equal or exceed its financial results in 2003 (aggregate purchase price $3,574,500).  In the event that Adoria’s financial results in 2004 do not equal or exceed its 2003 results, thePerformance Shares are to be cancelled and returned as treasury stock.  Adoria’s 2004 financial results exceeded its 2003 results and the Performance Shares were earned.  Adoria was a reseller of internet traffic routes and capacity, especially inEurope and Asia.  Through this acquisition the Company hoped to acquire the capability for dynamic network routing through the utilization of internet routes routinely exercised by Adoria, and management expertise regarding least cost routing alternatives ofinternational internet-based telephony traffic.  As a result of this acquisition, Mr. Balestraci joined the Company as Chief of International Wholesale Operations and a Director.

                During May 2004, the Company acquired an aggregate 50% of the membership interests of Brasil Communications, LLC (“BrasilLLC”) in two concurrent transactions with Software Innovations, Inc. (“SII”) and Brasil LLC.  As consideration for the purchase, the Company issued 2,000,000 shares of the Company’s common Stock to SII and $350,000 payable in cash toBrasil LLC (aggregate purchase price for 50% ownership interest $1,320,000).  Brasil LLC owns and operates a VoIP network with licenses and operations in Brazil and El Salvador.  Through this acquisition the Company hoped to gain a foothold for its VoIPbusiness in Brazil and El Salvador (each considered a fertile market).   Management also hopes to expand the Company’s global VoIP network and hardware sales into Latin America through this investment.

                  (As used herein and unless otherwise stated, the term "Company," "we," and "our," refers to the Company, and the subsidiariesMid-Atlantic, Adoria, and Viper-CA.)

****

**Business of the Company**

                We are a provider of Voice over Internet Protocol, or VoIP, communications products and services. Since we began VoIP operations in2000, we have evolved from a pioneer in selling VIPER CONNECT, a “push to talk” technology developed by ITXC, to a next generation provider of high-quality telecommunication services and technology for internet protocol, or IP telephony applications. Weutilize our VoIP technology to transmit digital voice communications over data networks and the internet.  The Company is located on the internet at www.vipernetworks.com.

                 We branded and shipped our first VoIP product, the vPhone, in July of 2003, and acquired our first global VoIP network withgateways and a billing server in Detroit, Michigan in October of 2003, through our acquisition of Mid-Atlantic International, Inc. We believe that while VoIP will eventually surplant the existing (“POTS”) telephone system, the more immediate market needexists where telephone costs are high and call quality is low (i.e., developing countries).  Our strategy has been to establish a network targeting these markets and to concentrate on customer segments characterized by a disproportionate call volume to suchmarkets (e.g., foreign nationals).  However, since customers expect the ability to call anywhere our network also serves all USA destinations and those of most other industrialized countries.

                Our gateways are located as follows: four in Brazil, one in El Salvador, one in Egypt, one in Ghana, one in India, one in Israel, onein Lebanon, one in Saudi Arabia, one in Sri Lanka, one in Syria, one in the United Kingdom, six in Western Europe, two in Eastern Europe.  No individual gateway is deemed to represent a material investment of the Company’s resources.  Developingcountries are generally less economically and politically stable than are industrialized countries; business interactions with some (such as Syria or Iran) may be unilaterally restricted by the U.S. government in furtherance of the war on terror or the interests tocurb human rights violations.  The Company has developed alternate route strategies should existing network facilities become compromised (and will abandon routes that are in conflict with U.S. national interests.

                In fiscal 2004 substantially all of the Company's revenues were generated from the sale and provisioning of VoIP products, services andtechnology with approximately 96% of our sales revenues derived from the sale of services and 4% from the sale of products as described in the section entitled, “Products and Services” below.  We

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do not own or hold any proprietary or intellectual property rights to the technology used in its vPhone products.  The Company holds no applicable patents, trademarks, or licenses, and derives none of its income fromfranchises, royalty agreements, or the similar.

                Our corporate structure is primarily organized around four wholly-owned operating subsidiaries:
|            | 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).  ViperInternational’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 telecommunicationsproviders through our internal sales force.                                                  |
|--------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                              | Viper-CA, 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 placedat 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 December31, 2004, we had approximately 12,000 active accounts using our suite of VoIP products. |

**Industry Background**

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

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

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

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

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

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and cost factor trends continue, these cost savings will continue and become more apparent to telecommunications users worldwide. 

**Our Strategy**

                Our strategy is to become a profitable, leading provider of VoIP telephony products and services worldwide.

                Viper entered the VoIP industry earlier than most current competitors.  Thus, even though some companies have experienced muchmore explosive growth and have a larger installed base of domestic customers, Viper has a good base of knowledge of the business it competes in.  The Company has used its time in business to: 1) develop a comprehensive call management and billing system that isfully scalable as the customer base grows; 2) acquire knowledge and contacts in the wholesale VoIP transport industry that complements and expands our own network and provides call termination capability to essentially any location on the planet; 3) acquire technicaland marketing talent to support the Company’s’ business needs.

                From the beginning the Company targeted international VoIP calls.  This in part dictated the characteristics of the network,hardware and software we adopted.  Although broadband internet connections have become commonplace in the U.S., they still represent only 45 million subscribers in the U.S. and 179 million worldwide – or 17 % of all internet subscribers(http://www.morganstanley.com/institutional/techresearch/pdfs/GSB112005.pdf).  With ‘dial-up’ connections so prevalent in the Company’s target market (international calls), this mandated the Company design and implement its network such that itprovides VoIP over low-speed internet connections.  Most competitors – including Vonage and the offerings of AOL, Yahoo, MSN, and the internet cable companies – do not have the capability to offer VoIP over a dialup internet connection.

                We believe our strategy will lead to a profitable business, even as price competition among VoIP providers intensifies.  We planto develop and offer a ‘flat rate’ service for unlimited domestic calls.  The Company will selectively target customers with a disproportionate amount of international calling, such as certain ethnic groups who frequently ‘callhome’.  Since international calls are billed on a per-minute-of-usage basis on top of any ‘flat-rate’ charges (and, since there is less price competition than in the domestic market, per-minute prices on international calls are generally moreprofitable), we can afford to treat our flat-rate plans as loss leaders toward customers who will prove profitable through their international calling habits.  Competitors who are not effectively positioned in a broad international capability will need to dependon their flat-rate plans as their primary profit generator, since they cannot support the dominant percentage of dial-up customers in other countries.  Being less ‘selling-price’ sensitive than our competitors, we therefore believe we will beeffective with our flat-rate plans.

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

                If we are successful in obtaining sufficient additional financial and managerial resources, we intend to implement our Strategy tobring the best possible voice products and services, at an affordable price, to consumers and businesses and enhance the ways in which these customers communicate.  The following are key elements of our strategy:
| Cap*italize on the Growth of VoIP Products and Services*.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 We believe that if we can implement our Strategy, we will be well positioned to take advantage of the expected growth of the VoIPproducts and services markets. Technology research firm Jupiter Research predicts that VoIP telephony services will grow to about 400,000 U.S. households by the end of 2004, and to 12.1 million U.S. households by 2009(http://www.clickz.com/stats/sectors/broadband/article.php/3418651). |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| *Capitalize on our technological expertise to introduce new products and features.*                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                 Over the past three years, we have developed or acquired several core technologies that form the backbone of our VoIP service and whichwe intend to use to develop product enhancements and future products.                                                                                                                                                                                                                   |

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| *Offer the best possible service and support to our customers with a world class customer support organization.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 We have established relationships with several resellers and distributors of telecommunications products. To further accelerate growthof our vPhone and future consumer and enterprise offerings, we intend to build upon our existing relationships and establish new relationships with distributors, value added resellers and system integrators, other service providers and retailers with strong localsales and marketing channels to make our products more readily available and accessible to potential customers of our service. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| *Focus Viper Networks on Opportunities in Emerging Markets and New Service Offerings.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                 Viper Networks’ Mid-Atlantic International, Inc. and Adoria Communications LLC targets international markets undergoingtelecommunications deregulation, which we believe will provide high margin opportunities. As our financial resources allow, we seek to continue to enhance and expand our global VoIP network into new markets by internal growth, acquisition and strategic alliances. Ourplan is to develop, expand and integrate new services into our existing managed platform.                                           |

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

                If we can implement our Strategy, we seek to make significant upgrades to our existing system infrastructure to enhance the support wecan provide to new and existing subscribers, as well as our distribution partners. In an emerging industry with world-changing technologies, we are focused on our customers and their experience with Viper Networks, Inc.

**Our Solution**

                The Company is a provider of high quality cost effective Voice over the Internet solutions for consumers (including businesses). In addition, the Company provides a wholesale VoIP transmission resale capability to other carriers who lack needed capacity to certain destinations, or for whom our network is more cost effective. Our secure, reliable method of communication is growing in demand inthe global markets where communication distances are typically great and where costs to communicate are high.  The Company’s low rates, high reliability, and good quality connection are the three factors fueling the growth and success.

                We believe our products and services help improve the cost, availability, and reliability, of voice communications. Our“vPhone” (and our other consumer VoIP products) provides our customers with rich, robust communications.  Our planned global VoIP network consists of gateways in major population centers.  The network automatically locates remote servers at theclosest point to the end user of each telephone call and routes the call over internet connection to that point – thereby eliminating the high cost of long distance connectivity.  With our VoIP network we can terminate (or send) our customers' calls to theproper destination using the most efficient route available.

**Consumer Products and Services**

                The Company offers a full suite of consumer VoIP products and services designed to meet our customers’ diverse global voicecommunications needs (all products are sourced from third parties, who hold any and all applicable intellectual property rights; none of the Company’s current products is deemed to be available from a single source).  The Company has designed its networksuch that products from different manufacturers will function correctly provided the manufacturer adheres to applicable industry standards.  In this way, the Company hopes to avoid sole source dependencies.

                Our suite of consumer VoIP Products allows calls to be placed 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).

*vPhone*

                The vPhone is a USB powered telephone device connected to a personal computer.  The vPhone:

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|                                                                                | •      | 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)*

**

                The IP Phone Adaptor is a USB powered device that allows a user to connect any standard telephone to a personal computer.  The IPPhone Adaptor:
|               | •      | 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)*

                The Broadband Phone Adaptor is a network device that allows a user to connect up to 2 standard telephones (or 1 phone and 1 faxmachine) to the internet.  The Broadband Phone Adaptor: 
|                                                                                | •      | 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*

                The Viper Networks Wi-Fi vPhone is an intelligent IP communications device.  The 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*

                The Viper Networks IP PBX provides:
|                                                                                | •      | 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, musicon 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*

                Once a retail customer registers a Viper product and establishes a prepaid account (the “Viper Minutes Account”) theyobtain access to the Company’s global VoIP network.   Retail calls on our global VoIP network are prepaid by conveniently depositing funds online.  The Viper Minutes Account maintains the retail customer’s detailed call records (telephonenumber, duration, and cost) and remaining prepaid balance.

*Wholesale Operations*

                Viper International LLC, formed in August 2004, represents the combination of the capabilities obtained through the acquisitions ofMid-Atlantic (9/03) and Adoria (2/04).  Viper International is responsible for world-wide termination of all calls made by customers using any of the Company’s consumer products.  Viper’s worldwide network permits the Company to offer highquality routes and the cost effective pricing in the highly competitive telecommunications industry.

                Additionally, Viper International has cooperative agreements with many underlying carriers who provide termination routes todestinations not served by Viper’s own network.  By combining the power of its own network with the breadth of affiliates’ networks, Viper is able to offer customers calling capability to anywhere in the world at prices unmatched by any traditionaltelephone carrier (and, lower than most competitive VoIP providers). 

                Vipers’ network is powered by the Company’s Nextone softswitch.  This state of the art VOIP switching facility allowshundreds of thousands of calls to be directed to specific partnerships and carriers throughout the world.  This Nextone switch is compatible with all VOIP networks, including Sansay, Cisco, and Nextone.

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                In addition to the termination of consumer calls, Viper International also sells traffic capacity on our VoIP network to a wide varietyof wholesale clients.  While providing our wholesale customers with a cost-effective alternative for their global traffic needs, this offering also helps us more fully utilize the capacity of our network (and creates another profitable revenue stream). Viper’s wholesale activities have targeted Latin America and the Middle East, including Argentina, Brazil, Uruguay, Egypt, Jordan, Saudi Arabia, Nepal & Mongolia.

                Our in-depth, moment-to-moment knowledge of market pricing for destinations around the globe enables us to competitively price usage ofour network while maximizing proceeds to the Company.

**Sales, Marketing and Promotional Activities**

                We currently sell and market our VoIP products to retail customers (end users) through our direct sales force, web site and third partydistributors.  The retail customer is required to 1) register their Viper Product, 2) establish a Viper Minutes Account, and 3) deposit funds into their Minutes Account in advance of utilizing Viper’s global VoIP network.  Most agreements require thecustomer to pre-pay for all products and services.  To date, we have not incurred significant advertising and promotional expenses as we have not had the working capital to fund significant mass media advertising expenditures.

                Viper’s VoIP products and services are offered to these third parties distributors (“Distributors”) through astandard distributor agreement.  These agreements typically provide 20% to 40% in discounted pricing (from approximate retail pricing levels) for product purchases and a residual 20% to 30% commission on funds deposited by retail customers (of the VoIP productssold by the Distributor) into their Minutes Account.  Agreements typically are for a one year term and include an option to renew the term for an additional one year period.

                We offer businesses the opportunity to become resellers of our products and services through a reseller program.  Resellers areable to purchase bulk accounts (the Viper Minutes Account) and/or hardware at additional discounts that they are then able to resell to end users under the Viper Networks brand.  In certain circumstances, resellers are able to resell end users under a privatebrand.

                Wholesale minutes on our global VoIP network are sold to other traditional and VoIP telecommunications providers through our internalsales force.

**Competition**

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

                The market for telecommunications services is intensely competitive.  In addition to the competitors listed above, many companiesoffer products and services like ours and many have a well established presence in major metropolitan centers.  We may not be able to compete successfully with these companies and others that may enter the market.  In an emerging industry withworld-changing technologies brand name recognition is critical to success; we may not be able to compete effectively with competitors who each possess significantly greater financial, distribution, and marketing resources than we do.  If we do not succeed inthis 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.

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

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

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

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

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

**Operations**

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

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

**Suppliers**

                We outsource the manufacturing of our vPhone and other VoIP products to third-party manufacturers.  The Company’s primarysuppliers are: BCM Advanced Research; Tiger Jet Network, Inc.; and, Shandong Bittel Electronics Co., Ltd.  While we believe that relations with our contract manufacture and third party suppliers (collectively “Suppliers”) are good, there can be noassurance that our Suppliers will be able or willing to supply products and services to us in the future or if they are supplied, that they will offer these products and services at prices that allow us to resell them at a profit.  While we believe that we couldreplace our Suppliers if necessary, our ability to provide product and service to our customers would be materially and adversely impacted for a protracted period, and this could have an adverse effect on our business, financial condition and results ofoperations.

**Research and Development**

                The VoIP market is characterized by rapid technological changes and advances.  Accordingly, if sufficient financial resourcesbecome available, we plan to make substantial investments in the design and development of new products and services and enhancements and features to existing products and services as well as investments in our global VoIP network. Our future research and developmentefforts will relate to our vPhone, SOHO

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applications, the 802-11 wireless standard, and our IP PBX products and the acquisition and development of new endpoints for subscribers of our service.  The development of new products and the expansion of our globalVoIP network are essential to our success.

                To date, we have not incurred significant research and development expenses as we have not had the working capital to fund significantdevelopment expenditures.  Our ability to offer new products or enhanced features has been dependent on our Suppliers, who are free to offer similar or identical products to other of their customers – our competitors.  Accordingly, the Company doesnot possess a competitive advantage with its suite of VoIP products and services.

