UNITED STATESSECURITIES
AND EXCHANGE COMMISSIONWashington,
D.C. 20549 FORM
10-K xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For
the fiscal year ended December 31, 2005 or oTRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For
transition period from _______ to
_______ Commission
file number: 000-27582 SPEEDUS CORP.
(Exact name of registrant as specified in its charter) Delaware
  (State or other jurisdiction of
  incorporation or organization)

13-3853788
  (I.R.S. Employer
  Identification Number)9
  Desbrosses Street, Suite 402, New York, NY(Address of
  Principal Executive Offices)

10013(Zip code) (888)
773-3669
(Registrants telephone number) Securities
registered pursuant to Section 12(b) of the Act: None Securities
registered pursuant to Section 12 (g) of the Act: Common Stock, par value $.01
per share Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o No x Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or
Section 15(d) of the Act. Yes o No x Indicate
by check mark whether the registrant (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 o Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of the registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. o Indicate
by check mark whether the registrant is an accelerated filer (as defined in
Rule 12b-2 of the Act).Yes o No x Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
o No x The
aggregate market value of the Registrants Common Stock held by non-affiliates
of the Registrant was $11,164,000 on June 30, 2005, based on the closing trade
price of the Common Stock on the NASDAQ Capital Market on that date. The
number of shares of Common Stock outstanding as of March 21, 2006 was
16,102,529. DOCUMENTS
INCORPORATED BY REFERENCE None    SPEEDUS CORP.TABLE OF
CONTENTS

PART IItem 1
BusinessItem 1A
Risk FactorsItem 1B
Unresolved Staff CommentsItem 2
PropertiesItem 3
Legal ProceedingsItem 4
Submission of Matters to a Vote of
  Security HoldersPART IIItem 5
Market for Registrants Common Equity,
  Related Stockholder Matters and Issuer Purchases of Equity SecuritiesItem 6
Selected Consolidated Financial
DataItem 7
Managements Discussion and Analysis
  of Financial Condition and Results of OperationsItem 7A
Quantitative and Qualitative
  Disclosures About Market RiskItem 8
Financial Statements and
  Supplementary DataItem 9
Changes in and Disagreements With
  Accountants on Accounting and Financial DisclosureItem 9A
Controls and ProceduresItem 9B
Other InformationPART IIIItem 10
Directors and Executive Officers of
  the RegistrantItem 11
Executive CompensationItem 12
Security Ownership of Certain
  Beneficial Owners and ManagementItem 13
Certain Relationships and Related
  TransactionsItem 14
Principal Accountant Fees and
  ServicesPART IVItem 15
Exhibits, Financial Statement
  SchedulesThis Form 10-K contains forward-looking
statements
within the meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934, as amended (the Exchange Act). These
statements appear in a number of places in this Form 10-K and include
statements regarding the intent, belief or current expectations of the Company
or its officers with respect to, among other things, the ability of the Company
to make capital expenditures, the ability to incur additional debt, as
necessary, to service and repay such debt, if any, as well as other factors
that may effect the Companys financial condition or results of operations.
Forward-looking statements may include, but are not limited to, projections of
revenues, income or losses, capital expenditures, plans for future operations,
financing needs or plans, compliance with covenants in loan agreements, plans
for liquidation or sale of assets or businesses, plans relating to products or
services of the Company, assessments of materiality, predictions of future
events, and the ability to obtain additional financing, including the Companys
ability to meet obligations as they become due, and other pending and possible
litigation, as well as assumptions relating to the foregoing. All statements in
this Form 10-K regarding industry prospects and the Companys financial
position are forward-looking statements. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date hereof. Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, it can give no assurance that
such expectations will prove to have been correct. The Company undertakes no
obligation to publicly release the result of any revisions to these
forward-looking statements that may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.

2

PART I

ITEM
1. BUSINESS

Business
Activities

Speedus
Corp. is a holding company that owns significant equity interests in diverse
businesses. We seek business opportunities across all industries for potential
transactions and relationships in which we can apply our current resources and
management strengths. The companies that we target, either public or privately
held, will be seeking growth or restructuring capital to pursue near term
business objectives in demonstrated markets. We will continue to pursue
opportunities involving our expertise in the medical device and wireless
markets as well as those areas involving our broadband assets as attractive
opportunities present themselves.

