SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

(Mark One)

|X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934 For the Fiscal Year Ended October 31, 2004

                                       OR

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                         Commission File Number 0-20317

                                   ----------

                                  BIOFARM, INC.
        (Exact name of small business issuer as specified in its charter)

              Nevada                                              88-0270266
   (State or other jurisdiction                                (I.R.S. Employer
of incorporation or organization)                            Identification No.)

         1255 Battery Street, Suite 200, San Francisco, California 94111

                    Issuer's telephone number: (415) 288-3333

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

      Securities registered pursuant to Section 12(g) of the Exchange Act:

                         Common Stock ($.001 Par Value)

      Check whether the issuer: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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. Yes |X|  No |_|

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

            State issuer's revenues for its most recent fiscal year:
                                      $ -0-

      As of February 12, 2005, 23,681,095 shares of Common Stock ($.001 par
value) were issued and outstanding. The aggregate market value of the Common
Stock held by non-affiliates was approximately $2,662,297 determined by the
closing sale price on that date based upon 5,324,595 shares owned by
non-affiliates.

<PAGE>

                                TABLE OF CONTENTS

Part I

         Item 1.  Description of Business

         Item 2.  Description of Property

         Item 3.  Legal Proceedings

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

Part II

         Item 5.  Market for Common Equity and Related Stockholder Matters

         Item 6. Management's Discussion and Analysis or Plan of Operation

         Item 7. Financial Statements

         Item 8.  Changes in and Disagreements with Accountants on Accounting
                  and Financial Disclosure

         Item 8A.  Controls and Procedures


Part III

         Item 9. Directors and Executive Officers of the Registrant

         Item 10. Executive Compensation

         Item 11. Security Ownership of Certain Beneficial Owners
                  and Management and Related Stockholder Matters

         Item 12. Certain Relationships and Related Transactions

         Item 13. Exhibits and Reports on Form 8-K

         Item 14.  Principal Accountant Fees and Services
<PAGE>

                                     PART I

Item 1.   Description of Business

      For the last three years, BioFarm, Inc. ("BIOF" or the "Company") has been
a public shell company with no revenue from operations. During this period, the
Company's management has sought to acquire an operating business. On August 24,
2004, BIOF entered into a Share Exchange Agreement with the stockholders of
friendlyway, Inc. ("FWI"), pursuant to which the Company agreed to acquire all
of the outstanding shares of FWI in exchange for the issuance of 18,000,000
shares of Common Stock of the Company and the assumption of outstanding options
granted to FWI employees. That transaction closed on December 10, 2004 and FWI
became a wholly-owned subsidiary of BIOF. This transaction has been accounted
for (effective as of December 10, 2004) as a recapitalization of FWI, which is
the accounting acquirer.

      Prior to the FWI transaction, the Company on June 11, 2004 transferred
substantially all of its then existing liabilities and substantially all of its
assets to a wholly-owned subsidiary, Ocwen, Corp. ("Ocwen"). It then transferred
all of the outstanding shares to Ocwen to certain trustees to hold for the
benefit of the stockholders of the Company on June 11, 2004. Under the terms
of the agreement between the Company and these trustees, the trustees will hold
the Ocwen shares until they can be registered and distributed to the
stockholders of the Company as of October 31, 2004 or, if such distribution is
determined not be practicable, the trustees will sell the shares and distribute
the proceeds to those stockholders.

      FWI was incorporated in Delaware in June 2000, as a self-service solutions
provider of customer-facing public access self-service systems. FWI's products
focus on the improvement of internet-based customer communication at the point
of sale in retail stores, point of service/information in public locations or
the Internet. Through July 31, 2002, FWI was a wholly-owned subsidiary of
Friendlyway AG ("FWAG"). Effective August 1, 2002, FWI's President, Alexander
von Welczeck, acquired a 70% interest in FWI from FWAG, pursuant to a Management
Buyout Agreement ("MBO") with FWAG. Following the MBO, FWAG retained a 30%
ownership interest in FWI.

      In March 2004, Henry Lo assumed full time responsibilities as Chief
Financial Officer. Mr. Lo, together with Mr. Welczeck, brought new investors to
the FWI to strengthen FWI's working capital to support its sales growth, and
took steps necessary to implement a new business strategy. This new business
strategy will seek to combine software, services and design around the
self-service solutions marketplace. In December 2004, FWI announced the launch
of Friendlyway Media, which will be primarily focused on FWI's software platform
and custom software design services. Together with Friendlyway Interactive
Systems and Friendlyway Event Services, these three business units form the
revenue model of FWI. Currently, FWI generates most of its revenue from the sale
and rental of its systems. FWI has a direct sales force in addition to a strong
network of Value Added Resellers for complex software integration projects. For
our rental business, FWI utilizes its unique Certified Rental Partner Network
for fulfilling short-term rental deployments for our customers. FWI outsources
its non-strategic tasks, including assembly and manufacturing, providing FWI
with tremendous leverage, resulting in increased turnover and scalability in a
cost-effective manner. FWI's products and services are offered domestically, in
Europe and in Asia.
<PAGE>

      During 2004, a number of significant steps were taken to prepare FWI for
the launch of this new plan, culminating with the reverse merger transaction
with BIOF. Among these steps taken were:

      o     Construction of the details of the new business plan around the
            Company's three core business units: Friendlyway Interactive
            Systems, Friendlyway Event Services and Friendlyway Media.
      o     Reduction of costs via direct materials sourcing and change in
            contract manufacturing partner.
      o     Engagement of key professional services providers: including legal
            and investment banking.
      o     Negotiating with new investment sources.
      o     Identifying and negotiating with key acquisition targets.