**Industry Overview**

                Historically, the communications services industry has transmitted voice and data over separate networks using differenttechnologies.  Traditional carriers have typically built telephone networks based on circuit switching technology, which establishes and maintains a dedicated path for each telephone call until the call is terminated  (sent). With a circuit-switched systema telephone call is placed, a circuit is established, and the circuit remains dedicated for transmission of the call and is unavailable to transmit any other call.  This restricted use of transmission capacity has become inefficient in light of the increaseddemand for voice services and the proliferation of data networks, with their enhanced functionality and efficiency.

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

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

                Over the last decade, the volume of traffic on data networks has grown at a faster rate than traditional telephone networks.  Thisgrowth has been driven by several factors, including technological innovation, high penetration of personal computers and, in particular, by the rapid expansion of the internet as a global medium for communications, information and commerce.  International DataCorporation, a market research firm, estimated in 1999 that the number of internet users worldwide would grow from approximately 142  to 399 million between 1998 and 2002 (http://docs.yahoo.com/docs/advertising/research/TheWeb/GrowthOfWeb/GrowthOfWeb.html).Internet usage has continued to accelerate; in March, 2000 the Angus Reid Group predicted internet usage would reach 1 billion by 2005 (http://www.clickz.com/stats/sectors/geographics/article.php/326181).  The Computer Industry Almanac confirmed this level ofusage in 2004 (http://www.c-i-a.com/pr0904.htm).  Morgan Stanley estimated in 2005 that communications over the internet – not browsing, chat and search – accounted for 44% of all U.S. online usage(http://www.morganstanley.com/institutional/techresearch/pdfs/GSB112005.pdf).  This increase in data traffic has necessitated additional data network capacity and quality.  As a result, businesses have invested billions of dollars in order to meet thisneed.

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

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**     Voice on Data Networks**

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

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

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

**     The Economics of Internet Telephony**

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

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

**     Limitations of Existing Internet Telephony Solutions**

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

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

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

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**     Increasing Trends Toward Outsourcing Telephony Solutions**

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

**     Government Regulation**

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

                *United States.*  We believe that, under U.S. law, the internet-related services that the Company provides constituteinformation services as opposed to regulated telecommunications services, and, as such, are not currently actively regulated by the FCC or any state agencies charged with regulating telecommunications carriers.  Nevertheless, aspects of our operations may besubject to state or federal regulation, including regulation-governing universal service funding, disclosure of confidential communications and excise tax issues.  We cannot provide assurances that internet-related services will not be actively regulated in thefuture.  Several efforts have been made in the U.S. to enact federal legislation that would either regulate or exempt from regulation services provided over the internet.  Increased regulation of the internet may slow its growth, particularly if othercountries also impose regulations.  Such regulation may negatively impact the cost of doing business over the internet and materially adversely affect our business, operating results, financial condition and future prospects.

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

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

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

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

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

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

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

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

                We will also be providing services in countries where the regulation of internet telephony is more restrictive than in the UnitedStates or the European Union.  Also, in the event we expand into additional foreign countries, such countries may assert that we are required to qualify to do business in the particular foreign country, that we are otherwise subject to regulation, or that we areprohibited from conducting our business in that country.  Our failure to qualify as a foreign corporation in a jurisdiction in which we are required to do so, or to comply with foreign laws and regulations, would materially adversely affect our business,financial condition and results of operations by subjecting us to taxes and penalties and/or by precluding us from, or limiting us in, enforcing contracts in such jurisdictions.  In some of those countries, we may be forced to find strategic partners withinthose countries to help us obtain regulatory approval.  Likewise, our customers and partners may be or become subject to requirements to qualify to do business in a particular foreign country, otherwise to comply with regulations, or to cease from conductingbusiness in that country.  We cannot be certain that our customers and partners are currently in compliance with regulatory or other legal requirements in their respective countries, that they will be able to comply with existing or future requirements, and/orthat they will continue in compliance with any requirements.  Changes in the regulatory regimes of countries where we do business, may have the effect of limiting or prohibiting internet telephony services, to one or more countries in which we currently operateor seek to operate in the future or the failure of our customers and partners to comply with these requirements could materially adversely affect our business, financial conditions and results of operations.

                Additionally, equipment located in a foreign country with a developing or emerging economy may be materially adversely affected bypossible political or economic instability.  The risks include, but are not limited to rapid political and legal change, terrorism, military repression, or expropriation of assets.  The effect of these factors cannot be accurately predicted but theiroccurrence could materially adversely affect our business, financial conditions and results of operations.

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                Finally, the International Telecommunications Union, or the ITU, an international treaty organization that deals withtelecommunications matters, has not taken any action in favor or against internet telephony.  In 2000, however, the ITU convened meetings and published reports on the internet and internet telephony issues, partly in response to concerns from some developingcountries over internet telephony and tariffing of international internet backbone traffic.  The ITU continues to track the regulatory environment in many countries regarding the internet, and may in the future encourage some countries to increase or reducetheir regulation of internet telephony (http://www.itu.int/publications/publications.aspx?lang=en&parent=D-REG-TTR&folder=D-REG-TTR-2003).  In particular, an ITU study group is examining how international internet backbone providers compensate each otherfor traffic.  These efforts, which may take several years to be completed and which are currently opposed by the United States and some European countries, may eventually result in changes in national or international regulations dealing with financialcompensation for international internet traffic which could affect certain of our costs.

**     Certain Other Regulations Affecting the Internet**

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

                *International.*  The European Union has also enacted several directives relating to the internet.  The EuropeanUnion has, for example, adopted a directive that imposes restrictions on the collection and use of personal data.  Under the directive, citizens of the European Union are guaranteed rights to access their data, rights to know where the data originated, rights tohave inaccurate data rectified, rights to recourse in the event of unlawful processing and rights to withhold permission to use their data for direct marketing.  The directive could, among other things, affect U.S. companies that collect or transmit informationover the internet from individuals in European Union member states, and will impose restrictions that are more stringent than current internet privacy standards in the U.S.  In particular, companies with offices located in European Union countries will not beallowed to send personal information to countries that do not maintain adequate standards of privacy.

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

                As of December 31, 2004, we had a total of 12 employees, of which 10 were full time.  In addition, the Company employs independentcontractors as required for services not demanding of full-time employment.  These services include software development, technical support, and other miscellaneous business support.  No independent contractors are deemed to be critical to the business ofthe Company.

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

****

                The Company’s business organization, the Company’s reliance upon certain technology and third parties, competitive trendsin the marketplace, and other factors all involve elements of substantial risk. In many instances, these risks arise from factors over which the Company will have little or no control.  Some adverse events may be more likely than others and the consequence ofsome adverse events may be greater than others.  No attempt has been made to rank risks in the order of their likelihood or potential harm.  In addition to those general risks enumerated elsewhere, any purchaser of the Company's Common Stock should alsoconsider the following factors.
| ***1.  Continued Operating Losses & Early-Stage Company.***                                                                                                                                                                                                                                                                                                                                                                     |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| The Company has incurred $7,910,925 in losses during the twelve months ending December 31, 2004 and cumulative losses of $11,071,676 since the Company’s inception through December 31, 2004. The Company is anearly-stage company and may well incur significant additional losses in the future as well and there can be no assurance that the Company will be successful or that it will be profitable in the future. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                     |

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| ***2.  Current Financial Structure, Limited Equity, Limited Working Capital & Need for Additional Financing.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| While the Company’s management believes that its financial policies have been prudent, the Company has relied, in large part, upon the use of common stock financing to provide a substantial portion of the Company’sfinancial needs. The Company anticipates that it will need to raise significant additional capital to implement is business plan. While the Company believes that it will be successful, the Company has had only limited discussions with potential investors and therecan be no guarantee that the Company will receive additional capital from any investors or, if it does receive sufficient additional capital, that it can obtain additional capital on terms that are reasonable in light of the Company’s current circumstances.Further, the Company has not received any commitments or assurances from any underwriter, investment banker, venture capital fund, or other individual or institutional investor.                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| ***3.  Auditor's Opinion: Going Concern.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| The Company’s independent auditors, Armando C. Ibarra, CPA, P.C., have expressed substantial doubt about the Company's ability to continue as a going concern since the Company is an early-stage company and there existsonly a limited history of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| ***4.  Subordinate to Existing and Future Debt & Authorized But Unissued Preferred Stock.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| All of the Common Stock is subordinate to the claims of the Company's existing and future creditors and the holders of the Company's existing preferred stock and any that may be issued in the future.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| ***5.  Dependence & Reliance Upon Others.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Some of our products and services may rely upon hardware, software, and communications systems provided by others. For this reason we may become dependent upon third parties which may materially and adversely affect ourability to offer distinct products and services which may result in adverse pricing pressures on our products with resulting adverse impact on our profits, if any.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| ***6.  Recent Acquisitions & Limited History of Operations.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| During the fiscal year ending December 31, 2004, we generated $4,612,783 in net sales revenues, primarily through our acquisition of Coliance and Mid-Atlantic in 2003 and our acquisition of Adoria in 2004. We will need tofurther increase our revenues and successfully develop and implement our business strategy in an ever-changing and challenging marketplace if we are to succeed. In the event that we are not able to successfully develop and implement our business strategy, we may besubject to continuing significant risks and resulting financial volatility.  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 continuingand protracted losses with the result that an investor may lose all or substantially all of their investment.                                                                                                                                          |
| *** ***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| ***7.  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 ofservice totaled $38,863 during the twelve months ending December 31, 2004.  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 ourexposure 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.                                                                                                                                                                                                                                                                                                          |
| *** ***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| ***8.  Price Competition on Certain Services.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| The products and services that we intend to offer may, through changing technology and cost structures, become commodities which result in intense price competition. While we believe that we will be able to distinguish ourproducts and services from competing products, services, and technologies offered by others, if we fail to distinguish ourselves from others, this could hinder market acceptance of our services, force reductions in contemplated sales prices for our products andservices, and reduce our overall sales and gross margins. Potential customers may view price as the primary distinguishing characteristic between our products and services and those of our competitors.  This could result in the Company incurring significant andprotracted losses.  Further, we are selling into a market that has a broad range of desired product characteristics and features which may make it difficult for us to develop products that will address a broad enough market to be commercially viable. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| ***9.  Absence of Barriers to Entry & Lack of Patent Protection.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Our planned products and services are not unique and others could easily copy our strategy and provide the same or similar services since there are no significant barriers to entering the business of providing internettelephone                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

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| 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.  Forthese reasons we may face continuing financial losses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| ***10.  Limited Customer Base.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| While we seek to implement our plans, we have a limited customer base of approximately 12,000 active accounts using our suite of VoIP products and there can be no assurance that we will grow and develop a sufficient customerbase 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 andotherwise lead to volatile results from operations with consequent adverse and material impact on our financial condition.                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| ***11.  Customers, Technology/Feature Options & Commercial Viability.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| If we are able to implement our business plan, we will be selling our products and services into a marketplace that is experiencing a convergence of competing technologies. Typically, telecommunications providers desireextremely robust products with the expectation of a relatively long effective life. As a result and depending on the outcome of unknown trends in technology, market forces, and other variables, we may not attract a broad enough market to achieve commercialviability.                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| ***12.  New Technologies May Be Developed.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| New products or new technologies may be developed that supplant or provide lower-cost or better-performing alternatives to our planned products and services.  This could negatively impact our financial results.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| ***13.  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 majormetropolitan 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 notsucceed 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.                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| ***14.  Government Regulation.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Our planned operations will likely be subject to extensive telecommunications-based regulation by the United States and foreign laws and international treaties.  In the United States we are subject to various FederalCommunications Commission ("FCC") rules and regulations.  Current FCC regulations suggest that our VoIP will not be unduly burdened by new and expanded regulations. However, there can be no assurance that the occurrence of regulatory changes would notsignificantly affect our operations by restricting our planned operations or increasing the opportunity of our competitors.  In the event that government regulations change, there can be no assurance that the costs and burdens imposed on us will not materiallyand adversely impact our planned business. |
| *** ***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ***15.  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 politicaland 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 operationsmay be materially and adversely affected.                                                                                                                                                                                                                                                               |
| ***16.  Control.***                                                                                                                                                                                                                                                                                                                                                                                                            |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Our officers and directors directly and indirectly hold an aggregate of 40,701,626 shares of the Company’s common stock (before including any shares issuable upon exercise of any options).  This representsapproximately 33.5% of the Company’s total outstanding shares as of December 31, 2004 and thereby allows the Company’s officers and directors to retain significant influence over the Company. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                |
| ***17.  Prior Filing of Form 10-SB.***                                                                                                                                                                                                                                                                                                                                                                                         |
| In June of 2001 we prepared and filed a registration statement on Form 10-SB with the U.S. Securities and Exchange Commission ("SEC").  Subsequently, our then legal counsel delivered a letter (dated November 15, 2001) tothe SEC which, by its terms, stated that the SEC had agreed to allow us to withdraw the registration statement. At                                                                                 |

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| 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 theSecurities 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) meetcertain 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 ExchangeAct 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 Section13(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 tocomply 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 anyway, 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 ourCommon 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 adialogue 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. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| ***18. Dependence Upon Key Personnel and New Employees.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| We believe that our success will depend, to a significant extent, on the efforts and abilities of Ronald G. Weaver, Jason A. Sunstein, John L. Castiglione, Farid Shouekani, and James R. Balestraci. The loss of the services ofany 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 significantnumbers of new employees during a relatively short period of time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| ***19. Absence of Key Man Insurance.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| We currently do not maintain any key man life insurance on the life of any of our officers or directors and there are no present plans to obtain any such insurance. In the event that any one or more of them are unable toperform their duties, the Company's business may be adversely impacted and our results of operations and financial condition would be materially and adversely impacted for a protracted period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| ***20.  Lack of Independent Evaluation of Business Plan & Proposed Strategy.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| We have not obtained any independent or professional evaluation of our business plan and our business strategy and we have no present plans to obtain any such evaluation. There can be no assurance that we will successfullyincrease revenues, or if revenues we do, that we can do so at levels that will allow us to achieve or maintain profitability.  If we are unsuccessful, our results of operations and financial condition would be materially and adversely impacted and investorswould likely lose all or a significant portion of their investment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| ***21.  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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ***22. Potential Dilution.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Funding of our planned business is likely to result in substantial and on-going dilution of our existing stockholders. While there can be no guarantee that we will be successful in raising additional capital, if we aresuccessful in obtaining any additional capital, existing stockholders may incur substantial dilution.                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| ***23. Matter of Public Market and Rule 144 Stock Sales.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| As of December 31, 2004, there were 86,351,874 shares of the Company’s Common Stock that were “restricted securities” and which may be sold pursuant to Rule 144.  Since September 16, 2002, we have had alimited public trading market for our Common Stock in the “Pink Sheets” market. Since that date trading volumes have been volatile with sporadic liquidity levels.  Further, our Common Stock is (as of the date of the filing of this Report) a“Penny Stock” and for this reason we face continuing difficulties in our efforts to gain a liquid trading market and there can be no assurance that any liquid trading market will ever develop or, if it does develop, that it can be |

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| 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 adverseenforcement 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 monthperiod 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 safeharbor 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 ourCommon 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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| ***24.  General Risks of Low Priced Stocks.***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| In any trading market for our Common Stock, we anticipate that our Common Stock will be deemed a "Penny Stock" which will limit trading and liquidity and thereby the retail market for the Common Stock. The limitations areprimarily due to the burdens that are imposed on brokers whose customers may wish to acquire our Common Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

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

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

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

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

                Disclosure also must be made about commissions payable to both the broker/dealer and the registered representative, current quotationsfor the securities, and, if the broker/dealer is the sole market maker, the broker/dealer must disclose this fact and its control over the market.  Monthly statements must be sent disclosing recent price information for the penny stock held in the account andinformation on the limited market in penny stocks.

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

                In addition, transactions in a NASDAQ security directly with the NASDAQ market maker for such securities, are subject only to the solemarket-maker disclosure, and the disclosure with regard to commissions to be paid to the broker/dealer and the registered representatives.  The Company's securities are subject to the above rules

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on penny stocks and the market liquidity for the Company's securities could be severely affected by limiting the ability of broker/dealers to sell the Company's securities.