We
have co-invested with Siemens Corporate Research, Inc., a subsidiary of Siemens
Corporation, in Zargis Medical Corp. to develop advanced diagnostic decision
support products and services for primary care physicians, pediatricians,
cardiologists and other healthcare professionals. Zargis Acoustic Cardioscan
(ZAC), Zargis core product, is the first and only FDA-authorized
computer-assisted medical device designed to support physicians in analyzing
heart sounds for the identification of suspected murmurswhich are a potential
sign of heart disease. We own 90% of F&B Güdtfood Holding Corp., the
creator and operator of the original Eurocentric chic and quick café, which
is operating two stores in Manhattan. We own a portfolio of patents that allow
for high-speed wireless communications. We also own fixed wireless spectrum in
the New York City metropolitan area that we may commercialize in the future to
support high-speed, or broadband, Internet access service. For
additional information on each of our business segments, see the discussions
below and Notes to Consolidated Financial StatementsNote 9, Business Segment
Information.

Zargis
Medical Corp.In January 2001, we co-invested with Siemens Corporate Research, Inc., a subsidiary of
Siemens Corporation, in Zargis Medical Corp. to develop non-invasive, diagnostic
support solutions that automatically analyze acoustical data from a patient to
determine physiologically significant features useful in medical
diagnosis.  The development of Zargis
patented technology is a pioneering effort in medicine which uses advanced
signal processing algorithms deployed
on standard computer platforms.  The
first Zargis device, the Zargis Acoustic Cardioscan, received FDA authorization
in May 2004 and in September 2005. ZAC is currently being tested by a select
group of physicians to be used as part of general medical examinations and physicals
to detect suspected murmurs which could be a sign of valvular and congenital
heart disease. General medical
examinations, according to the National Center for Health Statistics, totaled
64 million in 2000 for the US alone.
Zargis is currently researching, and conducting trials on, additional
noninvasive diagnostic support tools that process acoustical data from the body
in order to provide an accurate and intelligible assessment of a patients
health. These assessments may be used by physicians and other healthcare
providers to assist in the early identification or monitoring of heart, lung,
vascular and other conditions and to provide better patient treatment.

We
have signed an exclusive contract with Zargis to provide transaction processing
to support Zargis medical products that will result in direct revenues
to us although these revenues will be eliminated on our consolidated financial
statements. Major next steps remaining
for Zargis include continuing marketing trials and clinical trials for new
applications of the Zargis technology and the formation of strategic
partnerships designed to support product commercialization.

In
February 2003, we acquired a controlling interest in Zargis Medical for an
additional investment of $1,250,000. In July 2003, we increased our ownership in
Zargis Medical to 68.9% by investing an additional $2,000,000. As of December
31, 2003 and February 1, 2004, our ownership increased to 70.5% and 71.2%,
respectively, as a result of certain milestones not having been met. In
September 2004, we increased our ownership in Zargis Medical to 72.7% by
investing an additional $500,000. At December 31, 2005, as a result of continued
advances aggregating $1,480,000 during 2005, our ownership interest increased to
approximately 78%.

F&B
Güdtfood. We own 90% of F&B Güdtfood, the creator and operator
of the original Eurocentric chic and quick café, which is
operating two stores in Manhattan. The acquisition price was $3,500,000 in May
2002. In February 2003, we reduced our cash investment in F&B Güdtfood
and received $1,775,000 while maintaining our original 51% interest. In December
2003, as a result of renegotiation, our interest increased to 80% without an
additional investment. As a result of certain milestones not having been met, in
2005 our interest increased to 90%. We expect that F&B Güdtfood will
begin selling F&B Güdtfood franchises through its wholly owned
subsidiary, F&B Güdtfood Franchise Corp. We have also entered into a
management services contract with F&B Güdtfood that will result in
direct revenues to us although these revenues will be eliminated on our
consolidated financial statements.

Broadband
Patents. Through our
wholly owned subsidiaries, Broadband Patents, LLC and CellularVision Technology
& Telecommunications, L.P., we have accumulated a portfolio of patents that
allow for high-speed wireless communication systems with greater information
content, reliability, clarity, or more efficient use of licensed spectrum as
compared to prior systems.  We have six
domestic patents with expiration dates ranging from 2007 through 2017, with
approximately 37 international counterparts in 21 countries. We also have 21
patents

3

pending in an additional 6
countries. Certain wireless communications systems may employ a number of
different combinations of our patented technology to maximize operational and
spectrum efficiency.  While we believe
that it would be difficult for such a wireless communications system to be
constructed without using one or more of our patented technologies, it is a
lengthy and expensive process to pursue licensing/patent infringement cases. We
are evaluating a strategy for the utilization of these patents in the future,
which may include pursuit of licensing or development of other strategic
opportunities with users of the underlying technology. We have licensed
technology in the past, both domestically and internationally, but are not
currently receiving any license fees.