      This plan is now being implemented. The financial statements included in
this annual report are the historical financial statements of BIOF as a shell
corporation, but are not indicative of how management intends to operate the
Company.

      The Company's goal is to become a leading provider of self-service
solutions provider of customer-facing public access self-service systems. FWI's
customers include some of the most prestigious Fortune 500 companies including:
Bank of America, Boeing, Disney, Fidelity Investments, Marriott Hotels, Merck,
Microsoft, Nike, and Pfizer.

Item 2. Description of Property

      The principal office of the Company in the United States is currently
located at 1255 Battery Street, Suite 200, San Francisco, California 94111.


Item 3.   Legal Proceedings

      Neither the Company nor its property is subject to any legal proceedings.


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

      No matters were submitted to a vote of security holders during the
Company's fiscal fourth quarter.


                                     PART II

Item 5. Market for Common Equity and Related Stockholder Matters

      Market for Common Equity

      The Company's Common Stock is traded on the OTC Electronic Bulletin Board
under the symbol BIOF. The following table sets forth the reported high and low
bid and high and low asked quotations for the Company's Common Stock for the
period November 1, 2002, to October 31, 2004 as reported by OTC Bulletin Board.
Such quotations reflect inter-dealer prices, without retail mark-up, mark-down,
or commissions, and may not represent actual transactions.

<PAGE>

                             High Bid       Low Bid        High Ask     Low Ask

      2002
Oct 1 - Dec 31               1.26           0.55           1.30           0.57

       2003
Jan 1 - Mar 31               1.00           0.57           1.05           0.75
Apr 1 - Jun 30               1.20           0.69           1.25           0.75
Jul 1 - Sep 30               1.28           0.61           1.31           0.90
Oct 1 - Dec 31               2.10           1.01           2.25           1.09

       2004
Jan 1 - Mar 31               1.42           0.75           1.64           0.93
Apr 1 - Jun 30               0.93           0.75           1.10           0.83
Jul 1 - Sep 30               1.02           0.55           1.10           0.57
Oct 1 - Dec 31               1.10           0.53           1.12           0.59

      Shares Outstanding

      As of February 11, 2005 there were 23,681,095 shares of Common Stock
validly issued and outstanding. This number excludes 1,085,000 shares of Common
Stock issued pursuant to two improperly filed Form S-8 filings. These shares are
not deemed to be validly issued, fully paid and non-assessable because such
shares were not registered for public sale, were issued without consideration
and were not authorized for issuance by the Board of Directors. Under the terms
of the agreement pursuant to which it acquired the outstanding shares of FWI,
the Company is required to issue to FWI stockholders an additional 3 shares of
Common Stock for each share over 6,000,000 shares the Company had issued and
outstanding (or was otherwise obligated to issue) as of the closing of the
transaction. The Company intends to attempt to cancel the aforementioned
1,085,000 shares of Common Stock in the near future; however, it may not be able
to do so. If it is unable to do so, it will be required to issue additional
shares of Common Stock to FWI stockholders. There were a total of approximately
600 holders of record as of December 31, 2004. The Company believes, based upon
available information, that there are in excess of 1,000 beneficial owners of
the Company's Common Stock. No shares of the Company's authorized Preferred
Stock have ever been issued.

      Dividends

      The Company has not paid any cash dividends on its Common Stock in the
last two years and does not anticipate paying any cash dividends on its Common
Stock in the foreseeable future.
<PAGE>

Item 6. Management's Discussion and Analysis or Plan of Operation

      Prior to the Company's reverse merger transaction with FWI on December 10,
2004, the Company was fairly characterized as a non-operating "shell"
corporation. Therefore, the Company has not had any revenues from operation in
each of its last two fiscal years.

      Plan of Operation

      The Company has not had any business operations in the last two fiscal
years. Since the end of its 2004 fiscal year the Company acquired FWI. FWI
generates revenue from the sale and rental of its systems. For the twelve month
periods ended December 31, 2003 and 2002, FWI's total revenues were $1,637,012
and $1,160,922, respectively. In 2004, FWI strengthened its Balance Sheet by
raising approximately $600,000 to enhance its working capital as a result of
increases in inventory and accounts receivable associated with its sales growth.
The Company anticipates that it will need to raise additional funds during
fiscal 2005.

      Off-Balance Sheet Arrangements

      The Company does not have any off-balance sheet arrangements.

Item 7.  Financial Statements

      The Company's audited financial statements appear beginning on page F-1 of
this report.

Item 8.  Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosure

      None.