**ITEM 2.     DESCRIPTION OF PROPERTY**

**Principal Office**

                Our headquarters is located at 2070 Business Center Drive, Suite 210, Irvine, California 92612 at which we have 1477 square feet ofspace under a twenty-four month lease at a cost of $2437 per month.  Previously (from July, 2001 until December 31, 2003) the Company entered into an oral month-to-month lease from a shareholder at a cost of $1,100 per month in payment of all office space andutilities.

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

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

                Our subsidiary, Adoria Communications, LLC with offices at 140 Wood Road Suite 200, Braintree, Massachusetts 02184, maintains officesand support facilities totaling less than 1000 square feet of space under a month to month lease at a cost of $125 per month.

**Hills of Bajamar Commercial/Residential development**

                 During September 1998, we entered into an agreement with a related party to purchase 50 acres of real property known as the Hillsof Bajamar, located in Ensenada, Mexico (the “Land”).  The Land is valued at a predecessor cost of $125,000.   We intended, at the time, to sell lots for residential development and build a communications facility for residents in thesurrounding area.   As consideration for the Land, the Company issued 3,000,000 shares of our Series B Preferred Stock.  On June 30, 2001, all of the Series B Preferred Stock was converted into 400,000 shares of our Common Stock.  As of December31, 2004, the Company had not received documented title to the Land. 

                The Company's current management team and Board of Directors have determined that the goals for use of theBajamar property and construction of telecommunications facilities for the Hills of Bajamar are not within the Company's current budget or operational capabilities.  The Company and Tri-National did not upgrade the existing telecommunication facilities nor didthe Company commence its principal business operations with the Hills of Bajamar.  To date Tri-National has not cleared the restrictions from the title to the land nor transferred title to the Company. Since consideration for theagreement (documented title) has never been received the Company does not believe it is the owner of the Land and accordingly considers the agreement to be null and void.  We do not believe this property has any value as an asset of the Company.

**ITEM 3.     LEGAL PROCEEDINGS**

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

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

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

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

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

                None.

**PART II**

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

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

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

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

| **Year**                                                                             |                                                  | **Period**                                                                                                                                                                                                                                 |   | **High 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                                                                                                                     |
| 2003                                                                                 |                                                  | First Quarter                                                                                                                                                                                                                              | $ | 0.04                                                                                                                     |                                | $ | 0.04                                                                                                                     |                                | $ | 0.01                                                                                                                     |                                | $ | 0.01                                                                                                                     |
|                                                                                 |                                                  | Second Quarter                                                                                                                                                                                                                             | $ | 0.05                                                                                                                     |                                | $ | 0.05                                                                                                                     |                                | $ | 0.01                                                                                                                     |                                | $ | 0.01                                                                                                                     |
|                                                                                 |                                                  | Third Quarter                                                                                                                                                                                                                              | $ | 0.18                                                                                                                     |                                | $ | 0.18                                                                                                                     |                                | $ | 0.02                                                                                                                     |                                | $ | 0.02                                                                                                                     |
|                                                                                 |                                                  | Fourth Quarter                                                                                                                                                                                                                             | $ | 0.49                                                                                                                     |                                | $ | 0.49                                                                                                                     |                                | $ | 0.08                                                                                                                     |                                | $ | 0.08                                                                                                                     |
|                |                                                  |                                         |   |                      |       |   |                      |       |   |                      |       |   |                      |

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

                In May 2002, the Company offered and sold an aggregate of 1,323,962 shares of the Company’s Common Stock to seven investors at$0.10 per share.  Of these shares, 25,000 shares were sold for cash with proceeds of $2,500.  The remaining shares, totaling 1,298,962 shares were issued to five persons as follows (each at a value of $0.10 per share): (a) 222,500 shares were issued to twoindividuals in payment for services; (b) 210,000 shares to James Wray, an officer and director of the Company in payment for services; (c) 430,000 shares to Jason A. Sunstein, an officer and director of the Company in payment for services; and (d) 436,462 shares toJohn L. Castiglione, an officer and director of the Company in payment for services and in payment of monies owed for funds previously advanced to the Company.  All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of theSecurities 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 theSecurities 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, adescription of how the proceeds were to be used, and additional information to assist them 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 directorsand 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 2002, the Company offered and sold an aggregate of 1,387,500 shares of the Company’s Common Stock to nineinvestors.  Of these shares, 120,000 shares were sold to two persons in consideration of the Company’s receipt of $14,000.  The remaining shares, totaling 1,267,500 shares, were issued in exchange for the Company’s receipt of services.  Allof the shares were offered and sold 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 thetransaction.  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 wereprovided 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, andadditional 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.  Thepurchasers were informed the securities purchased were restricted securities and they may have to hold them for an indefinite period of time.

                In October 2002, the Company offered and sold an aggregate of 668,376 shares of the Company’s Common Stock to five persons inexchange for services received by the company with all of the shares valued at $0.225 per share.  All of the 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 NASDregistered broker-dealer; no commissions were incurred by the Company in connection with the transaction.  The purchasers were each an Accredited investor as defined in Rule 501 of Regulation D of the Securities Act of 1933.  The purchasers were providedwith, 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 additionalinformation 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 purchaserswere 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 November 2002, the Company offered and sold 25,000 shares of the Company’s Common Stock to one person in consideration of theCompany’s receipt of services.  The shares were valued at $0.167 per share.  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 registeredbroker-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 accessto, 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 assistthem 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 thesecurities purchased were restricted securities and they may have to hold them for an indefinite period of time.

                In February 2003, the Company issued 950,000 shares of the Company’s Common Stock to one person in consideration of theCompany’s receipt of services.  The shares were valued at $0.03 per share.  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 registeredbroker-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 accessto, 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 assistthem 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 thesecurities purchased were restricted securities and they may have to hold them for an indefinite period of time.

                In early May 2003, the Company issued 1,100,000 shares of the Company’s Common Stock to one person in consideration of theCompany’s receipt of services.  The shares were valued at $0.03 per share.  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 registeredbroker-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 accessto, 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 assistthem 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 thesecurities purchased were restricted securities and they may have to hold them for an indefinite period of time.

                Later in May 2003, the Company issued 11,100,000 shares of the Company’s Common Stock to four investors.  Of these shares,800,000 shares were issued in connection with the acquisition of a 49% interest in PC Mailbox valued at $0.05 per share, 2,500,000 shares were issued in connection with the purchase of certain assets from Greenland Corp. valued at $0.023 per share and all of theremaining 7,800,000 shares were issued in consideration of the Company’s receipt of services.  The shares were valued at $0.038 per share.  All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the SecuritiesAct 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 theSecurities 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, adescription 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 anddirectors 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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                Late in May 2003, the Company issued an aggregate of 11,947,966 shares of the Company’s Common Stock as follows:  (1)162,133 shares were issued in connection with the purchase of certain assets; (2) 1,785,833 shares were issued in exchange for an aggregate of $70,045 in cash received by the Company; and (3) 10,000,000 shares were issued to the Company’s Employee CompensationFund.  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 bythe 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’ssecurities.  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 howthe 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 receiveanswers 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 2003, the Company issued 2,500,000 shares of the Company’s Common Stock in connection with a proposed purchase ofassets.  The issuance of the shares was later cancelled in August 2003 and the shares were returned to the Company.  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 ofan 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 themerits 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 askquestions 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 2003, the Company issued 2,800,000 shares of the Company’s Common Stock to one person in consideration of theCompany’s receipt of services.  The shares were valued at $0.03 per share. 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 anunderwriter 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 wasprovided 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, andadditional 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.  Thepurchaser was informed the securities purchased were restricted securities and they may have to hold them for an indefinite period of time.

                In August 2003, the Company issued 5,000,000 shares of the Company’s Common Stock plus 450,000 shares of the Company’sPreferred Stock.  The 5,000,000 shares were issued to 12 persons in connection with the acquisition of a 40% interest in Coliance Communications with each share valued at $0.05001 per share. The 450,000 shares of Preferred Stock were issued to three purchasersand were converted to notes payable.  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 sophisticated and experienced in financial, business, and investment matters and otherwise able to evaluate the merits and risks associated with thepurchase 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 officersand 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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                Later in August 2003, the Company issued an aggregate of 13,000,000 shares of the Company’s Common Stock as follows: (1)12,000,000 shares were issued 2 persons in connection with the acquisition of the remaining 60% of Coliance Communications valued at $0.025 per share; and (2) 1,000,000 shares issued to one purchaser in payment for legal services for the period from June 2002 throughMay 2003 with these shares valued at $0.09 per share.  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 NASDregistered 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 risksassociated 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 ofthe 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 2003, the Company issued 500,000 shares of the Company’s Common Stock to Steven Hanks in payment for services tothe Company and in settlement of certain claims.  All of the shares were valued at $0.06 per share.  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 underwriteror 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 risksassociated 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, articlesof 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 theCompany’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 September 2003, the Company issued 3,250,000 shares of the Company’s Common Stock to one person in consideration of theCompany’s receipt of services.  The shares were valued at $0.03 per share.  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 registeredbroker-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 accessto, 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 inunderstanding 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 securitiespurchased were restricted securities and they may have to hold them for an indefinite period of time.

                In mid September 2003, the Company issued 4,000,000 shares of the Company’s Common Stock to two persons in connection with thepurchase of land.  All of the shares were valued at $220,000 or $0.055 per share.  All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933 without the use of an underwriter or NASD registeredbroker-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 associatedwith 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 ofincorporation, 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 theCompany’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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                Later, in September 2003 the Company issued an aggregate of 7,030,000 shares of the Company’s Common Stock to two officers anddirectors of the Company, as follows:  (1) 3,515,000 shares of the Company’s Common Stock were issued to Jason A. Sunstein in payment for labor services; and (2) 3,515,000 shares of the Company’s Common Stock were issued to John L. Castiglione inpayment for labor services.  All of the shares were valued at $.025 per share.  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 registeredbroker-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 givenaccess 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 toassist 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 informedthe securities purchased were restricted securities and they may have to hold them for an indefinite period of time.

                In mid October 2003, the Company issued 1,491,707 shares of the Company’s Common Stock to fifteen investors and the Companyreceived $30,125 in cash.  All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933 without the use of an underwriter or NASD registered broker-dealer; no commissions were incurred by the Companyin 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 wereto 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 theirquestions.  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 October 2003, the Company offered and sold an aggregate of 15,847,500 shares of the Company’s Common Stock asfollows:

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

                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 theuse 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.  Thepurchasers 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 beused, 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 theirquestions.  The purchasers were informed the securities purchased were restricted securities and they may have to hold them for an indefinite period of time.

                In January 2004, the Company issued 2,100,000 shares of the Company’s CommonStock to one purchaser in exchange for the Company’s receipt of $210,000 in cash.  All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933 without the use of an underwriter or NASDregistered 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

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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 notlimited 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.  Thepurchaser 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 themfor 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 inexchange 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 anunderwriter 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 themerits 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 askquestions 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 March 2004, in connection with the repurchase rights of common stock issued pursuant to the acquisition of Mid-Atlantic inOctober, 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 atthe 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.  There-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 thetransaction.  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 providedwith, 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 additionalinformation 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 wasinformed 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 anddirectors of the Company with each share valued at $0.04 per share.  The share issuances were as follows:  (1) 1,000,000 shares to Farid Shouekani; (2) 1,000,000 shares to Jason A. Sunstein; (3) 1,000,000 shares to John L. Castiglione; (4) 1,000,000 sharesto Ronald G. Weaver; and (5) 1,000,000 shares to Stephen D. Young.  All of the 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; nocommissions 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 inunderstanding 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 securitiespurchased were restricted securities and they may have to hold them for an indefinite period of time.

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                Later, in March 2004, the Company issued 2,500,000 shares of the Company’s Common Stock in connection with the acquisition ofAdoria Communications. The shares were accorded an aggregate value of $3,074,500 and were issued to one purchaser.  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 anunderwriter 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 wasprovided 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, andadditional 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.  Thepurchaser 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 inexchange for the Company’s receipt of an aggregate of $323,750 in cash. All of the shares were offered and sold by the Company’s management without the use of an underwriter or NASD registered broker-dealer, however  All of the shares were offeredand 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% paidin 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 infinancial, 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 theoffering, 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 ofthe 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 securitiesand 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 inexchange 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 registeredbroker-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 otherfees 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 thepurchase 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 officersand 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 theCompany’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.  TheCompany 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 inconnection 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.  Thepurchasers 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 beused, and additional information to assist them in understanding the merits and risks of

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

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

                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 theuse 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.  Thefinder 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 theinvestment.  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 andthey may have to hold them for an indefinite period of time.

                In May 2004, the Company issued an aggregate of 610,000 shares of the Company’s Common Stock to five investors in exchange forthe Company’s receipt of an aggregate of $152,500 in cash.  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 afinder’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 risksassociated 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 ofthe 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 theCompany’s receipt of $115,000 in cash.  All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933 without the use of an underwriter or NASD registered broker-dealer; no commissions wereincurred 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’ssecurities.  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 theproceeds 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 totheir 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 a37.5% 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 NASDregistered 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

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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 askquestions 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 theCompany’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 incurredby 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’ssecurities.  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 theproceeds 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 totheir 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 inexchange 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 underwriter or NASD registered broker-dealer.  TheCompany 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 afinder’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 risksassociated 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 ofthe 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 theCompany’s receipt of $180,000 in cash.  All of the shares were offered and sold under a claim of exemption provided by Section 4(2) of the Securities Act of 1933 without the use of an underwriter or NASD registered broker-dealer; no commissions wereincurred 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’ssecurities.  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 theproceeds 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 totheir 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 pershare; |

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|         | (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 valuedat $0.30 per share;                                                                                                                                                |
|         | (8)                               | A total of 225,000 shares were issued to two purchasers in payment for services received by the Company.  These shares were valued at aggregate of $0.45 per share; and                                                                                                                                                                                                                        |
|         | (9)                               | A total of 76,333 shares were issued to one purchaser in payment for services.  These shares were valued at aggregate of $0.4569 per share.                                                                                                                                                                                                                                                    |

                All of the shares were offered and sold by the Company’s management under a claim of exemption provided by Section 4(2) of theSecurities 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 ofthe 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, adescription 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 anddirectors 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 stockholderreceived one share of the Company’s Common Stock for every ten share of the Company’s Common Stock held as of the record date.

                The following table summarizes the 2000 Equity Plan and 2002 Employee Compensation Plan as of December 31, 2004:

| **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*                                                                                                                                                                                                                                 |                    | 3,600,000                                                                                                                                                                                                                                                                      |                    | $0.234                                                                                                                                                                                                                                                                         |                    | 8,400,000                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                           |                    |                                                                                                                                                                                                                                                                                |                    |                                                                                                                                                                                                                                                                                |                    |                                                                                                                                                                                                                                                                                |
| Equity Issuances Pursuant to 2002 Employee Compensation Plan*                                                                                                                                                                                                                  |                    | 0                                                                                                                                                                                                                                                                              |                    | $0.00                                                                                                                                                                                                                                                                          |                    | 10,450,000                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                           |                    |                                                                                                                                                                                                                                                                                |                    |                                                                                                                                                                                                                                                                                |                    |                                                                                                                                                                                                                                                                                |
| Equity compensation plans not approved by security holders                                                                                                                                                                                                                     |                    | 0                                                                                                                                                                                                                                                                              |                    | 0                                                                                                                                                                                                                                                                              |                    | 0                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                |                    |                                                                                                                                                                                                                                                                                |                    |                                                                                                                                                                                                                                                                                |                    |                                                                                                                                                                                                                                                                                |
| Total                                                                                                                                                                                                                                                                          |                    | 3,600,000                                                                                                                                                                                                                                                                      |                    | $0.234                                                                                                                                                                                                                                                                         |                    | 18,850,000                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                |                    |                                                                                                                                                                                                                                                                                |                    |                                                                                                                                                                                                                                                                                |                    |                                                                                                                                                                                                                                                                                |

                                                          * Approved by security holders 

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**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 consolidatedfinancial 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 thereported 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 formthe 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 differentassumptions 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 materiallyimpaired.