Wibiki. 
During 2005, our technology resources and
experience in wireless broadband enabled us to conceive a new software-based wireless
network that leverages existing Wi-Fi infrastructures to reduce cost, complexity and risk
for users when accessing the Internet wirelessly. We named that network Wibiki. Wibiki
offers free beta software designed to improve access to free Wi-Fi, including streamlining
registration and security configuration of Wi-Fi clients and routers. Wibiki software for
laptops and routers can be downloaded from www.wibiki.com. Wibikis business model
will employ a user opt-in advertising service we call AdChooser to generate revenues
that keep Wibiki services free to users.

Local
Multipoint Distribution Service (LMDS) license.We have an FCC commercial operating license,
awarded to us in recognition of our efforts in developing and deploying LMDS
technology and for spearheading its regulatory approval at the FCC, which
covers 150 MHz of spectrum in the New York City area. The license has been
renewed as a standard LMDS license through February 1, 2006. Renewal of the license
has been applied for and is currently pending. Under FCC authorization, the
license includes an additional 150 MHz of spectrum until the first Ka band
satellite is launched, an event which is not currently determinable. The
license provides that the spectrum may be used for a wide variety of fixed
wireless purposes, including wireless local loop telephony, high-speed Internet
access and two-way teleconferencing.

We
will not commence a full marketing effort using our LMDS technology until new
LMDS equipment becomes commercially available with cost and performance that
allow implementation of an economically viable business model. We cannot
determine when this will occur and this equipment may never be available to us
on this basis.

Other.We have invested a
portion of our assets in a portfolio of marketable securities consisting of
publicly traded equity securities. We have in the past and may in the future
sell publicly traded equity securities we do not own in anticipation of declines
in the fair market values of these securities.

We
have generated operating losses and negative operating cash flows since our
inception and expect to continue to do so in the near future.

Competition

Many
of our present and potential competitors have longer operating histories and
significantly greater financial, technical, marketing and other resources than
we do and therefore may be able to respond more quickly than we can to new or
changing opportunities, technologies, standards and customer requirements.

Intellectual Property

To
protect our proprietary rights, we rely on a combination of copyright and
trademark laws, trade secrets, confidentiality agreements with employees and
third parties and protective contractual provisions. All of our employees have
executed confidentiality and nonuse agreements that transfer any rights they
may have in copyrightable works or patentable technologies to us.

We
have applied for registration of our service marks and trademarks in the United
States and in other countries.  We may
not be successful in obtaining the service marks and trademarks for which we
have applied. To the extent we consider it necessary, we may file patents to protect
our technology. Patents with respect to our technology may not be granted, and,
if granted, patents may be challenged or invalidated. In addition, issued
patents may not provide us with any competitive advantages and may be
challenged by third parties.

Despite
our efforts to protect our proprietary rights, unauthorized parties may copy
aspects of our products or services or obtain and use information that we
regard as proprietary. The laws of some foreign countries do not protect
proprietary rights to as great an extent as do the laws of the United States.
In addition, others could possibly independently develop substantially
equivalent intellectual property. If we do not effectively protect our
intellectual property, our business could suffer. Companies have frequently
resorted to litigation regarding intellectual property rights. We may have to
litigate to enforce our intellectual property rights, to protect our trade
secrets or to determine the validity and scope of other parties proprietary
rights.

Government
Regulation

In
general, we are not currently subject to direct federal, state or local
government regulation, other than regulations that apply to businesses
generally. However, the grant, renewal and administration of spectrum licenses
is regulated by the Federal Communications Commission.  Our local multipoint distribution service
license expired in February 2006 and our renewal application is pending with
the FCC. While the FCC has historically renewed

4

licenses as a matter of course, licenses in the local
multipoint
distribution service band are just now coming up for renewal. A failure by the
FCC to renew our license could have an adverse effect on the Company.

In
addition, medical devices such as ours are subject to strict regulation by
state and federal authorities, including the Food and Drug Administration and
comparable authorities in certain states.

5

ITEM
1A. RISK FACTORS

Risks related to our business
generally

Although we have been a public company
since February 1996, we have reoriented our business several times and our
current business has not generated any significant revenues to date.

At
the time of our initial public offering, our business was primarily a
subscription television service.  In
November 1998, we terminated the subscription television business and began a
limited pilot program for the delivery of high-speed Internet access.  We encountered technical difficulties in
this pilot program and reoriented our business on wireless data and other
services. We have not yet generated any significant revenue from these
businesses.