Item 8A.  Controls and Procedures

      Disclosure Controls and Procedures

      As of the end of the period reported in this report, an evaluation was
carried out, under the supervision of our management, including the Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures, pursuant to Rule
13a-15 of the Securities Exchange Act of 1934. Based upon that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were effective, in all material respects,
with respect to the recording, processing, summarizing and reporting of
information required to be disclosed by us in the reports that we file or submit
under the Exchange Act.

      Internal Control Over Financial Procedures

      There have been no significant changes in our internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of the evaluation described above.
<PAGE>

                                    PART III

Item 9. Directors and Executive Officers of the Registrant

      The executive officers, directors and key personnel of the Company and
their ages as of February 11, 2005 are as follows: Except for Mr. Von Welczeck,
Mr. Lo and Mr. Trox, who were appointed to their positions on December 10, 2004
in connection with the Company's reverse merger transaction with FWI, each of
the other four persons named below occupied the office set forth opposite
his/her name from November 15, 1996, until October 5, 1998, and resumed the
occupancy of such office on October 31, 1999. Additionally, Mr. Stith served as
the Company's President and Chief Executive Officer and Mr. Esrine served as the
Company's Chief Financial Officer from October 31, 1999 until December 10, 2004.

<TABLE>
<CAPTION>
<S>                                      <C>            <C>
Name                                     Age           Positions held with the Company

Alexander von Welczeck                   41            Chief Executive Officer, President and Director

Henry Lo                                 41            Chief Financial Officer and Director

Klaus Trox                               48            Director

David R. Stith                           75            Director

Herbert S. McDonald                      68            Director

Allan Esrine                             76            Director

Desiree L. Pierson                       42            Secretary
</TABLE>


      Biographies of the directors and executive officers of the Company are set
forth below. All directors hold office until the next annual stockholders
meeting and until their successors have been elected and qualified or until
their death, resignation, retirement, removal or disqualification. Vacancies in
the existing Board are filled by majority vote of the remaining directors.
Officers of the Company serve at the will of the Board of Directors.

      Alexander von Welczeck has approximately 18 years of sales, marketing and
business development experience with multi-national companies. Since 1998, Mr.
Welczeck has been the Chief Executive Officer and President of FWI. During 2002,
Mr. Welczeck orchestrated the management buyout of FWI from friendlyway AG.
Prior to joining FWI in 1998, Mr. Welczeck spent two years as Marketing Manager
at Thyssen GmbH in Stuttgart, Germany. Prior to his years at Thyssen, he spent
over ten years at Dover Elevators in various managerial positions in sale,
marketing and business development. During his tenure at Dover, Mr. Welczeck
played a key role in the acquisition of 11 companies in a rollup strategy.

      Henry Lo has approximately 18 years of finance and accounting experience
with publicly-traded and privately-held companies. Mr. Lo oversees all finance,
accounting and administrative activities and developments for the Company. In
addition, his responsibilities include the architecture of the reverse merger
transaction with the public shell and fundraising. Prior to joining FWI in 2004,
Mr. Lo founded and served as Chief Financial Officer of Planet-Intra Software, a
web-based portal software company, since its inception in 2000. During his
tenure at Planet-Intra, Mr. Lo raised over $10M from first-tier venture capital
firms and ultimately sold the Company in 2003. Prior to Planet-Intra, he was
Chief Financial Officer at Versata Software leading its Initial Public Offering
in March 2000. Prior to Versata Software, he spent six years in the disk drive
industry with two publicly-traded companies. He served as Treasurer and Director
of Investor Relations at StorMedia Incorporated which went through its Initial
Public Offering in 1995. Mr. Lo was also Chief Financial Officer at SyQuest
Technology and orchestrated its sale to Iomega Corporation. Prior experience
included various managerial positions at GE Capital and was a Senior Manager at
PriceWaterhouseCoopers. Additionally, he is a Certified Public Accountant, and
is a member of the AICPA and the California Society of CPAs.
<PAGE>

      Klaus Trox was one of the founders of Friendlyway. Currently, Mr. Trox
serves as Chief Executive Officer of Friendlyway AG. Prior to joining
friendlyway, Mr. Trox served in various senior management positions in
multinational engineering companies, including Kontron, an embedded computer
systems company, Micromedia Corporation and Boards Corporation.

      David R. Stith became Vice Chairman and a Director of the Company on
November 25, 1991. Mr. Stith founded Underwater Technics in 1967 and has served
as its Chairman and President since such date. Mr. Stith led the crew that
cleaned up the major oil spills from the tankers the "Elias," the "Mellon, and
the "Athos." Mr. Stith was also involved in underwater testing for the National
Aeronautics and Space Administration, and led the crew that dove for sunken
treasure on the Spanish Gallon "San Jose" which sank off Columbia in 1708.

      Herbert S. McDonald became a director of the Company on December 27, 1995.
Mr. McDonald has, since January 1993, been the President of The Fulcrum Group, a
management consulting firm specializing in the restructuring and
merger/acquisition of corporate clients. Prior thereto, Mr. McDonald was (since
August 1990) the President (CEO) and principal shareholder of European
Automotive Products, Inc., a major importer of imported cars specializing in
higher end German automotive parts. Prior thereto, Mr. McDonald was the
President (CEO) and principal shareholder of Fulcrum Investments, a firm making
investments in manufacturing, leasing, automobile dealerships and real estate.