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

                During the fiscal year ending December 31, 2004 (“Fiscal 2004”), we recorded $4,612,783 as net revenues. This compares tothe fiscal year ending December 31, 2003 ("Fiscal 2003") when we recorded $433,376 as net revenue.  Net revenues of consumer products and services (“Consumer”) approximately tripled, increasing from $77,310 in 2003 to $222,941 in 2004. This increase was the result of growth from the initial market introduction of the Company’s VoIP products.  Wholesale operations (“Wholesale”) net revenues (on a consolidated basis) increased from $356,066 to $4,389,843.  However, this isprimarily the result of zero revenues in 2003 from the former Adoria operations to $2,698,638 in 2004 (the acquisition of Adoria did not occur until January, 2004) and the result of only the fourth quarter of the former Mid-Atlantic revenues in 2003 ($356,066)compared to a full years’ of Mid Atlantic revenues ($1,335,139) in 2004 (the acquisition of Mid-Atlantic occurred in October, 2003).  If pre-acquisition revenues of those operations were included, Mid-Atlantics proforma revenues would have decreased from$3,157,864 in 2003 to $1,335,139 in 2004, and Adoria proforma revenues would have increased from $2,028,076 in 2003 to $2,906,355 in 2004.  Similarly, wholesale proforma revenues would have decreased from $5,185,940 in 2003 to $4,241,494 in 2004.  Thisproforma decrease is the result of Mid-Atlantic sales and marketing efforts being redirected to testing and quality management of vPhone products.

                During Fiscal 2004, our Cost of revenues was $4,108,185 which resulted in a gross margin as a percentage of net sales revenues ofapproximately 11%. This compares to Fiscal 2003 where our Cost of revenues was $296,853 which resulted in a gross margin percentage of net sales revenues was approximately 31.5%.  Consumer cost of revenues as a percentage of net sales revenues increased from 47%in 2003 to 117% in 2004, caused by the addition of new traffic routes in 2004 that, as of the end of the year, were not yet fully utilized.  Wholesale cost of revenues as a percentage of revenues increased from 73% to 88%, the result of lower margins in thenewly acquired Adoria operation.  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 from32% in 2003 to 11% in 2004 (Consumer decreased from +53% to -17% while Wholesale decreased from 27% to 12%, respectively).  The Consumer gross margin was significantly influenced by the initial cost of new routes relative to the small revenue base.  TheWholesale gross margin reduction is reflective of tighter margins resulting from competitive pressures.

                During Fiscal 2004 we incurred $3,660,801 in general and administrative expenses.  This compares to Fiscal 2003 when we incurred$1,462,566 in general and administrative expenses.  General and administrative expenses as a percent of net sales revenues decreased both for Consumer (1,761% in 2003; $1,207% in 2004) and for Wholesale (28% in 2003; 22% in 2004).  The improvement inConsumer was due to large marketing expenses in 2003 associated with product launch activities not repeated in 2004, plus better absorption of fixed expenses as revenues increased.  The improvement in Wholesale was the result of generally lower General andadministrative expenses incurred within the newly acquired Adoria operations (General and administrative expenses as a percent of sales for the Mid-Atlantic operation increased from 28% in 2003 to 34% in 2004).  Overall, general and administrative expenses wereprimarily made up of wages and salaries, office expenses, fees and costs incurred for legal and accounting services, and other administrative costs.

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                The single largest factor distinguishing profitability in 2004 compared to 2003 was the impairment of purchased intangibles, for whichwe recorded a charge in 2004 of $3,396,138 related to the Adoria acquisition compared to a charge in 2003 of $792,440 related to the Coliance acquisition.  Both write downs occurred after a post-acquisition analysis of the fair market value of purchasedintangibles showed them to be significantly less than their book value.  In addition, during 2004 we recorded a charge of $1,092,100 for the impairment of purchased assets compared to zero in 2003.  The impairment was a non-temporary impairment in BrasilLLC resulting from an analysis of the fair market value of the assets and liabilities held by Brasil LLC. 

                  During Fiscal 2004, we had bad debt expense of $83,712 (split almost evenly between Wholesale (Mid-Atlantic) and Consumer)compared to Fiscal 2003 when we $0 in bad debt expense.  During Fiscal 2004, we recorded an equity loss from unconsolidated subsidiaries of $181,067 (associated with the Brasil LLC investment) compared to Fiscal 2003 when we recorded$29,400.  

                As a result of these margins and expenses, we incurred an operating loss of $7,909,220 in 2004 compared to an operating loss of$2,145,484 in 2003.  Most of the loss ($7,436,829) was within Consumer, which incurred the large charge for impairment of purchased intangibles and impairment of purchased assets and the bulk of the general and administrative costs.  As a percent of sales,the operating loss in Consumer increased from 2,720% to 3,312% and the loss in Wholesale increased from 1% to 11%.

                During Fiscal 2004 we had $15,761 in realized gain on marketable securities compared to Fiscal 2003 gain of $8,173.  In addition,in Fiscal 2004, we incurred interest expense of $73,060 (2% of revenues) compared to $60,495 (14% of revenues) in interest expense during Fiscal 2003.

                As a result, during Fiscal 2004 we had a net loss of $7,964,192 compared to Fiscal 2003 when we had a net loss of $2,200,854.  Theincrease in net loss was predominantly within Consumer (94%).  The operating loss in Wholesale increased from 1% in 2003 to 11% in 2004.

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

**Liquidity and Capital Resources**

                At December 31, 2004, we had $46,956 in cash. At the same time, we had $121,948 in net accounts receivable, $72,020 in inventories, and$59,324 in other current assets for a total of $305,248 of total current assets.  Total current assets compared to 2003 are a reduction of $49,645; the significant components are: cash ($123,384); short term investments ($48,200); net accounts receivable$31,044; and, inventories $72,020.  The inventory increase was the result of minimum inventory purchases (mostly from the USB vPhone device).  We expect inventory needs to grow in proportion to product sales growth; cash will be negatively impacted by thisneed.

                In contrast, as of December 31, 2004, our total current liabilities were $1,308,326 which consisted primarily of the following materialamounts: $375,564 in accounts payable; $61,915 in accrued liabilities; $607,094 in related party obligations; $82,103 in deferred revenues; $97,647 in short term debt; and, $81,380 in stock subscription deposit.  Total current liabilities compared to 2003 are anincrease of $618,060; the significant components are: accounts payable $305,117; accrued liabilities $56,756; related party obligations $595,436; deferred revenue $82,103; and, short term debt ($431,902).

                Net Working Capital as of December 31, 2004 was ($1,003,078).  During Fiscal 2004, our cash needs were met primarily by the saleof common stock and loans from certain of our shareholders.  Cash flows prior to the sale of common stock and loans from certain of our shareholders was ($3,074,079); comprised of ($2,701,671) for Consumer and ($372,408) for Wholesale.  Consumer cashconsumption includes aggregate cash payments of $800,000 for acquisitions and $269,500 on acquisition notes (related to 2003 acquisitions).  The Company anticipates that it will consume cash within Consumer as revenues increase, products are added toinventories, 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 fundsfrom these or any other sources to meet our need for additional capital resources.

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                The Companies’ cash as of December 31, 2004 ($46,956) is insufficient to continue operations for more than a very short period oftime; the Company will need to raise significant capital for both its continuing operations and to implement its business plan.  As of December 31, 2004, the Company expects that it will need to raise at least $1,300,000 in cash to cover our anticipatedoperating 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 andgiven 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 raisesignificant amounts of additional capital and during the period ending December 31, 2004 we had not received any commitment that any such additional financing would be forthcoming or, if could be obtained, that it can be obtained on reasonable terms in light of ourcircumstances at that time. In addition, if any financing should be obtained, existing shareholders will likely incur substantial, immediate, and permanent dilution of their existing investment.

**Critical Accounting Policies**

                The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the UnitedStates of America, requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements; and the reported amounts of revenues and expensesduring 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 differentassumptions 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 thebasis 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 persuasiveevidence 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 feeagreements 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 riskand 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 itshistorical experience.

                The Company’s property and equipment and purchased intangible assets represent a significant component of our consolidatedassets.  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, includingcompetitive 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, asrequired 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 estimatedusing 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 canbe identified by the use of forward-looking words such as “believes”, “expects”, "ma,", "will", "should", "could", "intends", "plan,", "anticipates", "contemplates",

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"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 theseforward-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 giventhat 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, thecomparatively limited financial resources of the Company, the intense competition the Company faces from other established competitors, technological changes that may limit the ability of the company to market and sell its products and services or adversely affectthe 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 ofunanticipated or other subsequent events, and we disclaim any such obligation.

**Impact of Inflation**

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

**Recent Accounting Pronouncements**

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

                In November 2002, the FASB issued FASB issued FASB Interpretation No. 45 (“FIN 45”), -- *Guarantor’s Accounting andDisclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others*,” FIN 45 requires that a liability be recorded in the guarantor’s balance sheet upon issuance of a guarantee.  In addition, FIN 45 requiresdisclosures about the guarantees that an entity has issued, including a rollforward of the entity’s product warranty liabilities. The Company will apply the recognition provisions of FIN 45 prospectively to guarantees issued after December 31, 2002.  Thedisclosure provisions of FIN 45 are effective for, and are reflected in, the 2002 financial statements.  The adoption of FIN 45 is not expected to have a material effect on the Company’s results of operation or financial condition.

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

**ITEM 7.     FINANCIAL STATEMENTS**

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

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

                None.

##### **ITEM 8A.     CONTROLS AND PROCEDURES**

*Disclosure Controls and Procedures*

                The Company’s management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated theeffectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the periodcovered by this report.  Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in recording, processing,summarizing and reporting information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act, but that such disclosure controls and procedures are not effective to insure reporting is on a timely basis.  Inaddition, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Company in thereports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate but that such disclosure controls andprocedures are not effective to insure information is communicated to allow for timely decisions regarding required disclosure.

*Changes in Internal Controls Over Financial Reporting*

                There have not been any changes in the Company’s internal controls over financial reporting (as such term is defined inRules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

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

                The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, assuch term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.  The Company’s internal control over financial reporting has been designed to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America.

                The Company’s internal control over financial reporting includes policies and procedures that pertain to the maintenance ofrecords that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets of the Company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance withaccounting principles generally accepted in the United States of America, and that receipts and expenditures are being made only in accordance with authorization of management and directors of the Company; and provide reasonable assurance regarding prevention ordetection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s financial statements.  Management believes the internal control policies and procedures have been and are likely tocontinue to be effective in meeting these needs.

                In addition, the Company’s internal control over financial reporting also includes policies and procedures that pertain to thetimeliness of information and reporting, both to management and to the public.  These policies and procedures are important to support Management’s decision making processes, to quickly identify inappropriate activities and minimize loss, and to empowerinvestors with timely information in support of their investment decisions.  Management has determined that these internal control policies and procedures have not been effective to ensure that financial statements for internal and external reporting purposesare prepared on a timely basis.  In addition, management does not believe the necessary changes to these control policies and procedures to rectify this

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deficiency have been implemented.  As such, management believes financial statements may continue to suffer from lack of timely preparation and dissemination, and that this condition will continue until adequate changeshave been designed and implemented.

                Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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

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

                **Directors and Executive Officers**

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

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

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

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

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

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

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

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

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

                ***Paul E. Atkiss, age 49,*** is Chief Financial Officer and Director of the Company and has held these positions since June2004. Mr. Atkiss brings to the Company over 25 years of accounting and finance experience with privately held and publicly traded corporations. Mr. Atkiss spent 12 years with Jaycor, most recently as Controller, where he was responsible for theaccounting systems, consolidated reporting, financial and tax audits, banking, and insurance. Mr. Atkiss holds a Bachelor of Science degree from San Diego State University and is a California CPA.

                ***James R. Balestraci, age 39,*** is Chief of International Wholesale Operations and Director and has held this position sinceJanuary 2004.  Prior to joining the Company, Mr. Balestraci was the President and founder of Adoria Communications, LLC and served in that capacity for 2 years. Mr. Balestraci joins Viper Networks with over 11 years of successful telephony engineering and salesexperience having worked for some of the premier firms in the industry. This includes 9 years immediately prior to founding Adoria Communications with Network Plus, Inc., where he held various sales and marketing positions.  Mr. Balestraci holds a Bachelors ofScience degree from Plymouth State University with an emphasis in marketing.

**Advisory Board Member**

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

                ***Paul Goss, age 61,*** is an Advisory Board Member of the Company. Mr. Goss has been legal counsel to the Company sinceSeptember 2000.  Mr. Goss had been the Executive Vice President and General Counsel for One Capital Corporation, a private merchant bank with offices in New York and Denver from 1990 until 2005.  Prior to joining Capital One, Corporation, Mr. Goss wasengaged in the private practice of law in Denver, Colorado with a concentration in real estate, corporate, and merger and acquisition law both domestic and international.  He is a member of the Denver and Colorado Bar Associations.  Mr. Goss has a Mastersin Business Administration (degree) in addition to his Juris Doctor (degree) from the University of Denver.

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

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

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

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

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

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**ITEM 10.     EXECUTIVE CONPENSATION**

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

**SUMMARY COMPENSATION TABLE**

|                                                                                    | **Annual Compensation** | **Long-Term Compensation**                                                                                                                                    |                  |
|------------------------------------------------------------------------------------|-------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------|
|                                                                                    |                         |                                                                                                                                                               |                  |
|                                                                                    |                         |                                                                                                                                                               |                  |  | **Awards               Payouts** |  |
|                                                                                    |                         |                                                                                                                                                               |                  |  |  |  |
| **Name and Principal Position (a)**                                                | **Year (b)**            | **Salary ($)(c)**                                                                                                                                             | **Bonus ($)(d)** | **Other Annual Compen- sation ($)(e)*** | **Restricted Stock Awards (s)($)(f)** | **Securities Underlying Options/ SARs (#)(g)** | **LTIP Payouts ($)(h)** | **All Other Compen- sation (1)($)(i)** |
|                                                                                    |                         |                                                                                                                                                               |                  |  |  |  |  |  |
| Ronald G. Weaver, President, CEO and Director (2)                                  | 2002 2003 2004          | $           0 $  13,846 $140,885                                                             | $ 0 $ 0 $ 0      | $        0 $        0 $ 9,000 | $           0 $  80,000 $  80,000 |               0    750,000               0 | $ 0 $ 0 $ 0 | $        0 $        0 $        0 |
| John L. Castiglione, V.P. Marketing, Treasurer, and Director                       | 2002 2003 2004          | $           0 $  13,846 $140,885                                                             | $ 0 $ 0 $ 0      | $        0 $        0 $ 9,000 | $179,301 $167,875 $  80,000 |    250,000    250,000               0 | $ 0 $ 0 $ 0 | $        0 $        0 $        0 |
| Farid Shouekani, Chief Technical Officer and Director (3)                          | 2002 2003 2004          | $           0 $  24,000 $120,000                                                             | $ 0 $ 0 $ 0      | $        0 $ 1,831 $ 8,787 | $           0 $           0 $  80,000 |               0    250,000               0 | $ 0 $ 0 $ 0 | $        0 $        0 $        0 |
| Jason A. Sunstein, V.P. Finance, Secretary & Director                          | 2002 2003 2004          | $           0 $  13,846 $140,885                                                             | $ 0 $ 0 $ 0      | $        0 $        0 $ 9,000 | $179,301 $167,875 $  80,000 |    250,000    250,000               0 | $ 0 $ 0 $ 0 | $        0 $        0 $        0 |
| Paul E. Atkiss, CFO & Director (4)                                             | 2002 2003 2004          | $           0 $           0 $  75,077 | $ 0 $ 0 $ 0      | $        0 | $           0 $           0 $  76,750 |               0               0 1,000,000 | $ 0 | $        0 |
| James R. Balestraci Chief of International Wholesale Operations & Director (5) | 2002 2003 2004          | $           0 $           0 $132,353            | $ 0 $ 0 $ 0      | $        0 $        0 $        0 | $           0 $           0 $  40,000 |               0               0               0 | $ 0 $ 0 $ 0 | $        0 $        0 $ 6,753 |
| Stephen D. Young, CEO and Director (6)                                             | 2002 2003 2004          | $           0 $    9,231 $  77,423                                                 | $ 0 $ 0 $ 0      | $        0 $        0 $ 5,192 | $           0 $  80,000 $  80,000 |               0    750,000               0 | $ 0 $ 0 | $        0 $        0 $        0 |
|                                                                                    |                         |                                                                                                                                                               |                  |  |  |  |  |  |
| All Directors as a Group (7 persons)                                               | 2002 2003 2004          | $           0 $  74,769 $827,508                                                                  | $ 0 $ 0 $ 0      | $        0 $ 1,831 $40,979 | $358,602 $495,750 $516,750 |    500,000 2,250,000 1,000,000 | $ 0 $ 0 $ 0 | $        0 $        0 $ 6,753 |

| Footnote:                                                                                                    |                                                                                          |
|--------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|
| (1)                                                                                                          | Amount includes payment by subsidiary of 2003 contribution to qualified retirement plan. |
| (2)                                                                                                          | Mr. Weaver became an officer of the Company in July 2003.                                |
|                    |                                                                                          |