We have recorded operating losses in each
reporting period since our inception and may never be profitable.

We
have recorded operating losses and negative operating cash flows in all
reporting periods since inception and, at December 31, 2005, had an accumulated
deficit of approximately $63.9 million.
We believe that we have sufficient liquidity to finance our current
level of operations through the 2006 fiscal year.  However, we do not expect to have earnings from operations,
exclusive of non-cash charges, until such time as we substantially increase our
customer base and/or form a strategic alliance for use of our capabilities in
the future.

Our existing operations and infrastructure may not be
adequate to manage the growth necessary for successful implementation of our
business plan.

Successful
implementation of our business plan will require the management of growth.  Our existing operations and
infrastructure
may not be adequate to manage such growth, and any steps taken to improve such
systems and controls may not be sufficient. Our future success will depend in
part upon attracting and retaining the services of current management and
technical personnel.  We also may not be
successful in attracting, assimilating and retaining new personnel in the
future as future growth takes place.  We
do not maintain key person life insurance policies on any of our key
personnel.

Shant S. Hovnanian and Vahak S. Hovnanian,
who in the aggregate own approximately 41% of our Common Stock, may have the
power acting together to control the direction and future operations of our
company.

Shant
S. Hovnanian and Vahak S. Hovnanian in the aggregate own approximately 41% of
our outstanding Common Stock at February 15, 2006.  As a result, acting together they may have the power to elect
all
of the members of our Board of Directors, amend our certificate of
incorporation and by-laws and control the direction and future operations of our
Company, in each case without the approval of any of our other stockholders.

Our stock price has historically been volatile, which
may
make it more difficult for you to resell shares when you want at prices you
find attractive.

The
trading price of our Common Stock has been and may continue to be subject to
wide fluctuations.  During 2005, 2004
and 2003, the high and low sale prices of our Common Stock on the Nasdaq Stock
Market ranged from $2.92 to $1.06, $4.28 to $1.39 and $1.65 to $0.71, respectively.  The closing sale price of
our Common Stock
was $1.31 on March 21, 2006. Our stock price may fluctuate in response to a
number of events and factors, such as quarterly variations in operating
results, announcements of technological innovations or new products and media
properties by us or our competitors, the operating and stock price performance
of other companies that investors may deem comparable, and news reports
relating to trends in our markets.

On
several occasions through 2003, we were not in compliance with Marketplace Rule
4450(a)(5), which requires listed companies to maintain a closing bid price
equal to or greater than $1.00. Most recently, in June 2003, we received notice
from Nasdaq that we had regained compliance with Marketplace Rule 4450(a)(5)
and the matter was closed.

If
our Common Stock were delisted from Nasdaq, trading in our Common Stock would
have to be conducted on the OTC Bulletin Board or in the non-Nasdaq
over-the-counter market, also referred to as the pink sheets. If that were to
occur, liquidity for our Common Stock could be significantly decreased which
could reduce the trading price and increase the transaction costs of trading
shares of our Common Stock.

6

Sales of shares of Common Stock by Shant S. Hovnanian
and
Vahak S. Hovnanian could adversely affect the market price of the Common Stock.

Future
sales of shares of Common Stock, or the availability of shares of Common Stock
for future sale, may adversely impact the market price of the Common Stock
prevailing from time to time.  Sales of
substantial amounts of our Common Stock, or the perception that such sales
could occur, could adversely affect the prevailing market price of the Common
Stock.

Shares
of Common Stock held by Shant S. Hovnanian and Vahak S. Hovnanian have been
held by each of them for the requisite holding periods under Rule 144 under the
Securities Act and may be sold in accordance with volume restrictions.

Risks
related to certain short-term investments

Securities that we invest in are subject to
market price risks.

As
part of our overall investment strategy, we invest in publicly traded equity
securities. We purchase these securities in anticipation of increases in the
fair market values of the securities.

We
have in the past and may in the future sell publicly traded equity securities
that we do not own in anticipation of declines in the fair market values of the
securities. When we sell securities that we do not own, we must borrow the
securities we sold in order to deliver them and settle the trades. Thereafter,
we must buy the securities and deliver them to the lender of the securities.
Our potential for loss on these transactions is unlimited since the value of
the underlying security can keep increasing which could have a material adverse
effect on the Companys consolidated financial statements.

The Company is seeking to eliminate the risk that it
could
be deemed to be an investment company.

The
Company has substantial liquidity. Although a portion of the Companys cash is
invested in securities, the Company is pursuing an acquisition strategy that
will, if successfully executed, eliminate any risk of it being deemed to be an
investment company.