      Allan Esrine became a director of the Company on November 15, 1996, as
well as Principal Financial Officer. Mr. Esrine has, for the past five years,
been involved in private financial activities in New York City, including the
management of several family businesses.

      Desiree L. Pierson became Secretary of the Company in January, 1996. Ms.
Pierson was an employee of the Company from 1991 until June 28, 1996. In her
capacity as Secretary, Ms. Pierson's duties include shareholder relations,
matters involving the Transfer Agent and corporate record keeping, and do not
include corporate decision making or substantive matters involving the Company.

      No director, officer or affiliate of the Company is an adverse party to
the Company or any of its subsidiaries in any material proceeding.

      The Company's Board of Directors does not have an audit committee and no
determination has been made as to whether any member of the Board of Directors
qualifies as an audit committee financial expert as defined in Item 401 of
Regulation S-B.
<PAGE>

      Compliance with Section 16(a) of the Act

      The Company and its directors and executive officers are in compliance
with the requirements of Section 16(a) of the Exchange Act.

      Code of Ethics

      The Company does not currently have a code of ethics applicable to its
principal executive and financial officers. Prior to the Friendlyway
transaction, the Company did not believe such a code was necessary as the
Company was not an operating company. The Board of Directors intends to consider
adopting such a code.

Item 10.   Executive Compensation

      None of the directors and officers of the Company has received any
remuneration of any kind (including reimbursement of expenses) during the period
November 1, 2003, through October 31, 2004. Desiree L. Pierson, Secretary, has
received the sum of $600 per month for services rendered to the Company on a
part-time basis. Alexander von Welczeck, Chief Executive Officer and President
of FWI received the sum of $5,000 per month for services rendered to FWI. Henry
Lo, Chief Financial Officer of FWI received the sum of $3,000 per month
beginning on July 1, 2004 for services rendered to FWI.

Item 11.   Security Ownership of Certain Beneficial Owners and Management and
           Related Stockholder Matters

      The following table sets forth certain information with regard to the
beneficial ownership of outstanding shares of Common Stock by (i) each person
known by the Company to own beneficially five (5%) percent or more of the
outstanding shares of the Company's Common Stock; (ii) each director and
executive officer individually; and (iii) all executive officers and directors
of the Company as a group:

<TABLE>
<CAPTION>
                                         Number of Shares of
Name and Address                         Common Stock                           Percentage (%) of
Of Beneficial Owner                      Beneficially Owned (1)                 Class Outstanding (2)
--------------------                     ----------------------                 ---------------------
<S>                                            <C>                                         <C>
Alexander von Welczeck                          8,659,999                                  36.57%
Klaus Trox                                      6,000,001                                  25.34
Henry Lo                                          900,000                                   3.80
David R. Stith                                     86,500                                   0.37
Herbert S. McDonald                                70,000                                   0.30
Allan Esrine                                      200,000                                   0.84

Directors and Officers                         15,916,500                                  67.21%
  as a Group (6 persons)
</TABLE>

<PAGE>

----------
(1)  Beneficial ownership as reported in the table above has been determined in
     accordance with Instruction (4) to Item 403 of Regulation S-B of the
     Securities Exchange Act.
(2)  Percentage of class based upon 23,681,095 shares of Common Stock
     outstanding on February 12, 2005. (3) Includes 6,000,001 shares held by
     friendlyway, AG of which Mr. Trox is Chief Executive Officer. Mr. Trox
     disclaims beneficial ownership of these shares.

Item 12.   Certain Relationships and Related Transactions

      None

Item 13.   Exhibits and Reports on Form 8-K

      (a) Exhibits

<TABLE>
<CAPTION>
             -------------- -----------------------------------------------------------------------------------------
<S>                                                       <C>
             2.1            Separation  Agreement  dated June 11, 2004  between  the  Registrant,  Ocwen  Corp.  and
                            Herbert McDonald, David R. Stith and Allan Esrine.
             -------------- -----------------------------------------------------------------------------------------
             2.2            Trust  Agreement  dated June 11, 2004 between the  Registrant,  Ocwen Corp.  and Herbert
                            McDonald, David R. Stith and Allan Esrine.
             -------------- -----------------------------------------------------------------------------------------
             2.3            Share Exchange Agreement dated August 13, 2004.
                            (Incorporated by reference to Exhibit 2.1 to
                            Registrants Report on Form 8-K filed on December 16,
                            2004.
             -------------- -----------------------------------------------------------------------------------------
             2.4            Closing Agreement dated December 10, 2004.  (Incorporated by reference to Exhibit 2.1 to
                            Registrants Report on Form 8-K filed on December 16, 2004.
             -------------- -----------------------------------------------------------------------------------------
             3.1            Amended and Restated Certificate of Incorporation of Registrant.
             -------------- -----------------------------------------------------------------------------------------
             3.2            Amended and Restated Bylaws of Registrant.  (Incorporated by reference to Exhibit 3.1 to
                            Registrants Report on Form 8-K filed on December 16, 2004.
             -------------- -----------------------------------------------------------------------------------------
             31.1           Certification of Chief Executive  Officer Pursuant to Section 302 of the  Sarbanes-Oxley
                            Act of 2002.
             -------------- -----------------------------------------------------------------------------------------
             31.2           Certification of Chief Financial  Officer Pursuant to Section 302 of the  Sarbanes-Oxley
                            Act of 2002.
             -------------- -----------------------------------------------------------------------------------------
             32.1           Certification of Chief  Executive  Officer  Pursuant  to Section 906 of the Sarbanes-Oxley
                            Act of 2002.
             -------------- -----------------------------------------------------------------------------------------
             32.2           Certification of Chief  Financial  Officer  Pursuant  to Section 906 of the Sarbanes-Oxley
                            Act of 2002.
             -------------- -----------------------------------------------------------------------------------------
</TABLE>