-42-

----

|                    |                                                                                                        |
|--------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|
| (3)                                                                                                          | Mr. Shouekani became an officer of the Company in October 2003.                                        |
| (4)                                                                                                          | Mr. Atkiss became an officer of the Company in June 2004.                                              |
| (5)                                                                                                          | Mr. Balestraci became an officer of the Company in January 2004.                                       |
| (6)                                                                                                          | Mr. Young became an officer of the Company in July 2003 and resigned from the Company in October 2004. |

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

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

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

| ****

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

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

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

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

**Expiration Date (e) (1)** |
|--------------------|---------------------------------------------------------------------|----------------------------------------------------------------------------------|---------------------------------------------|-----------------------------------|
|                    |                                                                     |                                                                                  |                                             |                                   |
| Paul E. Atkiss     | 500,000 500,000                                                     | 100% 100%                                                                        | $(.526) $(.450)                             | 06/02/2009 09/17/2006             |

| Footnote: |                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)       | During the calendar year ending December 31, 2004, Mr. Atkiss was awarded the following as stock options:  (a) an option to purchase 500,000 shares of the Company’s common stock at an exercise price of $0.526 pershare with the option expiring on June 2, 2014; and (b) an option to purchase 500,000 shares of the Company’s common stock at an exercise price of $0.450 per share with the option expiring on September 17, 2014. |

                There were no options exercised during the 2004 fiscal year and 650,000 unvested options were forfeited upon the resignation of anofficer.

                A summary of Executive and Officer option holdings as of December 31, 2004 are shown below:

| **SUMMARY - EXECUTIVE OPTION HOLDINGS, 12/31/04** |
|---------------------------------------------------|
|                                                   | OUTSTANDING |  | IN THE MONEY |
| NAME                                              | as of |  | SHARES |  | EXERCISE |  | MARKET |
|                                                   | 12/31/05 |  |  |  | COST |  | VALUE* |
| Ron Weaver                                        | 750,000 |  | 750,000 | $ | 79,000 | $ | 225,000 |
| John Castiglione                                  | 750,000 |  | 750,000 | $ | 105,000 | $ | 225,000 |
| Farid Shouekani                                   | 250,000 |  | 250,000 | $ | 62,000 | $ | 75,000 |
| Jason Sunstein                                    | 750,000 |  | 750,000 | $ | 105,000 | $ | 225,000 |
| Paul Atkiss                                       | 1,000,000 |  | 0 | $ | 0 | $ | 0 |
| Stephen Young                                     | 100,000 |  | 100,000 | $ | 3,400. | $ | 30,000 |
|                                              |  |       |  |       |  |       |  |
| TOTAL                                             | 3,600,000 |  | 2,600,000 | $ | 354,400 | $ | 780,000 |
|                                                   |  |  | * At the 12/31/04 closing price of $0.30 |

-43-

----

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

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

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

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

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

**(4) Percent Of Class (1) (2)** |
|                                               |                                |                                                                                |                                            |                                                         |                                            |                                                  |
| Common Stock                                  |       | Ronald G. Weaver 10373 Roselle Street Suite 170 San Diego, California 92121    |                   | 9,000,000                                               |                                            | 7.21%                                            |
| Common Stock                                  |                                | John L. Castiglione 10373 Roselle Street Suite 170 San Diego, California 92121 |                                            | 12,766,684                                              |         | 10.23%                                           |
| Common Stock                                  |                                | Farid Shouekani 10373 Roselle Street Suite 170 San Diego, California 92121     |                                            | 5,480,000                                               |                                            | 4.39%                                            |
| Common Stock                                  |                                | Jason A. Sunstein 10373 Roselle Street Suite 170 San Diego, California 92121   |                                            | 11,994,942                                              |                                            | 9.61%                                            |
| Common Stock                                  |                                | James R. Balestraci 10373 Roselle Street Suite 170 San Diego, California 92121 |                                            | 4,600,000                                               |                                            | 3.69%                                            |
| Common Stock                                  |                                | Paul E. Atkiss 10373 Roselle Street Suite 170 San Diego, California 92121      |                                            | 1,110,000                                               |                                            | 0.89%                                            |
|                                               |                                |                                                                                |                                            |                                                         |                                            |                                                  |
| Officers and Directors as a group (6 persons) |                                |                                                                                |         | 44,951,626                                              |                                            | 36.01%                                           |
|                                               |                                |                                                                                |                                            |                                                         |                                            |                                                  |
|                                               |                                |                                                                                |                                            |                                                         |                                            |                                                  |

| Footnote: |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)       | "Beneficial Owner" means having or sharing, directly or indirectly (i) voting power, which includes the power to vote or to direct the voting, or (ii) investment power, which includes the power to dispose or to direct the disposition, of shares of the common stock of an issuer. The definition of beneficial ownership includes shares underlyingoptions 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 solevoting and investment power. |
| (2)       | Percentages are based on 121,222,899 shares outstanding on December 31, 2004 and an aggregate of 3,600,000 shares purchasable upon exercise of certain Common Stock Purchase Options granted to the Company’s officers anddirectors, including 1,000,000 granted and 650,000 forfeited in fiscal 2004 (See “Option/SAR Grants in Last Fiscal Year” table shown above).                                                                                                                                                                                                                                                                    |

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

****

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

-44-

----

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

                In July, 2001 (and continuing thru December 31, 2003) the Company entered into an oral month-to-month lease for the rental of officespace from Jason A. Sunstein, an officer and director of the Company, which required that the Company pay Mr. Sunstein the sum of $1,100 per month in payment of all office space and utilities.  While the Company believes that the office arrangement with Mr.Sunstein was undertaken on terms that were no different than those the Company could have obtained in an arms-length transaction with an unrelated party, the Company completed only a limited evaluation of other alternatives.

                During June and July 2003, the Company’s Board of Directors approved the acquisition of Coliance Communications(“Coliance”) which included the purchase of the shares of Coliance acquired from Ronald G. Weaver and Stephen D. Young.  In this transaction, the Company issued 6,000,000 shares of the Company’s Common Stock to Ronald G. Weaver, who became theCompany’s Chief Executive Officer and a Director and 6,000,000 shares of the Company’s Common Stock to Stephen D. Young, who became the Company’s Chairman of the Board and President.

                On October 15, 2003, the Company’s Board of Directors approved the acquisition of Mid-Atlantic International, Inc., a Michigancorporation (“Mid-Atlantic”) from Farid Shouekani.  Under the terms of the Mid-Atlantic Agreement, the Company acquired all of Mr. Shouekani’s Mid-Atlantic Shares in exchange for: (1) $50,000 cash within 21 days of Closing; and (2) an aggregateof 7,235,000 shares of the Company’s Common Stock with 4,235,000 of these shares (the “Special Shares”) subject to certain redemption rights (the “Redemption Rights”), at the option of Mr. Shouekani at a redemption price of $0.17 perSpecial Share as provided by the Mid-Atlantic Agreement.  All of the Redemption Rights expire on January 15, 2003 and are secured by Mid-Atlantic’s assets.  As of December 31, 2004, Mr. Shouekani exercised his Redemption Rights over 1,802,000 SpecialShares.  The remaining 2,433,000 Special Shares were canceled and returned to treasury.  Mr. Shouekani also became Chief Technical Officer and a Director of the Company.

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

**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*                                            |

-45-

----

|                  |                                                                                                                                                 |
|--------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|
| 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**

                The anticipated aggregate fees to Armando C. Ibarra, CPA, P.C., for professional services rendered for the audit of the Company’sannual financial statements for the fiscal year ended December 31, 2003 and for the reviews of the financial statements included in the Company’s Quarterly Reports on Form 10-QSB for that fiscal year are estimated at $ 10,000.  The aggregate fees toArmando C. Ibarra, CPA, P.C., for professional services rendered for the audit of the Company’s annual financial statements for the fiscal year ended December 31, 2004 and for the reviews of the financial statements included in the Company’s QuarterlyReports on Form 10-QSB for that fiscal year were $ 11,800.  Audit related services generally include fees for accounting consultations, business acquisitions, and work related thereto.  No audit-related fees for assurance and related services were billed byor paid to Armando C. Ibarra, CPA, P.C. in 2003 or in 2004.

**Tax Fees**

An aggregate of $0 was spent for Tax Fees (as defined in Item 14(3) of Form 10-KSB of the Securities and Exchange Commission) during the last two fiscal years ended December 31, 2004. 

-46-

----

**Other Fees**

No other fees for audit-related services or products were billed by or paid to Armando C. Ibarra, CPA, P.C. in 2003 or in 2004.

**Audit Committee Charter**

****

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

**Audit Committee Report**

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

**SIGNATURES**

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

****

| **Viper Networks, Inc.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                            |                   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                            |                   |
| By:  /s/ *Farid Shouekani* Farid Shouekani Chief Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                 | Date: May 5, 2006 |
|                                                                                           |                                                                                                                                                                                            |                   |
| By:  /s/*Paul E. Atkiss* Paul E. Atkiss Chief Financial Officer/Principal Accounting Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                            | Date: May 5, 2006 |

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

| By:  /s/ *Farid Shouekani* Farid Shouekani Chief Executive Officer & Director                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                 | Date: May 5, 2006 |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------|
|                                                                                           |                                                                                                                                                                                            |                   |
| By:  /s/*Paul E. Atkiss* Paul E. Atkiss Chief Financial Officer, Secretary & Director                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                            | Date: May 5, 2006 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                            |                   |
| By:  /s/ *Ronald G. Weaver* Ronald G. Weaver Chief Executive Officer & Director                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                            | Date: May 5, 2006 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                            |                   |

-47-

----

| **Index****to Financial Statements**                                                                  |                                                                                                                                      |
|-------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                  |                        |
| Report of Independent Registered Public Accounting Firm                                               | F-2                                                                                                                                  |
|                                                                                                  |                                                                                                                                      |
| Consolidated Balance Sheet as of December 31, 2004                                                    | F-3                                                                                                                                  |
|                                                                                                  |                                                                                                                                      |
| Consolidated Statements of Operations for the Years Ended December 31, 2004 and 2003                  | F-4                                                                                                                                  |
|                                                                                                  |                                                                                                                                      |
| Consolidated Statements of Stockholders’ Deficit for the Years Ended December 31, 2004 and 2003 | F-5                                                                                                                                  |
|                                                                                                  |                                                                                                                                      |
| Consolidated Statements of Cash Flows for the Years Ended December 31, 2004 and 2003                  | F-6 – F-7                                                                                                            |
|                                                                                                  |                                                                                                                                      |
| Notes to the Consolidated Financial Statements                                                        | F-8 – F-25                                                                                                           |

F-1

----

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

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

We have audited the accompanying consolidated balance sheet of Viper Networks, Inc. and subsidiaries of December 31, 2004 and 2003 and the related consolidated statements of operations, changes in shareholders’ equityand cash flow for the years then ended. These consolidated financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Viper Networks, Inc., and subsidiaries as of December 31, 2004 and 2003,and the results of their operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 2 to the consolidated financial statements, the Company’slosses from operations raise doubt about its ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| /s/ Armando C. Ibarra                                                                                 |
|-------------------------------------------------------------------------------------------------------|
| ARMANDO C. IBARRA, CPA May 5, 2006 – restated see note 15 April 14, 2005 Chula Vista, Ca. 91910 |

F-2

----

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

****

|                                                                                                                                                                                                                                                                           |         |              |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|--------------|---|
|                                                                                                                                                                                                                                                                                |         | December 31, |   |
|                                                                                                                                                                                                                                                                                |         | 2004         |   |
|                                                                                                                                                                                                                                                                                |         |              |   |
| ASSETS                                                                                                                                                                                                                                                                         |
| Current Assets:                                                                                                                                                                                                                                                                |         |              |   |
|         Cash                                                                                                                                                                                                                                | $       | 46,956       |   |
|         Sort-term investments                                                                                                                                                                                                               |         | 5,000        |   |
|         Accounts receivable, net of allowance for doubtful accounts             and sales returns (Note 4)                                                                           |         | 121,948      |   |
|         Inventories                                                                                                                                                                                                                         | 72,020  |
|         Other current assets (Note 4)                                                                                                                                                                                                       | 59,324  |
|                                                                                                                                                                                                                                                                                |         |              |   |
|                 Total current assets                                                                                                                                                                |         | 305,248      |   |
|                                                                                                                                                                                                                                                                           |         |              |   |
| Property and equipment, net (Note 4)                                                                                                                                                                                                                                           |         | 497,226      |   |
| Investments in unconsolidated businesses (Note 3)                                                                                                                                                                                                                              | 46,833  |
| Goodwill (Note 5)                                                                                                                                                                                                                                                              | 424,541 |
|                                                                                                                                                                                                                                                                                |         |              |   |
|                                                                                                                                                                                                                                                                                |         |              |   |
|                 Total assets                                                                                                                                                                        | $       | 1,273,8485   |   |
|                                                                                                                                                                                                                                                                                |         |              |   |
|                                                                                                                                                                                                                                                                           |         |              |   |
|                                                                                                                                                                                                                                                                           |         |              |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                                     |
| Current liabilities:                                                                                                                                                                                                                                                           |         |              |   |
|         Accounts payable                                                                                                                                                                                                                    | $       | 375,564      |   |
|         Accrued liabilities (Note 4)                                                                                                                                                                                                        |         | 61,915       |   |
|         Loans from related party (Note 7)                                                                                                                                                                                                   |         | 607,094      |   |
|         Taxes payable                                                                                                                                                                                                                       |         | 2,623        |   |
|         Deferred revenues                                                                                                                                                                                                                   |         | 82,103       |   |
|         Short term debt                                                                                                                                                                                                                     |         | 97,647       |   |
|         Stock subscription deposit (Note 8)                                                                                                                                                                                                 | 81,380  |
|                                                                                                                                                                                                                                                                                |         |              |   |
|                 Total current liabilities                                                                                                                                                           |         | 1,308,326    |   |
|                                                                                                                                                                                                                                                                                |         |              |   |
|                                                                                                                                                                                                                                                                           |         |              |   |
| Commitments and Contingencies (Note 10)                                                                                                                                                                                                                                        |         | -            |   |
|                                                                                                                                                                                                                                                                           |         |              |   |
| Stockholders equity:                                                                                                                                                                                                                                                           |         |              |   |
|         Preferred stock: Class A, authorized 100,000 shares at $1.00 par            value, -0- shares issued and outstanding (Note 11)                                                    |         | -            |   |
|         Preferred stock: Class B, authorized 10,000,000 shares at $1.00 par            value, -0- shares issued and outstanding (Note 11)                                                 |         | -            |   |
|         Common stock: 250,000,000 shares authorized of $0.001 par value,                      121,222,899 shares issued and outstanding |         | 121,223      |   |
|         Additional paid-in capital                                                                                                                                                                                                          |         | 11,425,685   |   |
|         Stock subscription receivable (Note 6)                                                                                                                                                                                              |         | (125,000     | ) |
|         Unearned stock-based compensation                                                                                                                                                                                                   |         | (253,318     | ) |
|         Accumulated deficit                                                                                                                                                                                                                 |         | (11,124,943  | ) |
|         Accumulated comprehensive loss                                                                                                                                                                                                      | (78,125 | )            |
|                                                                                                                                                                                                                                                                                |         |              |   |
|                 Total stockholders’ equity                                                                                                                                                    |         | (34,478      | ) |
|                                                                                                                                                                                                                                                                                |         |              |   |
|                                                                                                                                                                                                                                                                           |         |              |   |
|                 Total liabilities and stockholders’ equity                                                                                                                                    | $       | 1,273,848    |   |
|                                                                                                                                                                                                                                                                                |         |              |   |