Generally,
a company must register under the Investment Company Act of 1940 and comply
with significant restrictions on operations and transactions with affiliates if
its investment securities exceed 40% of the companys total assets, or if it
holds itself out as being primarily engaged in the business of investing,
owning or holding securities. If it is deemed to be an investment company, it
might need to dispose of or acquire investments in order to avoid investment
company status.

Risks
related to investments in other companies

Ability
to successfully identify investment opportunities

We
will face substantial competition in identifying and closing appropriate
investment opportunities from, among others, venture capital firms, large
corporate investors and other publicly traded companies. These competitors may
limit our opportunity to acquire interests in new partner companies. In
addition, we may be unable to acquire interests in appropriate companies for
other reasons, including the inability to agree on terms, such as price and
ownership percentages, incompatibility between us and management and access to
sufficient funding. Our growth will be materially adversely affected if we
cannot successfully identify investments in a sufficient number of companies.

The value of our business may fluctuate because of
companies
that we may invest in.

The
value of our business may fluctuate because of companies that we may invest in.
These companies may be development stage or privately held companies for which
no public market exists for their stock. The valuations of our investments in
privately held companies that we may invest in are indeterminate prior to their
public offerings, and there can be no assurance that these offerings will occur
since they will be dependent upon the development of these businesses, market
conditions and other conditions over which we may have no control.

Capital and management resources

There
will be a number of special issues that we will have to address for investment
in start-up companies, including: the diversion of management attention in
connection with both negotiating and overseeing these transactions; the
potential issuance of additional shares of our Common Stock in connection with
these transactions, which could dilute the rights of existing shareholders, and
the need to incur additional debt in connection with these transactions. In
addition, many, if not all, of these start-up companies will face the same, or
similar, risks as we face in our own business.

7

Managing growth

Successful
implementation of our business plan will require the management of growth. We
cannot assure you that our existing operations and infrastructure will be
adequate to manage such growth, or that any steps taken to improve such systems
and controls will be sufficient. Our future success will depend in part upon
attracting and retaining the services of current management and technical
personnel. We cannot assure you that we will be successful in attracting,
assimilating and retaining new personnel in the future as future growth takes
place.

Risks related to medical device
companies

Risks related to government regulation and future
regulatory
requirements

Medical
devices such as ours are subject to strict regulation by state and federal
authorities, including the Food and Drug Administration and comparable
authorities in certain states.

Manufacturers
of medical devices are required to comply with very specific rules and
regulations concerning the testing, manufacturing, packaging, labeling and
marketing of medical devices. Failure to comply with applicable regulatory
requirements could result in, among other things, civil and criminal fines,
product recalls, detentions, seizures, injunctions and criminal prosecutions.

In
addition, these regulations are subject to future change. We cannot predict
what material impact, if any, these changes might have on our business. Future
changes in regulations or enforcement policies could impose more stringent requirements
on us, compliance with which could adversely affect our business.

Potential product recalls

In
the event that any of our products prove to be defective, we could voluntarily
recall, or the FDA could require us to redesign or implement a recall of, any
defective product. There is a possibility that we may recall products in the
future and that future recalls could result in significant costs to us and in
significant negative publicity which could harm our ability to market our
products in the future.

We could be exposed to significant liability
claims.

We
could be exposed to significant liability claims if we are unable to obtain
insurance at acceptable costs and adequate levels or otherwise protect
ourselves against potential product liability claims.

The
testing, manufacture, marketing and sale of medical devices involve the
inherent risk of liability claims. A successful product liability claim could
affect or prevent commercialization of our medical devices, or cause a
significant financial burden on us, or both, and could have a material adverse
effect on our business, financial condition, and ability to market our medical
devices.

Health care providers may not be able to obtain
adequate
levels of third-party reimbursement.

The
success of our product will depend to a significant extent on the ability of
health care providers to obtain adequate levels of third-party reimbursement.
The amount of reimbursement available may vary. The cost of medical care is funded,
in substantial part, by government insurance programs, such as Medicare and
Medicaid, and private and corporate health insurance plans. Third-party payers
may deny reimbursement at adequate levels if they determine that a prescribed
device or diagnostic procedure is not used in accordance with cost-effective
treatment methods as determined by the payer, or is experimental, unnecessary
or inappropriate. The inadequacy of the reimbursement would have a material
adverse effect on our business.

The medical device industry is characterized by rapid
technological changes and advances.