      (b) Reports on Form 8-K

      None.

Item 14.   Principal Accountant Fees and Services

      a) AUDIT FEES. The aggregate fees billed for each of the last two fiscal
      years for professional services rendered by the independent auditor for
      the audit of the Company's annual financial statements and review of
<PAGE>

      financial statements included in the Company's Form 10-QSB, or services
      that are normally provided by the accountant in connection with the
      statutory and regulatory filings or engagements for such two fiscal years,
      amounted to $38,150 ($20,500 and $17,650 for the fiscal years ended
      October 31, 2004 and 2003, respectively)

      b) AUDIT RELATED FEES. The aggregate fees billed in each of the last two
      fiscal years for assurance and related services by the independent auditor
      that are reasonably related to the performance of the audit or review of
      the Company's financial statements and are not reported under Item 9(e)(1)
      of Schedule 14A, amounted to $4,860 ($3,200 and $1,660 for the fiscal
      years ended October 31, 2004 and 2003, respectively) The nature of the
      services comprising the fees disclosed under this category included review
      of filings and reissuance of audit opinions related to the Company's
      restated financial statements for the years ended October 31, 2003 and
      2002, and interim period ended January 31, 2004.

      c) TAX FEES. There were no fees billed in either of the last two fiscal
      years for professional services rendered by the independent auditor for
      tax compliance, tax advice and tax planning.

      d) ALL OTHER FEES. There were no fees billed in each of the last two
      fiscal years for products and services provided by the independent auditor
      other than the services reported in the three preceding paragraphs.
<PAGE>

                                   SIGNATURES

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

                              BIOFARM, INC.


                              By:  /s/ Alexander von Welczeck
                                       --------------------------------------
                                       Alexander von Welczeck
                                       President and Chief Executive Officer,
                                       February 14, 2005

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

<TABLE>
<CAPTION>
Signatures                               Title                                  Date
----------                               -----                                  ----

<S>                                       <C>                                   <C>
/s/ David R. Stith                       Director                               February 14, 2005
    -----------------------
David R. Stith

/s/ Allan Esrine                         Director                               February 14, 2005
    -----------------------
Allan Esrine

/s/ Herbert S. McDonald                  Director                               February 14, 2005
    -----------------------
Herbert S. McDonald

/s/  Alexander von Welczeck              Chief Executive Officer, President     February 14, 2005
    -----------------------
     Alexander von Welczeck              and Director
                                         (Principal Executive Officer)

/s/  Henry Lo                            Chief Financial Officer and Director   February 14, 2005
     --------
     Henry Lo                            (Principal Financial Officer)

                                          Director
/s/  Klaus Trox                                                                 February 14, 2005
     ----------------------
     Klaus Trox
</TABLE>

<PAGE>
                                  Biofarm, Inc.

                            OCTOBER 31, 2004 AND 2003

                                TABLE OF CONTENTS

                                                                  Page

Report of Independent Registered Public Accounting Firm...........F-2

Consolidated Financial Statements

         Balance Sheets...........................................F-3

         Statements of Operations.................................F-4

         Statements of Changes in Stockholders' Equity............F-5

         Statements of Cash Flows.................................F-6

         Notes to Consolidated Financial Statements...............F-7 - F-11
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Stockholders and Board of Directors
Biofarm, Inc.

We have audited the accompanying consolidated balance sheets of Biofarm, Inc.
(the "Company") as of October 31, 2004 and 2003, and the related consolidated
statements of operations, stockholders' deficit and cash flows for the years
then ended. These financial statements are the responsibility of management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Biofarm, Inc. as of October 31, 2004 and 2003, and the consolidated results of
its operations and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.

As discussed in Note A to the consolidated financial statements, the Company
entered into a reverse merger transaction with friendlyway, Inc. on December 10,
2004. The reverse merger transaction will be accounted for as a recapitalization
of friendlyway, Inc., which is the accounting acquirer, effective on December
10, 2004.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note A to the
consolidated financial statements, the Company has limited working capital and
no recent operating activities. Additionally, friendlyway, Inc., a company with
which the Company entered into a reverse merger transaction on December 10,
2004, is an early stage entity with a limited operating history. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans regarding these matters also are described in
Note A. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

                                        /s/ ASHER & COMPANY, LTD.