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

----

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

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |        |        | Year ended Dece                                                                                                                                              | mber 31, |                                |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|--------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |        |        | 2004                                                                                                                                                         |          |                                |  | 2003 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |        |        |                                                                                                                                                              |          |                                |  |  |  |
|                                                                                                      |   |   |                            |          |       |  |                            |  |
| Net Revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |        | $      | 4,612,783                                                                                                                                                    |          |                                | $ | 433,376 |  |
| Cost of revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |        |        | 4,108,185                                                                                                                                                    |          |                                |  | 296,853 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |        |        |                                                                                                                                                              |          |                                |  |  |  |
|         Gross Margin                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |        |        | 504,598                                                                                                                                                      |          |                                |  | 136,523 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |        |        |                                                                                                                                                              |          |                                |  |  |  |
| Operating Expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |        |        |                                                                                                                                                              |          |                                |  |  |  |
|         General and administrative                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |        |        | 3,660,801                                                                                                                                                    |          |                                |  | 1,462,566 |  |
|         Bad debt expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |        | 83,712                                                                                                                                                       | -        |
|         Equity loss from unconsolidated subsidiaries                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |        |        | 181,067                                                                                                                                                      | 27,001   |
|         Impairment of purchased intangibles                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |        |        | 3,396,138                                                                                                                                                    |          |                                |  | 792,440 |  |
|         Impairment of purchased assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |        |        | 1,092,100                                                                                                                                                    |          |                                |  | - |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |        |        |                                                                                                                                                              |          |                                |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |        |        | 8,413,818                                                                                                                                                    |          |                                |  | 2,282,007 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |        |        |                                                                                                                                                              |          |                                |  |  |  |
| Loss from operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |        |        | (7, 909,220                                                                                                                                                  | )        |                                |  | (2,145,484 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |        |        |                                                                                                                                                              |          |                                |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |        |        |                                                                                                                                                              |          |                                |  |  |
| Other income (expenses)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |        |        |                                                                                                                                                              |          |                                |  |  |  |
|         Realized gain on marketable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |        |        | 15,761                                                                                                                                                       |          |                                |  | 8,173 |  |
|         Interest expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |        |        | (73,060                                                                                                                                                      | )        |                                |  | (60,495 | ) |
|         Other income (expense)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |        |        | 2,327                                                                                                                                                        |          |                                |  | (3,048 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |        |        |                                                                                                                                                              |          |                                |  |  |  |
|                 Total other income (expenses)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |        |        | (54,972                                                                                                                                                      | )        |                                |  | (55,370 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |        |        |                                                                                                                                                              |          |                                |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |        |        |                                                                                                                                                              |          |                                |  |  |  |
| Net loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |        | $      | (7,964,192                                                                                                                                                   | )        |                                | $ | (2,200,854 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |        |        |                                                                                                                                                              |          |                                |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |        |        |                                                                                                                                                              |          |                                |  |  |  |
| Basic loss per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |        | $      | (0.08                                                                                                                                                        | )        |                                | $ | (0.06 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |        |        |                                                                                                                                                              |          |                                |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |        |        |                                                                                                                                                              |          |                                |  |  |  |
| Weighted average number of shares outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |        |        | 101,961,298                                                                                                                                                  |          |                                |  | 37,243,157 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |        |        |                                                                                                                                                              |          |                                |  |  |  |

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

F-4

----

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

|                                                                                          |  |                          |                Common Stock               |        | Additional Paid-In Capital |        |                                                                                                                    | Stock Subscriptions      |   |                                                                                                                    | Unearned stock-based |                          |   | Accumulated                                                                                                        |   |                          | Other Comprehensive |                                                                                                                    |        | Total Stockholders’ |   |
|------------------------------------------------------------------------------------------|--|--------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|--------|--------------------------------------------------------------------------------------------------------------------|--------------------------|---|--------------------------------------------------------------------------------------------------------------------|----------------------|--------------------------|---|--------------------------------------------------------------------------------------------------------------------|---|--------------------------|---------------------|--------------------------------------------------------------------------------------------------------------------|--------|---------------------------|---|
|                                                                                          |  |                          | Shares                                                                                                                                                                                     |        |                            | Amount |                                                                                                                    | (Deficit)                |   |                                                                                                                    | Receivable           |                          |   | Compensation                                                                                                       |   |                          | Deficit             |                                                                                                                    |        | Loss                      |   |  | Deficit |  |
|                                                                                          |  |                          |                                                                                                                                                                                            |        |                            |        |                                                                                                                    |                          |   |                                                                                                                    |                      |                          |   |                                                                                                                    |   |                          |                     |                                                                                                                    |        |                           |   |  |  |  |
|                                                                                          |  |      |                                                                                             |   |        |        |                     |      |   |                     |                      |      |   |                     |   |      |                     |                     |   |       |   |                     |  |     |  |                     |  |     |  |                     |  |
| Balance, December 31, 2002                                                               |  |                          | 17,640,689                                                                                                                                                                                 |        |                            | $      | 17,641                                                                                                             |                          | $ | 1,046,165                                                                                                          |                      |                          | $ | (125,000                                                                                                           | ) |                          | $                   | (4,700                                                                                                             | )      |                           | $ | (959,897 | ) |  | $ | - |  |  | $ | (25,791 | ) |
| Issuance of common stock for cash                                                        |  |                          | 7,538,457                                                                                                                                                                                  |        |                            |        | 7,538                                                                                                              |                          |   | 400,722                                                                                                            |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | - |  |  |  | 408,260 |  |
| Issuance of common stock for services received                                           |  |                          | 28,130,000                                                                                                                                                                                 |        |                            |        | 28,130                                                                                                             |                          |   | 930,095                                                                                                            |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | - |  |  |  | 958,225 |  |
| Issuance of common stock loan interest                                                   |  |                          | 675,000                                                                                                                                                                                    |        |                            |        | 675                                                                                                                |                          |   | 51,650                                                                                                             |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | - |  |  |  | 52,325 |  |
| Issuance of common stock for acquisition                                                 |  |                          | 24,602,000                                                                                                                                                                                 |        |                            |        | 24,602                                                                                                             |                          |   | 1,093,728                                                                                                          |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | - |  |  |  | 1,118,330 |  |
| Employee compensation fund                                                               |  |                          | 210,000                                                                                                                                                                                    |        |                            |        | 210                                                                                                                |                          |   | 54,745                                                                                                             |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | - |  |  |  | 54,955 |  |
| Stock-based compensation                                                                 |  |                          | -                                                                                                                                                                                          |        |                            |        | -                                                                                                                  |                          |   | 324,274                                                                                                            |                      |                          |   | -                                                                                                                  |   |                          |                     | (319,848                                                                                                           | )      |                           |   | - |  |  |  | - |  |  |  | 4,426 |  |
| Comprehensive loss                                                                       |  |                          | -                                                                                                                                                                                          |        |                            |        | -                                                                                                                  |                          |   | -                                                                                                                  |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | (48,018 | ) |  |  | (48,018 | ) |
| Net loss for the year ended         December 31, 2003 |  |                          | -                                                                                                                                                                                          |        |                            |        | -                                                                                                                  |                          |   | -                                                                                                                  |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | (2,200,854 | ) |  |  | - |  |  |  | (2,200,854 | ) |
|                                                                                          |  |                          |                                                                                                                                                                                            |        |                            |        |                                                                                                                    |                          |   |                                                                                                                    |                      |                          |   |                                                                                                                    |   |                          |                     |                                                                                                                    |        |                           |   |  |  |  |  |  |  |  |  |  |  |
| Balance, December 31, 2003                                                               |  |                          | 78,796,146                                                                                                                                                                                 |        |                            |        | 78,796                                                                                                             |                          |   | 3,901,379                                                                                                          |                      |                          |   | (125,000                                                                                                           | ) |                          |                     | (324,548                                                                                                           | )      |                           |   | (3,160,751 | ) |  |  | (48,018 | ) |  |  | 321,858 |  |
| Issuance of common stock for cash                                                        |  |                          | 14,244,836                                                                                                                                                                                 |        |                            |        | 14,245                                                                                                             |                          |   | 2,127,218                                                                                                          |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | - |  |  |  | 2,141,463 |  |
| Issuance of common stock for services received                                           |  |                          | 12,113,382                                                                                                                                                                                 |        |                            |        | 12,114                                                                                                             |                          |   | 908,047                                                                                                            |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | - |  |  |  | 920,161 |  |
| Issuance of common stock loan interest                                                   |  |                          | -                                                                                                                                                                                          |        |                            |        | -                                                                                                                  |                          |   | -                                                                                                                  |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   |  |  |  |  | - |  |  |  |  |  |
| Issuance of common stock for acquisition                                                 |  |                          | 4,500,000                                                                                                                                                                                  |        |                            |        | 4,500                                                                                                              |                          |   | 4,090,000                                                                                                          |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | - |  |  |  | 4,094,500 |  |
| Conversion of notes payable and interest                                                 |  |                          | 646,322                                                                                                                                                                                    |        |                            |        | 646                                                                                                                |                          |   | 201,327                                                                                                            |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | - |  |  |  | 201,973 |  |
| Issuance of common stock for stock dividend                                              |  |                          | 10,632,213                                                                                                                                                                                 |        |                            |        | 10,632                                                                                                             |                          |   | (10,632                                                                                                            | )                    |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | - |  |  |  |  |  |
| Employee Compensation Fund                                                               |  |                          | 290,000                                                                                                                                                                                    |        |                            |        | 290                                                                                                                |                          |   | 213,645                                                                                                            |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | - |  |  |  | - |  |  |  | 213,935 |  |
| Stock-based compensation                                                                 |  |                          | -                                                                                                                                                                                          |        |                            |        | -                                                                                                                  |                          |   | (5,299                                                                                                             | )                    |                          |   |                                                                                                                    |   |                          |                     | 71,230                                                                                                             |        |                           |   | - |  |  |  | - |  |  |  | 65,931 |  |
| Comprehensive loss                                                                       |  |                          | -                                                                                                                                                                                          |        |                            |        | --                                                                                                                 |                          |   | -                                                                                                                  |                      |                          |   | -                                                                                                                  |   |                          |                     | --                                                                                                                 |        |                           |   | - |  |  |  | (30,107) |  |  |  | (30,107 | ) |
| Net Loss for the year ended         December 31, 2004 |  |                          | -                                                                                                                                                                                          |        |                            |        | -                                                                                                                  |                          |   | -                                                                                                                  |                      |                          |   | -                                                                                                                  |   |                          |                     | -                                                                                                                  |        |                           |   | (7,964,192 | ) |  |  | - |  |  |  | (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 | ) |
|                                                                                          |  |                          |                                                                                                                                                                                            |        |                            |        |                                                                                                                    |                          |   |                                                                                                                    |                      |                          |   |                                                                                                                    |   |                          |                     |                                                                                                                    |        |                           |   |  |  |  |  |  |  |  |  |  |  |

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

----

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

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Year Ended December 31, |                                                                                                                                                              |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                         |                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 2004                    |                                                                                                                                                              |  | 2003 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                         |                                                                                                                                                              |  |  |  |
|                                                                                                                          |                         |                            |  |       |  |                            |  |
| Cash flows from operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                         |                                                                                                                                                              |  |  |  |  |  |
| Net loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | $                       | (7, 964,192                                                                                                                                                  | ) |  | $ | (2,200,854 | ) |
| Adjustments to reconcile net loss to net cash used in operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                         |                                                                                                                                                              |  |  |  |  |  |
|       Depreciation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                         | 291,549                                                                                                                                                      |  |  |  | 54,052 |  |
|       Allowance for doubtful accounts and sales returns                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                         | 76,272                                                                                                                                                       |  |  |  | - |  |
|       Amortization of stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                         | 65,931                                                                                                                                                       |  |  |  | 4,426 |  |
|       Amortization of stock-based interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                         | 19,944                                                                                                                                                       |  |  |  | 32,381 |  |
|       Equity loss from unconsolidated subsidiaries                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                         | 181,067                                                                                                                                                      |  |  |  | 2,498 |  |
|       Impairment of purchased intangibles                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                         | 3,396,138                                                                                                                                                    |  |  |  | 792,440 |  |
|       Impairment of purchased assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                         | 1,092,100                                                                                                                                                    |  |  |  | - |  |
|       Stock based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                         | 948,163                                                                                                                                                      |  |  |  | 950,081 |  |
|       Interest accrual                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                         | (1,446                                                                                                                                                       | ) |  |  | 14,347 |  |
|       (Gain) on sale of marketable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                         | (15,761                                                                                                                                                      | ) |  |  | (13,173 | ) |
|       Changes in assets and liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                         |                                                                                                                                                              |  |  |  |  |  |
|              Accounts receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                         | (52,736                                                                                                                                                      | ) |  |  | (42,993 | ) |
|              Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                         | (72,020                                                                                                                                                      | ) |  |  | - |  |
|              Prepaid expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                         | 739                                                                                                                                                          |  |  |  | (17,941 | ) |
|              Other current assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                         | (35,039                                                                                                                                                      | ) |  |  | (1,750 | ) |
|              Accounts payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                         | 240,061                                                                                                                                                      |  |  |  | 18,458 |  |
|              Accrued liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                         | 22,268                                                                                                                                                       |  |  |  | 2,047 |  |
|              Accounts payable related party                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                         | -                                                                                                                                                            |  |  |  | (58,618 | ) |
|              Taxes payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                         | (885                                                                                                                                                         | ) |  |  | 1,746 |  |
|              Deferred revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                         | 79,625                                                                                                                                                       |  |  |  | - |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                         |                                                                                                                                                              |  |  |  |  |  |
|              Net cash used in operating activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                         | (1,728,222                                                                                                                                                   | ) |  |  | (462,853 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                         |                                                                                                                                                              |  |  |  |  |  |
| Cash flows from investing activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                         |                                                                                                                                                              |  |  |  |  |  |
|       Acquisitions, net of cash acquired                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                         | (757,091                                                                                                                                                     | ) |  |  | 15,436 |  |
|       Purchases of property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                         | (182,594                                                                                                                                                     | ) |  |  | (13,931 | ) |
|       Proceeds from sale of property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                         | 5,056                                                                                                                                                        |  |  |  |  |  |
|       Purchases of marketable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                         | -                                                                                                                                                            |  |  |  | (43,515 | ) |
|       Sales of marketable securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                         | -                                                                                                                                                            |  |  |  | 13,595 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                         |                                                                                                                                                              |  |  |  |  |  |
|              Net cash used in investing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                         | (935,629)                                                                                                                                                    |  |  |  | (28,415 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                         |                                                                                                                                                              |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                         |                                                                                                                                                              |  |  |  |  |  |