Although
the Company believes that its products are technologically current, the
development of new technologies or refinements of existing ones by the Companys
competitors could at any time make the Companys existing products
technologically or economically obsolete. Although the Company is not aware of
any pending technological developments that would be likely to materially and
adversely affect its business or financial position, there can be no assurance
that such developments will not occur at any time.

We may rely on third parties to support the
manufacture or
commercialization of our products.

We
may rely on third parties, and possibly single third parties, to manufacture or
commercialize our products. Third parties may not perform their obligations as
expected. The amount and timing of resources that third parties devote to
manufacturing or commercializing our product may not be within our control. The
third party on which we rely to commercialize our products may not be able to
recruit and retain skilled sales representatives.

8

Furthermore,
our interests may differ from those of the third party that manufacture or
commercializes our products. Disagreements that may arise with the third party
could limit the manufacture or commercialization of our products, or result in
litigation or arbitration, which would be time-consuming, distracting and
expensive. If the third party that supports the manufacture or
commercialization of our products breaches or terminates its agreement with us,
or fails to conduct its activities in a timely manner, such breach, termination
or failure could result in the disruption of our business and could have a material
adverse effect on our results of operations.

Risks
related to our high-speed Internet access service

We may be unable to solve ongoing technical
difficulties in our deployment and equipment for our high-speed Internet access
service is not, and may never be, available
at a cost and with performance levels that allow for commercial implementation
on an economically attractive basis.

Our
super high-speed Internet service utilizes a new technology that has a limited
operating history and that remains subject to further development and
refinement.

The
equipment necessary to provide our high-speed Internet access service is not
currently manufactured on a scale and at a cost suitable for the
commercialization of our service.  Such
equipment may never become available at a cost and with performance levels that
allow for commercial implementation on an economically attractive basis.

Many financially stronger competitors with
broader market coverage are offering high-speed Internet access.

The
market for Internet access and related services is highly competitive.  We expect local, regional and national
Internet service providers to be competitors for our super high-speed Internet
access service. Telephone companies with digital subscriber line technology,
which increases the effective capacity of existing copper telephone cables, are
among other competitors.  Also, cable
operators with high-speed cable modems are among the other communications
companies also providing high-speed Internet access.  Many of the competing Internet service providers have, or
can be
expected to have, greater financial, marketing and other resources than
us.  We may not be able to compete
successfully with these entities.

ITEM 1B. UNRESOLVED STAFF
COMMENTS

None.

ITEM 2. PROPERTIES

All
of our properties are leased space. Information on our major locations is
presented below:

Location

Use

Square
  footage

Lease
  expiration

Renewal
  optionsNew York, NY

Executive and administrative

2,500

2006

13 six-month renewalsNew York, NY

F&B restaurant

1,300

2009

NoneNew York, NY

F&B restaurant

1,500

2014

NoneNew York, NY

Other

3,000

2006

NonePrinceton, NJ

Administrative and research

2,500

2009

NoneStamford, CT

Administrative

850

2006

1 one-year renewalITEM
3. LEGAL PROCEEDINGS

The
Company is not currently involved in any material pending legal proceedings.

9

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

At
its Annual Meeting of shareholders held on November 17, 2005, the Company
submitted the following matters to a vote of its shareholders, all of which
were approved:

1.
Election of Directors:

Name of
  Director

Votes For

Votes WithheldShant S. Hovnanian

13,531,093

56,541Vahak S. Hovnanian

13,335,933

251,701William F. Leimkuhler

13,387,365

200,269Jeffrey Najarian

13,388,215

199,419Christopher Vizas

13,386,315

201,3192.
Appointment of PricewaterhouseCoopers LLP as the independent registered public
accounting firm of              the Company:

Votes For

Votes Against

Abstentions13,560,341

15,878

11,4153.
Approval of the Companys 2005 Stock Incentive Plan:

Votes For

Votes Against

Abstentions

No Vote7,316,491

571,284

36,400

5,663,45910

PART II

ITEM
5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

Our
Common Stock is listed for quotation on the Nasdaq Capital Market and trades
under the symbol SPDE. The following table sets forth high and low trade
prices for the Common Stock for the fiscal quarters indicated.

High Sale

Low Sale2005First quarter


$
2.920



$
2.000Second quarter



2.100




1.240Third quarter



1.750




1.060Fourth quarter



1.690




1.1102004First quarter


$
3.950



$
1.390Second quarter



4.280




1.830Third quarter



2.630




1.600Fourth quarter



3.800




1.710On
March 21, 2006, the closing trade price of our Common Stock was $1.31 per
share. As of December 31, 2005, there were approximately 300 registered
shareholders and, to the best of our belief, approximately 5,200 beneficial
owners of our Common Stock. During the year ended December 31, 2005, we did not
make any sales of securities that were not registered under the Securities Act
of 1933, as amended.