Philadelphia, PA
February 12, 2005

                                      F-2
<PAGE>

                                  BIOFARM, INC.
                           CONSOLIDATED BALANCE SHEETS
                            OCTOBER 31, 2004 AND 2003

                                     ASSETS

<TABLE>
<CAPTION>
                                                                                      2004             2003
                                                                                   ------------    ------------
<S>                                                                                <C>             <C>
CURRENT ASSETS
Cash                                                                               $        243    $        393
                                                                                   ------------    ------------
Total current assets                                                                        243             393
                                                                                   ------------    ------------

Total Assets                                                                       $        243    $        393
                                                                                   ============    ============

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable                                                                   $    101,818    $     81,623
                                                                                   ------------    ------------
Total current liabilities                                                               101,818          81,623

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIT)

Preferred stock, $.001 par value; 5,000,000 Shares authorized, none issued
Common stock, $.001 par value; 25,000,000 shares authorized, 5,681,480 shares
issued and 5,681,095 shares outstanding at October 31, 2004 and 5,240,280 shares
issued and 5,239,895 shares
outstanding at October 31, 2003                                                           5,682           5,241
Additional paid-in capital                                                           17,187,107      17,158,771
Accumulated deficit                                                                 (17,288,777)    (16,994,568)
Stock subscriptions receivable                                                           (4,600)       (223,700)
Accrued interest on stock subscriptions receivable                                           --         (25,987)
                                                                                   ------------    ------------
                                                                                       (100,588)        (80,243)
Less treasury stock, at cost, 385 shares                                                   (987)           (987)
                                                                                   ------------    ------------
Total Stockholders' Equity (Deficit)                                                   (101,575)        (81,230)
                                                                                   ------------    ------------

Total Liabilities and Stockholders' Equity (Deficit)                               $        243    $        393
                                                                                   ============    ============
</TABLE>


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

                                       F-3
<PAGE>

                                  BIOFARM, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      YEARS ENDED OCTOBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                             2004          2003
                                                         -----------    -----------
<S>                                                      <C>            <C>
Expenses
General and administrative expenses                      $    82,817    $   113,885
Costs related to abandoned investments                        17,500         19,037
                                                         -----------    -----------
                                                             100,317        132,922

Extraordinary Loss: Transfer of assets and liabilities       193,892             --
                                                         -----------    -----------

NET LOSS                                                 $  (294,209)   $  (132,922)
                                                         ===========    ===========

Basic and diluted loss per common share
  Loss before extraordinary item                         $     (0.02)   $     (0.03)
  Extraordinary item                                           (0.03)            --
                                                         -----------    -----------
  Net loss                                               $     (0.05)   $     (0.03)
                                                         ===========    ===========
Weighted-average number of common shares
outstanding                                                5,554,609      5,122,969
                                                         ===========    ===========
</TABLE>

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

                                       F-4
<PAGE>

                                  BIOFARM, INC.
      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                      YEARS ENDED OCTOBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                       Shares
                                         of                        Additional
                                       Common       Common          Paid-In         Accumulated    Subscriptions
                                        Stock        Stock          Capital          Deficit       Receivable
                                     ------------   ------------   ------------    ------------    ------------
<S>                                    <C>         <C>            <C>             <C>             <C>
Balance, November 1, 2002               4,972,930   $      4,973   $ 17,148,597    $(16,861,646)   $   (364,900)

Issuance of common stock                  267,350            268           (268)             --              --

Payments collected on subscription
receivable from related party                  --             --             --              --         141,200

Interest accrued on subscriptions
   receivable                                  --             --         10,442              --              --

Net loss                                       --             --             --        (132,922)             --
                                     ------------   ------------   ------------    ------------    ------------

Balance, October 31, 2003               5,240,280          5,241     17,158,771     (16,994,568)       (223,700)

Issuance of common stock                  441,200            441           (441)             --              --

Payments collected on subscription
receivable from related party                  --             --             --              --          88,000

Interest accrued on subscriptions
   receivable                                  --             --          3,777              --              --

New subscription receivable                    --             --         25,000              --         (25,000)

Transfer to OCWEN                              --             --             --              --         156,100

Net loss                                       --             --             --        (294,209)             --
                                     ------------   ------------   ------------    ------------    ------------

Balance, October 31, 2004               5,681,480   $      5,682   $ 17,187,107    $(17,288,777)   $     (4,600)
                                     ============   ============   ============    ============    ============
<CAPTION>

                                       Accrued
                                     Interest on                    Total
                                    Subscriptions     Treasury     Stockholders'
                                     Receivable        Stock       Equity (Deficit)
                                     ------------    ------------    ------------
<S>                                 <C>             <C>             <C>
Balance, November 1, 2002            $    (15,545)   $       (987)   $    (89,508)

Issuance of common stock                       --              --              --

Payments collected on subscription
receivable from related party                  --              --         141,200

Interest accrued on subscriptions
   receivable                             (10,442)             --              --

Net loss                                       --              --        (132,922)
                                     ------------    ------------    ------------

Balance, October 31, 2003                 (25,987)           (987)        (81,230)

Issuance of common stock                       --              --              --

Payments collected on subscription
receivable from related party                  --              --          88,000

Interest accrued on subscriptions
   receivable                              (3,777)             --              --

New subscription receivable                    --              --              --

Transfer to OCWEN                          29,764              --         185,864

Net loss                                       --              --        (294,209)
                                     ------------    ------------    ------------

Balance, October 31, 2004            $         --    $       (987)   $   (101,575)
                                     ============    ============    ============
</TABLE>


   Theaccompanying notes are an integral part of these consolidated financial
                                   statements.