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

F-6

----

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

| Cash flows from financing activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                                                                                                                              |   |                                |   |                                                                                                                                                              |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------|---|--------------------------------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------|---|
|       Proceeds from issuance of common stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 2,355,398                                                                                                                                                    |   |                                |   | 463,215                                                                                                                                                      |   |
|       Net borrowing (repayments) under revolving credit lines                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (107,661                                                                                                                                                     | ) |                                |   | (72                                                                                                                                                          | ) |
|       Repayment of debt from acquisition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | (269,500                                                                                                                                                     | ) |                                |   | -                                                                                                                                                            |   |
|       Proceeds from short term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 143                                                                                                                                                          |   |                                |   | 40,850                                                                                                                                                       |   |
|       Repayments of short term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | (15,000                                                                                                                                                      | ) |                                |   | (27,000                                                                                                                                                      | ) |
|       Proceeds from shareholder loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 753,041                                                                                                                                                      |   |                                |   | 136,158                                                                                                                                                      |   |
|       Repayments of shareholder loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | (228,303                                                                                                                                                     | ) |                                |   | (107,960                                                                                                                                                     | ) |
|       Proceeds from convertible loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 150,000                                                                                                                                                      |   |                                |   | 175,000                                                                                                                                                      |   |
|       Repayments of convertible loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | (75,000                                                                                                                                                      | ) |                                |   | (75,000                                                                                                                                                      | ) |
|       Payments on capital lease obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | (35,086                                                                                                                                                      | ) |                                |   | (9,695                                                                                                                                                       | ) |
|       Stock subscription deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | 11,435                                                                                                                                                       |   |                                |   | 61,415                                                                                                                                                       |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                              |   |                                |   |                                                                                                                                                              |   |
|              Net cash provided by financing activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | 2,539,467                                                                                                                                                    |   |                                |   | 656,911                                                                                                                                                      |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                              |   |                                |   |                                                                                                                                                              |   |
| Net increase in cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | (123,384                                                                                                                                                     | ) |                                |   | 165,643                                                                                                                                                      |   |
| Cash at the beginning of the year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | 170,340                                                                                                                                                      |   |                                |   | 4,697                                                                                                                                                        |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                              |   |                                |   |                                                                                                                                                              |   |
| Cash at the end of the year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | $ | 46,956                                                                                                                                                       |   |                                | $ | 170,340                                                                                                                                                      |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                              |   |                                |   |                                                                                                                                                              |   |
| Supplemental schedule of cash flow activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                                                                              |   |                                |   |                                                                                                                                                              |   |
|       Cash paid for:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                                                                              |   |                                |   |                                                                                                                                                              |   |
|              Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | $ | 20,839                                                                                                                                                       |   |                                | $ | 126,465                                                                                                                                                      |   |
|              Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | $ | 800                                                                                                                                                          |   |                                | $ | 800                                                                                                                                                          |   |
| Non-cash investing and financial activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                                                                                              |   |                                |   |                                                                                                                                                              |   |
|       Common stock issued for business acquisition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | $ | 4,094,500                                                                                                                                                    |   |                                | $ | 1,118,330                                                                                                                                                    |   |
|       Common stock issued in payment of services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | $ | 920,161                                                                                                                                                      |   |                                | $ | 958,225                                                                                                                                                      |   |
|       Common stock issued in payment of convertible loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | $ | 201,973                                                                                                                                                      |   |                                | $ | -                                                                                                                                                            |   |
|       Common stock issued in payment of convertible loan interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | $ | -                                                                                                                                                            |   |                                | $ | 52,325                                                                                                                                                       |   |
|                                                                                                                          |   |                            |   |       |   |                            |   |

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

----

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

| NOTE 1 -                                                                                                            | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                          | a.  Organization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                          | The consolidated financial statements presented are those of Viper Networks, Inc. and its wholly-owned Subsidiaries (the “Company”).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                          | We are a 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 byITXC, to a next generation provider of high-quality telecommunication services and technology for internet protocol, or IP telephony applications.  We utilize our VoIP technology to transmit digital voice communications over data networks and theinternet.                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                          | Viper Networks, Inc. (“Viper-CA”) was incorporated on September 14, 2000 under the laws of the State of California. Taig Ventures, Inc. (“Taig”) was incorporated under the laws of the State of Utah onFebruary 28, 1983.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                          | On November 15, 2000, Taig and Viper-CA completed a Securities Purchase Agreement and Plan of Reorganization whereby Taig issued 36,000,000 pre-split or 3,000,000 post-split shares of its common stock in exchange for all ofthe outstanding common stock of Viper-CA.  Immediately prior to the Securities Purchase Agreement and Plan of Reorganization, Taig had 6,788,507 pre-split or 565,786 post-split shares of common stock and 3,000,000 shares of non-voting preferred stock issued andoutstanding.  For accounting purposes, the acquisition has been treated as a recapitalization of Viper-CA with Viper-CA as the acquirer (reverse acquisition).  Viper-CA was treated as the acquirer for accounting purposes because the shareholders of Viper-CAcontrolled 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                          | b.  Basis of presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                          | The Company’s consolidated financial statements are prepared using the accrual method of accounting and include Viper-CA and its wholly-owned subsidiaries.  All significant intercompany accounts and transactionshave been eliminated.  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 inUnconsolidated Businesses on the consolidated balance sheet.                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                          | c.  Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                          | Inventories are stated at the lower of cost or market using the first-in first-out method.  Inventory costs include international inbound freight, duty and custom fees.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                          | d.  Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                          | The preparation of financial statements in conformity with generally accepted accounting principles requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.  The Company is required to make judgments and estimates about the effect ofmatters 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 reportedresults.                                                                                                                                      |

F-8

----

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

| NOTE 1 -                                                                                                                 | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                          | d.  Estimates (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                          | 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 othercontingencies.  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 andliabilities that are not readily apparent from other sources.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                          | e.  Property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                          | Property and equipment are stated at cost and are depreciated over their estimated useful lives using the straight-line method.  Useful lives range from three to five years for office furniture and equipment. Additions to property and equipment together with major renewals and betterments are capitalized.  Maintenance, repairs and minor renewals and betterments are charged to expense as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                          | f.  Goodwill and Other Intangible Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                          | 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 combinationand 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.  Theestimated 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 forimpairment in accordance with SFAS No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets”. |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                          | g.  Long lived assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                          | 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 maynot 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 begenerated 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 isdetermined using a discounted cash flow analysis.  Any impairment in value is recognized as an expense in the period when the impairment occurs.                                                                                                                                                                                                                                                  |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

F-9

----

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

| NOTE 1 -                                                                                                                 | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                          | h.  Revenue recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                      | The Company recognizes revenues and the related costs for voice, data and other services along with product sales when persuasive evidence of an arrangement exists, delivery and acceptance has occurred or service has beenrendered, 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 areallocated 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 ontheir 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. |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                          | The Company accrues for warranty costs, sales returns, bad debts, and other allowances based on its historical experience.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                          | i.  Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                          | Statement of Financial Accounting Standards No. 123 (“SFAS 123”), “Accounting for Stock-Based Compensation”, provides for the use of a fair value based method of accounting for stock-basedcompensation.  However, SFAS 123 allows the measurement of compensation cost for stock options granted to employees using the intrinsic value method of accounting prescribed by Accounting Principles Board Opinion No. 25 (“APB 25”), “Accountingfor Stock Issued to Employees”, which only requires charges to compensation expense for the excess, if any, of the fair value of the underlying stock at the date a stock option is granted (or at an appropriate subsequent measurement date) over the amount theemployee must pay to acquire the stock.  The Company has elected to account for employee stock options using the intrinsic value method under APB 25.  By making that election, the Company is required by SFAS 123 to provide pro forma disclosures of net lossas if a fair value based method of accounting had been applied.                                                                                                                                                                       |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                          | In accordance with the provisions of SFAS 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 areaccounted for based on the fair value of the equity instrument issued (unless the fair value of the consideration received can be more reliably measured).  During the year ended December 31, 2004 and 2003, the Company recognized $323,005 and $549,557 and$468,856 and $495,750 of expense relating to the grant of common stock to non-employees and employees, respectively, for services which are included in the accompanying consolidated statements of operations.  The value of these shares was determined based uponover the counter closing prices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

F-10

----

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

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

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Year Ended December 31, |                                                                                                                                                              |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                         |                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 2004                    |                                                                                                                                                              |  | 2003 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                         |                                                                                                                                                              |  |  |  |
|                                                                                      |                         |                            |  |       |  |                            |  |
| Net loss (numerator)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | $                       | (7,964,192                                                                                                                                                   | ) |  | $ | (2,220,854 | ) |
| Weighted average shares outstanding for basic           net loss per share (denominator)                                                                                                                                                                                                                                                                                                                                                                                    |                         | 101,961,298                                                                                                                                                  |  |  |  | 37,243,157 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                         |                                                                                                                                                              |  |  |  |  |  |
| Per share amount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | $                       | (0.08                                                                                                                                                        | ) |  | $ | (0.06 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                         |                                                                                                                                                              |  |  |  |  |  |

F-11

----

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

| NOTE 1 -                                                                                                                 | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                          | l.  Concentrations of Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                          | 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 lotsfor 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 hasa 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.  TheCompany 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 exchangerates, 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 residentialdevelopment and build a communications facility could adversely affect the Company’s business.  Operations may be affected in varying degrees by government regulations with respect to development restrictions, price controls, export controls, income andother 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 accuratelypredicted. |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                          | m.  New Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                          | In November 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No.151, Inventory Costs – an amendment of ARB No. 43, Chapter 4 (“SFAS151”).  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 ARB43, 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...” ThisStatement 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 conversionbe based on the normal capacity of the production facilities.  This Statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005.  The adoption is not expected to have a material effect on the Company’s resultsof operations or financial conditions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                          | In December 2004, the FASB issued SFAS No. 152, “Accounting for Real Estate Time-Sharing Transactions—an amendment of FASB Statements No. 66 and 67” (“SFAS 152”). This Statement amends FASBStatement No. 66, Accounting for Sales of Real Estate, to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position (SOP) 04-2, Accounting No. 67, Accounting for Costs andInitial 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 andcosts 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 adoption is not expected to have a material effect on theCompany’s results of operations or financial conditions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

F-12

----

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

| NOTE 1 -                                                                                                                 | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                          | m.  New Accounting Pronouncements (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                          | In December 2004, the FASB issued SFAS No. 123 (Revised 2004), Shared-Based Payment (“SFAS 123R).  SFAS 123R requires that compensation cost related to share-based payment transactions, including grants of employeestock options, be recognized in the financial statements based on their fair value.  Share-based payment transactions within the scope of SFAS 123R include stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employeeshare purchase plans.  The provisions of SFAS 123R are effective as of the first interim period that begins after June 15, 2005.  Accordingly, the Company will implement the revised standard in the third quarter of fiscal year 2005.  Currently, theCompany accounts for its share-based payment transactions under the provisions of APB 25, which does not necessarily require the recognition of compensation cost in the financial statements.  Management is assessing the implications of this revised standard,which may materially impact the Company’s results of operations in the third quarter of fiscal year 2005 and thereafter. |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                     | On December 16, 2004, FASB issued Statement of Financial Accounting Standards No. 153, Exchanges of Non-monetary Assets, an amendment of APB Opinion No. 29, Accounting for Non-monetary transactions (“SFAS153”).  This statement amends APB Opinion 29 to eliminate the exception for non-monetary exchanges of similar productive assets and replaces it with a general exception of exchanges of non-monetary assets that do not have commercial substance.  UnderSFAS 153, if a non-monetary exchange of similar productive assets meets a commercial-substance criterion and fair value is determinable, the transaction must be accounted for at fair value resulting in recognition of any gain or loss.  SFAS 153 is effective fornon-monetary transactions in fiscal periods that begin after June 15, 2005.  The adoption is not expected to have a material effect on the Company’s results of operations or financial conditions.                                                                                                                                                                                                   |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| NOTE 2 -                                                                                                                 | GOING CONCERN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                          | The Company’s consolidated financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in thenormal course of business.  The Company has incurred a loss from inception on September 14, 2000 through December 31, 2004, which has resulted in an accumulated deficit of $11,124,943 at December 31, 2004 which raises doubt about the Company’s ability tocontinue as a going concern.  The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from theoutcome of this uncertainty.                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                          | It is the intent of management to continue to develop its voice and data services to Web-based customers and expand its Voice-over-Internet Protocol networks for businesses, institutions, and Internet Service Providers(ISP).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                          | Company management will seek additional financing through new stock issuances and lines of credit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

F-13

----

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

| NOTE 3 -                                                                                                                 | ACQUISTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                          | During June and July 2003, the Company purchased 100% of the stock in Worldlink-C.com, Inc. doing business as Coliance Communications, Inc. (“Coliance”), a seller of VoIP hardware.  As consideration for thepurchase, the Company issued to Coliance shareholder’s an aggregate of 17,000,000 shares of the Company’s Common Stock and 200,000 shares of the Company’s Preferred Stock for an aggregate purchase price of $750,005.  All of the Preferred Stockwas later converted into two notes payable aggregating $200,000.  As part of the transaction, Mr. Stephen Young and Mr. Ronald Weaver joined the Company’s management team and Board of Directors as Chairman and President and as Chief Executive Officer,respectively.  Management intends to add Coliance’s VoIP products to the Company’s existing VoIP business strategy.  Goodwill of $754,940 was recognized upon the acquisition as the excess of the aggregate purchase price over the fair value ofColiance’s identifiable net liabilities.  There were no purchased research and development assets.  Based on a discounted cash flow model the entire goodwill balance was considered to be impaired and accordingly a non-cash expense was charged toincome during 2003 as an Impairment of Purchased Intangibles. |
|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                          | During October 2003, the Company purchased 100% of the stock in Mid-Atlantic International, Inc. (“Mid-Atlantic) from Mr. Farid Shouekani.  Mid-Atlantic owns and operates a global VoIP network and billing servers inRochester Hills, Michigan.  As consideration for the purchase, the Company issued 5,102,000 shares of the Company’s Common Stock and $269,500 payable in cash for an aggregate purchase price of $779,700.  Mr. Shouekani became Chief Technical Officerand a Director of the Company.  Management intends to deploy its VoIP products over the Mid-Atlantic network to capture recurring monthly revenue.  Goodwill of $338,441 was recognized upon the acquisition as the excess of the aggregate purchase price overthe fair value of Mid-Atlantic’s identifiable net assets.  There were no purchased research and development assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                          | The acquisitions during 2003 were accounted for using the purchase method and, accordingly, results of operations of the acquired companies are included in the Company’s operating results as of the date ofpurchase.  The following condensed balance sheet represents the major asset captions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

|                                                                                                                                                                                                                                                                                                                                                                                                        | Coliance |                                                                                                                    |        | Mid-Atlantic                   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|--------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|---|
|                                                                                                                                                                                                                                                                                                                                                                                                        |          |                                                                                                                    |        |                                |   |
|                                                                   |          |                     |   |       |   |                     |   |
| Current assets                                                                                                                                                                                                                                                                                                                                                                                         | $        | 315                                                                                                                |        |                                |   | 63,594 |  |
| Fixed assets                                                                                                                                                                                                                                                                                                                                                                                           |          | -                                                                                                                  |        |                                | $ | 541,200 |  |
| Other intangible assets                                                                                                                                                                                                                                                                                                                                                                                |          | -                                                                                                                  |        |                                | $ | - |  |
| Goodwill upon acquisition                                                                                                                                                                                                                                                                                                                                                                              |          | 754,940                                                                                                            |        |                                |   | 338,441 |  |
| Current liabilities                                                                                                                                                                                                                                                                                                                                                                                    |          | 5,250                                                                                                              |        |                                |   | 47,875 |  |
| Long-term liabilities                                                                                                                                                                                                                                                                                                                                                                                  | $        | -                                                                                                                  |        |                                | $ | 115,660 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                        |          |                                                                                                                    |        |                                |   |  |  |
|         Aggregate purchase price                                                                                                                                                                                                                                                                                                                                    | $        | 750,005                                                                                                            |        |                                | $ | 779,700 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                        |          |                                                                                                                    |        |                                |   |  |  |