We
have never declared or paid any cash dividends on our Common Stock and do not
intend to declare or pay cash dividends on the Common Stock at any time in the
foreseeable future. Future earnings, if any, will be used for the expansion of
our business.

Issuer Purchases of Equity Securities

The
following table sets forth certain information regarding repurchases by the
Company of its own equity securities during the fourth quarter of 2005:

Period

(a) Total
  Number
  of Shares (or
  Units) Purchased

(b) Average
  Price
  Paid per Share (or
  Unit)

(c) Total
  number
  of Shares (or
  Units) Purchased
  as Part of Publicly
  Announced Plans
  or Programs

(d)
  Maximum
  number (or
  Approximate
  Dollar Value) of
  Shares (or Units)
  that May Yet Be
  Purchased Under
  the Plans or
  Programs (1)October 1,
2005
  -October 31, 2005


13,495


$
1.38


13,495

$
615,137November 1,
2005 -November 30, 2005


0

$



0

$
615,137December 1,
2005
  -December 31, 2005


0

$



0

$
615,137Total


13,495

$
1.38


13,495

$
615,137(1) On November 21, 2000, the Company announced that
  its Board of Directors had approved a stock repurchase program for the
  repurchase of up to $1,000,000 of Company stock through open market as well
  as privately negotiated transactions. Thereafter, the Board of Directors
  approved increases to the program in the aggregate amount of $5,500,000.11

Equity Compensation Plans

The
following table sets forth certain information as of December 31, 2005 for all
compensation plans, including individual compensation arrangements, under which
equity securities of the Company are authorized for issuance:

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 further issuanceEquity compensation plans approved by security
  holders


1,726,459

$
2.32


1,169,368Equity compensation plans not approved by security
  holdersTotal


1,726,459

$
2.32


1,169,36812

ITEM 6.
SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data below should
be read in and Analysis of Financial Condition and Results of Operations and
the Consolidated Financial Statements of conjunction withManagements
Discussion the Company and Notes thereto included elsewhere in this Form 10-K.

Year ended December 31,2005

2004

2003

2002

2001(in thousands, except per share
data)Statement
  of Operations DataRevenues

$
1,038

$
917

$
711

$
907

$
69Total
operating
  expenses


6,934


10,778


7,581


11,380


16,353Operating
loss


(5,896
)

(9,861
)

(6,870
)

(10,473
)

(16,284
)Net
interest/investment
  income/(loss)


(52
)

419


(4,520
)

(194
)

9,059Minority
  interest


159


508


779


80


Equity in
loss
  of associated company








(93
)

(521
)

(125
)Other
income














86Settlement
of
  litigation





15,000








Benefit
  from/(provision for) taxes


322


(62
)







Net
  earnings/(loss)

$
(5,467
)
$
6,004

$
(10,704
)
$
(11,108
)
$
(7,264
)Per
  Common ShareBasic
earnings/(loss)

$
(0.34
)
$
(0.37
)
$
(0.65
)
$
(0.62
)
$
(0.36
)Weighted
average
  outstanding


16,182,208


16,245,281


16,498,267


17,927,000


19,947,784Diluted
  earnings/(loss)

$
(0.34
)
$
(0.36
)
$
(0.65
)
$
(0.62
)
$
(0.36
)Weighted
average
  outstanding


16,182,208


16,799,298


16,498,267


17,927,000


19,947,784December 31,2005

2004

2003

2002

2001(in thousands)Balance
  Sheet DataCash and
cash
  equivalents

$
18,563

$
17,741

$
19,419

$
33,053

$
39,934United
States
  Treasury bills





5,977








Working
capital


18,635


23,329


17,774


29,544


37,528Net
property and
  equipment


426


610


420


820


5,828Net other
  intangible assets


623


1,418


2,042


1,651


1,799Net
goodwill








621


1,760


Total
assets


22,460


28,682


28,510


50,185


53,892Minority
  interest





159


531


1,592


Total
  liabilities


1,285


1,673


6,990


16,175


8,410Total
equity


21,176


26,850


20,989


32,418


45,482In
February 2003, the Company acquired a majority interest in Zargis Medical This
acquisition was accounted for using the purchase method of accounting and the
results of operations of Zargis Medical have been included in the consolidated
statements of operations for the periods subsequent to February 28, 2003.