                                       F-5

<PAGE>

                                  BIOFARM, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      YEARS ENDED OCTOBER 31, 2004 AND 2003


                                                    2004            2003
                                                 -----------    -----------

OPERATING ACTIVITIES
Net loss                                         $  (294,209)   $  (132,922)
Adjustments to reconcile net loss to cash
utilized by operating activities:
Extraordinary loss on transfer to OCWEN              193,892
Write-off of investments                                  --            932
Changes in:
Accounts payable                                      12,167        (13,180)
                                                 -----------    -----------
Net cash utilized by operating activities            (88,150)      (145,170)

INVESTING ACTIVITIES
Advances for note receivable                              --         (1,000)
Repayments for note receivable                            --          5,000
                                                 -----------    -----------

Net cash provided by investing activities                 --          4,000

FINANCING ACTIVITIES
Payments received for subscriptions receivable        88,000        141,200
                                                 -----------    -----------

Net cash provided by financing activities             88,000        141,200
                                                 -----------    -----------

(DECREASE) INCREASE  IN CASH                            (150)            30

Cash, beginning of period                                393            363
                                                 -----------    -----------

Cash, end of period                              $       243    $       393
                                                 ===========    ===========


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

                                       F-6
<PAGE>

                                  BIOFARM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            OCTOBER 31, 2004 AND 2003

      NOTE A - ORGANIZATION AND OPERATIONS

      Organization

      Biofarm, Inc. (the "Company") was incorporated in June 1991 to acquire,
      operate and develop environmental contracting and consulting companies and
      related businesses. All operating companies were disposed of or sold in
      prior years. At October 31, 2004, the Company was a non-operating shell
      corporation.

      On December 10, 2004, the Company entered in a reverse merger transaction
      with friendlyway, Inc ("FWI"), a full-service solution provider of
      interactive customer communication systems and applications. As a result
      of this transaction, the stockholders of FWI became the controlling
      stockholders of the Company. This reverse merger transaction will be
      accounted for as a recapitalization of FWI, as FWI is the accounting
      acquirer, effective December 10, 2004.

      Operations

      The Company's consolidated financial statements have been prepared on a
      going concern basis, which contemplates the continuation of operations,
      realization of assets and liquidation of liabilities in the ordinary
      course of business, and do not reflect any adjustments that might result
      if the Company is unable to continue as a going concern. At October 31,
      2004, the Company has total assets of $243 and liabilities of $101,818.
      Although all of the Company's liabilities have been assumed by Ocwen
      effective June 11, 2004 (see Note H), the Company remains as the primarily
      responsible party for these liabilities. The Company has recorded a
      receivable from Ocwen related to its assumption of the Company's
      liabilities; however, a valuation reserve equal to the full amount of the
      receivable has also been recorded. The Company's recent operations have
      consisted of administrative costs to maintain the Company, and identifying
      potential investment and acquisition opportunities. As a result of the
      Company's reverse merger transaction with FWI on December 10, 2004, the
      Company became an operating company. FWI is an early stage company with a
      limited operating history (See Note C for pro forma financial information
      related to this reverse merger transaction). Management considers FWI to
      be a potential high growth company with the ability to raise capital to
      fund its expansion and working capital needs

      These factors indicate that there is substantial doubt about the Company's
      ability to continue as a going concern. The accompanying financial
      statements do not include any adjustments that might be necessary should
      the Company be unable to continue as a going concern.


                                      F - 7

<PAGE>

                                  BIOFARM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            OCTOBER 31, 2004 AND 2003


      NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Principles of consolidation

      The accompanying consolidated financial statements include the accounts of
      Biofarm, Inc. and its wholly owned subsidiaries after elimination of all
      intercompany balances and transactions.

      Use of estimates

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

      Income taxes

      Income taxes are  calculated  using the  liability  method  specified  by
      Statement of Financial  Accounting Standards ("SFAS") No. 109, "Accounting
      for Income Taxes."

      Loss per common share

      The Company reports basic and diluted earnings per share in accordance
      with SFAS No. 128, "Earnings Per Share" ("EPS"). There is no difference in
      basic and diluted EPS for the years ended October 31, 2004 and 2003 since
      there are no potentially dilutive securities outstanding for either period
      presented.

                                       F-8

<PAGE>


                                  BIOFARM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            OCTOBER 31, 2004 AND 2003


      NOTE C - PROFORMA FINANCIAL INFORMATION

      As discussed in Note A, on December 10, 2004, the Company entered into a
      reverse merger transaction with FWI pursuant to the terms of a Share
      Exchange Agreement between the two companies. This reverse merger
      transaction will be accounted for as a recapitalization of FWI.