F-14

----

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

| NOTE 3 -                                                                                                                 | ACQUISTIONS (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                      | During January 2004, the Company acquired 100% of the membership interest in Adoria Communications, LLC (“Adoria”) from Mr. James Balestraci, the sole member.  Adoria owns and operates a global VoIP networkwith operations in Boston, Mass.  As consideration for the purchase, the Company issued an aggregate of 2,500,000 shares of the Company’s Common Stock, with 500,000 of these shares (the “Performance Shares”) subject to the condition thatAdoria’s financial results in 2004 must equal or exceed its financial results in 2003, and $500,000 payable in cash for an aggregate purchase price of $3,574,500.  The Performance Shares were contingent on Adoria’s 2004 financial results being equalto 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 andAdoria 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 netassets.  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 anImpairment 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 ofpurchase.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

|                                                                                                                                                                                                                                                                                                                                                                                                        | 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                                                                                                          |        |  |
|                                                                                                                                                                                                                                                                                                                                                                                                        |        |                                                                                                                    |        |  |

|                      | During May 2004, the Company acquired an aggregate 50% of the membership interests of Brasil Communications, LLC (“Brasil LLC”) in two concurrent transactions with Software Innovations, Inc. (“SII”) andBrasil LLC.  Brasil LLC owns and operates a VoIP network with licenses and operations in Brazil and El Salvador.  As consideration for the purchase, the Company issued 2,000,000 shares of the Company’s Common Stock to SII and $300,000 payable in cashto 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 Americathrough 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:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

F-15

----

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

| NOTE 3 -                                                                                                                 | ACQUISTIONS (continued) |
|--------------------------------------------------------------------------------------------------------------------------|-------------------------|
|                      |                         |

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

|                      | Since the Company determined this to be other than a temporary impairment, a charge against earnings was taken in the amount of $1,092,100 for Impairment of Purchased Assets.  Following this charge, the book value ofBrasil LLC investment was $227,900.  For the year ended December 31, 2004 the Company recorded $181,067 as its 50% equity share in Brasil LLC operating loss subsequent to the Company’s investment.  At December 31, 2004 the Company’s equityinvestment was $46,833. |
|--------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

F-16

----

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

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

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

F-17

----

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

| 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 annuallyand 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.  Theestimated fair value is determined using a discounted cash flow analysis.  The changes in the carrying amount of goodwill is as follows: |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                              | December 31, |                                                                                                                                      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------|--------------|--------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                              | 2004         |                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                              |              |                                                                                                                                      |
|                                                                                           |            |              |                        |   |
| Balance at beginning of year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                              | $            | 338,441                                                                                                                              |  |
|         Goodwill from acquisitions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                              |              | 3,482,238                                                                                                                            |  |
|         Impairment losses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                              |              | (3,396,138                                                                                                                           | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                              |              |                                                                                                                                      |  |
| Balance at end of year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                              | $            | 424,541                                                                                                                              |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                              |              |                                                                                                                                      |  |

|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| NOTE 6 -                                                                                                                 | STOCK SUBSCRIPTION RECEIVABLE                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                          | During September 1998, the Company entered into an agreement with a related party to purchase 50 acres of real property known as the Hills of Bajamar, located in Ensenada, Mexico (the “Land) that is valued at thepredecessor 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 settlementand release with the Class B preferred stockholder whereby the Preferred Stock and stock warrants were exchanged for 400,000 shares of the Company’s Common Stock and the cumulative undeclared dividend was not declared. |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                          | As of the date of these financial statements, the Company had not received documented title to the Land.  Since consideration for the agreement (documented title) has never been received the Company does not believe it isthe owner of the Land.  Accordingly, the value of the Land has been classified as a stock subscription receivable.  The 400,000 share certificate is being held by the Company.                                     |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| NOTE 7 -                                                                                                                 | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                          | During Fiscal 2004, the Company’s shareholders incurred expenses on behalf of the Company in the amount of $120,912, which will be repaid in the normal course of business.                                                                                                                                                                                                                                                                               |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                          | During Fiscal 2003, the company’s shareholders incurred expenses on behalf of the Company in the amount of $89,094 which will be repaid in the normal course of business.  During Fiscal 2003, the company agreed toreimburse a stockholder $12,000 and $1,200 for office rental and utilities, respectively, as the use of the stockholder’s personal residence.                                                                              |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                          | During Fiscal 2004, 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 theseshareholders were $607,094.                                                                                                                                                                                                              |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                          | The following individuals advanced funds to the Company in 2004:                                                                                                                                                                                                                                                                                                                                                                                                |

F-18

----

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

| NOTE 7 -                                                                                                                 | RELATED PARTY TRANSACTIONS (Continued) |
|--------------------------------------------------------------------------------------------------------------------------|----------------------------------------|
|                      |                                        |

| Shareholder                                                                                                                                                                                                                                            |                                | Funds Advanced during 2004 |                                                                                                                                      | December 31, 2004              |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|----------------------------|--------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|
|                                                                                                                                                                                                                                                        |                                |                            |                                                                                                                                      |                                |
|                                           |       |                            |                        |       |  |                        |
| Sunstein                                                                                                                                                                                                                                               |                                | $                          | 153,070                                                                                                                              |                                | $ | 100,571 |
| Castiglione                                                                                                                                                                                                                                            |                                |                       | 153,075                                                                                                                              |                                |   | 100,575 |
| Balestraci                                                                                                                                                                                                                                             |                                |                       | 25,000                                                                                                                               |                                |   | 25,139 |
| Shouekani                                                                                                                                                                                                                                              |                                |                       | 421,896                                                                                                                              |                                |   | 380,808 |
|                                                                                                                                                                                                                                                        |                                |                            |                                                                                                                                      |                                |  |  |
| TOTAL                                                                                                                                                                                                                                                  |                                | $                          | 753,041                                                                                                                              |                                | $ | 607,094 |
|                                                                                                                                                                                                                                                        |                                |                            |                                                                                                                                      |                                |  |  |

|                      | The terms of the unsecured Notes carried full payment of principal and accrued interest as of the end of the following fiscal year.  All loans were rolled forward into similarly termed notes in 2005, payable at the end of2006.  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. |
|--------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

F-19

----

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

| NOTE 8 –                                                                                                 | STOCK SUBSCRIPTION DEPOSIT                                                                                                                                                                                                                                                           |
|--------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                      |
|                                                                                                                          | As of December 31, 2004, the company had received a total of $81,380 for the purchase of 904,000 shares of common stock.  The shares were issued subsequent to December 31, 2004.  The $81,380 is recorded as astock subscription deposit at December 31, 2004.  |
| NOTE 9 -                                                                                                                 | INCOME TAXES                                                                                                                                                                                                                                                                         |
|--------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                      |
|                                                                                                                          | Due to the Company’s net loss position from inception on September 14, 2000 to December 31, 2004, there was no provision for income taxes recorded.  The following is a reconciliation of the statutory federal incometax rate to the Company’s effective tax rate: |

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

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

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                              | December 31, |                                                                                                                                      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------|--------------|--------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                              | 2004         |                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                              |              |                                                                                                                                      |
|                                                                                           |            |              |                        |   |
| Deferred tax assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                              |              |                                                                                                                                      |  |
|         Net operating loss carryforward                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                              | $            | 3,418,382                                                                                                                            |  |
|         Other assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                              |              | 1,391                                                                                                                                |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                              |              |                                                                                                                                      |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                              |              | 3,419,774                                                                                                                            |  |
| Less valuation allowance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                              |              | (3, 419,774                                                                                                                          | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                              |              |                                                                                                                                      |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                              | $            | -                                                                                                                                    |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                              |              |                                                                                                                                      |  |  |

|                                                                                                                          | As a result of the Company’s losses to date, there exists doubt as to the ultimate realization of the deferred tax assets.  Accordingly, a valuation allowance equal to the total deferred tax assets has been recordedat December 31, 2004.                                                                                                                                                                                                                                                                                                     |
|--------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                          | At December 31, 2004, the Company had federal and state net operating loss carryforwards for tax purposes of approximately $8,389,000 and $7,647,000 which may be available to offset future taxable income and which, if notused, begin to expire in 2010 and 2012, respectively.                                                                                                                                                                                                                                                                          |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| NOTE 10 -                                                                                                      | 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 $2,474.  In August, 2004 the Company entered into aforty lease agreement for administrative and warehouse space; monthly rent for this space is $3,969 with an option to terminate the lease after twenty-four months upon payment of certain unamortized lease costs.  Rent expense for the year ended December 31, 2004and 2003 was $43,328 and $44,483, respectively. |

F-20

----

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

| NOTE 10 -                                                                                                      | COMMITMENTS AND CONTINGENCIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                          | Equity Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                          | In December 2000, the Company’s shareholders adopted the 2000 equity incentive plan (the “2000 Plan”) for the benefit of employees, directors, advisors and consultants of the Company. In December 2002, theCompany’s shareholders increased the shares authorized within the 2000 Plan by 10,500,000 shares.  Under the plan, the Company may grant stock options or awards at a maximum of 12,000,000 shares.  At December 31, 2004, there were 8,400,000 shares ofthe Company’s Common Stock available for grant under the 2000 Plan. |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| NOTE 11 -                                                                                                      | PREFERRED STOCK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                          | a.  Preferred Stock - Class A                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                          | The Company has authorized 100,000 shares of non-voting Class A preferred stock, at a par value of $1.00 per share.  These shares are convertible into common stock at a ratio of 500 shares of common stock for each shareof Class A preferred stock.  There were no shares issued and outstanding at December 31, 2004.                                                                                                                                                                                                                                               |
|                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                          | b.  Preferred Stock - Class B                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                          | The Company has authorized 10,000,000 shares of non-voting Class B preferred stock, at a par value of $1.00 per share.  These shares accumulate dividends at a rate of 15% per annum and are convertible into common stock ata $1.00 per share or the market price for the 10 day average prior to the date of conversion, whichever is less, but in no event less than 75 cents per share.  There were no shares issued and outstanding at December 31, 2004.                                                                                                          |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| NOTE 12 -                                                                                                      | COMMON STOCK TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                          | On December 29, 2000, the Company approved a reverse-split of its Common Stock on a 1-for-12 basis leaving 3,565,786 shares issued and outstanding.  All references to common stock have been retroactivelyrestated.                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                          | During March 2002, the Company created the Viper Networks Compensation Fund to provide compensation to employees and consultants.  The Company authorized the issuance of up to 10,000,000 shares of Common Stock.                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                          | During Fiscal 2004, the Company issued 14,244,836, 12,113,382, 4,500,000, 646,322, and 10,632,213 shares for cash, in payment of services, for acquisitions, in conversion of notes and accrued interest, and a stock dividend,respectively.                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| NOTE 13 -                                                                                                      | 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 reserved12,000,000 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.                                                                                                                                              |

F-21

----

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

| NOTE 13 -                                                                                                      | STOCK OPTIONS (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                          | Options and limited rights granted under the 2000 Plan shall be exercisable at such time or upon such events and subject to the terms, conditions, vesting, and restrictions as determined by the board of directorsor the compensation committee (the “Plan Committee”) of the Company provided however that no option shall be exercisable after the expiration of ten years from the date of grant.  The exercise price of options granted under the 2000 Plan will beequal to the fair market value of the Company’s Common Stock as determined by the Plan Committee on the date of grant.  If, at the time of grant, an incentive stock option is granted to a 10% beneficial owner, as defined, the exercise price will not beless than to 110% of the fair market value of the Company’s Common Stock and the option shall not be exercisable after the expiration of five years. |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                          | Stock awards granted under the 2000 Plan shall be subject to the terms, conditions, vesting, and restrictions as determined by the Plan Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                          | At December 31, 2004, there were 8,400,000 shares of the Company’s Common Stock available for future grant under the 2000 Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                          | A summary of the Company’s stock options as of December 31, 2004 and 2003 and changes during the periods is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

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

F-22

----

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

| NOTE 13 -                                                                                                      | STOCK OPTIONS (continued)                                                                                          |
|--------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                    |
|                                                                                                                          | The following table summarizes information regarding employee stock options outstanding at December 31, 2004. |

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

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

F-23

----

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

| NOTE 13 -                                                                                                      | STOCK OPTIONS (continued)                                                                                                                                                                                                                                                     |
|--------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                               |
|                                                                                                                          | Had compensation cost for the Company’s stock-based compensation plan been determined based on the fair value at the grant dates for awards under those plans consistent with the method described in SFAS 123, theCompany’s net loss would have been as follows: |

|                                                        | Year Ended December 31, |                                                                                                                    |
|--------------------------------------------------------|------------------------------|--------------------------------------------------------------------------------------------------------------------|
|                                                        |                              |                                                                                                                    |
|                                                        | 2004                         |                                                                                                                    |  | 2003 |  |
|                                                        |                              |                                                                                                                    |  |  |  |
|                                                        |                              |                                                                                                                    |  |  |  |  |  |
| Net loss:                                              |                              |                     |  |       |  |                     |  |
|         As reported | $                            | (7, 964,192                                                                                                        | ) |       | $ | (2,200,854 | ) |
|         Pro forma   | $                            | (8, 080,696                                                                                                        | ) |  | $ | (2,211,813 | ) |
|                                                   |                              |                                                                                                                    |  |  |  |  |  |
| Basic loss per share:                                  |                              |                                                                                                                    |  |  |  |  |  |
|         As reported | $                            | (0.08                                                                                                              | ) |  | $ | (0.06 | ) |
|         Pro forma   | $                            | (0.08                                                                                                              | ) |  | $ | (0.06 | ) |

| NOTE 14 -                                                                                                      | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                          | On February 4, 2005, the Company entered into five stock subscription agreements for an aggregate of 33,333,335 shares of the Company’s Common Stock in exchange for $5,000,000 in US Treasury Bonds, with both theCompany’s shares and the $5,000,000 being placed into escrow.  On August 8, 2005, by mutual agreement, the five stock subscription agreements and all associated agreements (as described below) were rescinded; the escrow was closed with the 33,333,335shares 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 torepurchase 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 theCompany’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 alsoprovides for the exchange of certain cash flows, as defined in the agreement. |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                          | On January 31, 2005, the Company granted stock options from the 2000 Plan to Officers for an aggregate of 5,150,000 shares and to an employee for 100,000 shares exercisable at $0.200; the options expire on January 31,2015                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                          | During February 2005, the Company closed an $180,000 private placement resulting in the issuance of an aggregate of 3,000,000 shares of the Company’s Common Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                          | Also during February 2005, the Company entered into a one year services agreement with Rhino Capital, Inc. (“Rhino”) to assist the Company in obtaining a listing on a national stock exchange, raising capitol, andinvestor relations.  The services are payable with an aggregate of 1,250,000 shares of the Company’s Common Stock and an aggregate of $30,000 in cash.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                          | On March 8, 2005, the Company granted stock options from the 2000 Plan to an officer for 3,000,000 shares exercisable at $0.230; the options expire on March 8, 2015.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

F-24

----

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

| NOTE 14 -                                                                                                      | SUBSEQUENT EVENTS (continued)                                                                                                                                                                                                                                                                                                                                                                                              |
|--------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                          | Also during March 2005, the Company closed a $271,000 private placement resulting in the issuance of an aggregate of 3,011,111 shares of the Company’s Common Stock.                                                                                                                                                                                                                                                 |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                          | At various times during 2005, the Company borrowed an aggregate of $115,000 form Officers and Directors to fund operations; the amounts will be repaid from available cash flows.  During 2005, the Company repaid anaggregate of $60,000.                                                                                                                                                                            |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                            |
| NOTE 15 -                                                                                                      | RESTATEMENT                                                                                                                                                                                                                                                                                                                                                                                                                |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                          | The restatement includes additional disclosures regarding; business investments (Balance Sheet, Statements of Operations, and Statements of Cash Flows, captions and footnote 3), goodwill (Balance Sheet, Statements ofOperations, Statements of Cash Flows, and footnotes 3 and 5), related party transactions (Statements of Cash Flows and Footnote 7), and footnote disclosures (footnotes, 1-h, 1-k, 9, 10, and 13). |
|                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                          | The accompanying audited financial statements as of December 31, 2004, along with the auditors report dated April 14, 2005, have been restated as of May 5, 2006 to solely address the items noted above.                                                                                                                                                                                                                  |

F-25