      The following table summarizes the results of the Company on a pro forma
      basis, as if the reverse merger transaction with FWI had occurred at the
      beginning of each period. These results do not purport to represent what
      the results of operations for the Company actually would have been or to
      be indicative of the future results of operations of the Company.


                                                        (Unaudited)
                                             For the year ended October 31,
                                                 2004              2003
      Revenues                                 $ 2,251,344    $ 1,494,468
      Net loss                                 $  (613,263)   $  (731,568)
      Net loss per share - basic and diluted   $      (.03)   $      (.03)


      NOTE D - SUBSCRIPTIONS RECEIVABLE

      The Company has a stock subscription receivable of $4,600 and $223,700 at
      October 31, 2004 and October 31, 2003, respectively. The stock
      subscription receivable on October 31, 2003, along with related accrued
      interest receivable of $29,764, was distributed to Ocwen Corp. as
      described in Note H.

      NOTE E - INCOME TAXES

      The Company has deferred tax assets of approximately $4.4 million as of
      October 31, 2004, related to net operating loss carryforwards ("NOL"),
      which have not been utilized. As a result of the spin-off of certain of
      the Company's operating subsidiaries, the reverse merger transaction with
      FWI on December 10, 2004, and the issuance of additional shares of common
      stock, the amount of the NOL of approximately $12.6 million is limited.
      Additionally, the utilization of this NOL, if available, to reduce the
      future income taxes will depend upon the generation of sufficient taxable
      income prior to the expiration of the useable portion of the NOL.
      Therefore, at October 31, 2004 and October 31, 2003, the Company has
      established a 100% valuation allowance against the deferred tax assets as
      the likelihood of recognizing this benefit cannot be certain. The net
      operating losses are due to expire in various years through October 2020.

                                       F-9

<PAGE>


                                  BIOFARM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            OCTOBER 31, 2004 AND 2003

      NOTE F - ABANDONED INVESTMENTS

      The Company has previously entered into several contracts related to the
      proposed acquisitions of businesses. In connection with such contracts,
      the Company may have made cash advances to such businesses. Each of these
      investments (excluding friendlyway, Inc. Note K) has been abandoned and
      the contracts are terminated at October 31, 2004. Abandoned investments in
      2004 and 2003 resulted in charges to operations of $17,500 and $19,037,
      respectively.


      NOTE G - ISSUANCE OF COMMON SHARES

      The Company has issued the following shares of its authorized, unissued
      common stock in exchange for the collection of subscriptions receivable
      and $19,875 in payment of the amount previously advanced by the Company in
      connection with a third party subscription agreement. The par value of
      these shares was removed from additional paid-in capital and credited to
      common stock.
                                                     Subscription
                                    Issued           Amount
                                    Shares           Received
                                    ------           --------
         June 23, 2003              106,850          $53,400
         November 5, 2003           306,000           33,000
         October 5, 2004            135,200           67,600


      During the year ended October 31, 2004, the Company collected an
      additional $20,400 of stock subscriptions receivable for which no common
      stock has been issued, but for which the Company is obligated to issue
      40,800 shares of its common stock.

      Additionally, at October 31, 2004, the Company is contingently obligated
      to issue an additional 9,200 shares of its common stock pending collection
      of the remaining subscriptions receivable of $4,600.


                                      F-10

<PAGE>

                                  BIOFARM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            OCTOBER 31, 2004 AND 2003

      NOTE H - LITIGATION SETTLEMENT AND TRANSFER TO OCWEN

      Transfer to Ocwen

      On June 11, 2004, the Board of Directors of the Company adopted a
      resolution providing for the transfer of all of the Company's assets to
      Ocwen Corp. ("Ocwen" - a former wholly-owned subsidiary of Biofarm) and
      assumption of all of the Company's liabilities by Ocwen. Also on June 11,
      2004, the Company transferred its ownership of 100% of the outstanding
      stock of Ocwen to a trust for the benefit of the stockholders of Biofarm.
      This transfer from Biofarm of its assets to and assumption of its
      liabilities by Ocwen (i) enables Biofarm to effect the acquisition of an
      operating entity on a basis that gives the shareholders of the operating
      entity a preponderant interest in the Common Stock of Biofarm, (ii)
      removes Biofarm as a party defendant in the sole litigation matter to
      which it was a party defendant, and (iii) provides the shareholders of
      Biofarm with shares in another (Ocwen) company.

      As a result of the transfer of ownership in Ocwen to a trust, Ocwen is a
      private shell company. It is primarily through collection of its
      subscriptions receivable that Ocwen intends to fund the payment of
      liabilities assumed from Biofarm. As a result, the receivable recorded by
      the Company in connection with Ocwen's obligation to fund payment for the
      Company's liabilities is fully reserved at October 31, 2004.

      Litigation Settlement

      On July 22, 2004, the Company entered into an agreement of settlement with
      a party which had been seeking seeking recovery of approximately
      $3,000,000 that was paid by a foreign insurance company for an insurance
      settlement. As part of the settlement, which results in no costs to the
      Company, the Company agreed to transfer all of its assets and liabilities
      to Ocwen, as described above. Additionally, the agreement of settlement
      permitted the substitution of the Company by Ocwen as the named defendant.

                                      F-11