In
May 2002, the Company acquired a 51% interest in F&B Güdtfood This
acquisition was accounted for using the purchase method of accounting and the
results of operations of F&B Güdtfood have been included in the
consolidated statements of operations for the periods subsequent to May 6,
2002.

For
additional information on these transactions, see Managements Discussion and
Analysis of Financial Condition and Results of Operations.

13

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Operations

Speedus
Corp. is a holding company that owns significant equity interests in diverse
businesses. We seek business opportunities across all industries for potential
transactions and relationships in which we can apply our current resources and
management strengths. The companies that we target, either public or privately
held, will be seeking growth or restructuring capital to pursue near term
business objectives in demonstrated markets. We will continue to pursue
opportunities involving our expertise in the medical device and wireless
markets as well as those areas involving our broadband assets as attractive
opportunities present themselves.

We have
co-invested with Siemens Corporate Research, Inc., a subsidiary of Siemens
Corporation, in Zargis Medical Corp. to develop advanced diagnostic decision
support products and services for primary care physicians, pediatricians,
cardiologists and other healthcare professionals. Zargis Acoustic Cardioscan
(ZAC), Zargis core product, is the first and only FDA-authorized
computer-assisted medical device designed to support physicians in analyzing
heart sounds for the identification of suspected murmurswhich are a potential
sign of heart disease. We own 90% of F&B Güdtfood Holding Corp., the
creator and operator of the original Eurocentric chic and quick café, which
is operating two stores in Manhattan. We own a portfolio of patents that allow
for high-speed wireless communications. We also own fixed wireless spectrum in
the New York City metropolitan area that we may commercialize in the future to
support high-speed, or broadband, Internet access service. For
additional information on each of our business segments, see the discussions
below and Notes to Consolidated Financial StatementsNote 9, Business Segment
Information.

Zargis Medical Corp.In January 2001, we co-invested with Siemens Corporate
Research, Inc., a subsidiary of Siemens Corporation, in Zargis Medical Corp. to
develop non-invasive, diagnostic support solutions that automatically analyze
acoustical data from a patient to determine physiologically significant
features useful in medical diagnosis. The development of Zargis patented
technology is a pioneering effort in medicine which uses advanced signal
processing algorithms deployed
on standard computer platforms.The first Zargis device, the Zargis Acoustic
Cardioscan (ZAC), received FDA authorization in May 2004 and in September 2005.
ZAC is currently being tested by a select group of physicians to be used as
part of general medical examinations and physicals to detect suspected
murmurs which could be a sign of valvular and congenital heart disease. General medical examinations,
according to the National Center for Health Statistics, totaled 64 million in
2000 for the US alone. Zargis is currently researching, and conducting trials
on, additional noninvasive diagnostic support tools that process acoustical
data from the body in order to provide an accurate and intelligible assessment
of a patients health. These assessments may be used by physicians and other
healthcare providers to assist in the early identification or monitoring of
heart, lung, vascular and other conditions and to provide better patient
treatment.

We
have signed an exclusive contract with Zargis to provide transaction processing
to support Zargis medical products that will result in direct
revenues to us although these revenues will be eliminated on our consolidated
financial statements. Major next steps
remaining for Zargis include continuing market trials and clinical trials for
new applications of the Zargis technology and the formation of strategic
partnerships designed to support product commercialization.

In
February 2003, we acquired a controlling interest in Zargis Medical for an
additional investment of $1,250,000. In July 2003, we increased our ownership
in Zargis Medical to 68.9% by investing an additional $2,000,000. As of
December 31, 2003 and February 1, 2004, our ownership increased to 70.5% and
71.2%, respectively, as a result of certain milestones not having been met. In
September 2004, we increased our ownership in Zargis Medical to 72.7% by
investing an additional $500,000. At December 31, 2005, as a result of
continued advances aggregating $1,480,000 during 2005, our ownership interest increased to
approximately 78%.

F&B
Güdtfood.We
own 90% of F&B Güdtfood, the creator and operator of the original
Eurocentric chic and quick café, which is operating two stores in Manhattan.
The acquisition price was $3,500,000 in May 2002. In February 2003, we reduced
our cash investment in F&B Güdtfood and received $1,775,000 while
maintaining our original 51% interest. In December 2003, as a result of
renegotiation, our interest increased to 80% without an additional investment.
As a result of certain milestones not having been met, in 2005 our interest
increased to 90%. We expect that F&B Güdtfood will begin selling
F&B Güdtfood franchises through its wholly owned subsidiary, F&B
Güdtfood Franchise Corp. We have also entered into a management services
contract with F&B Güdtfood that will result in direct revenues to us
although these revenues will be eliminated on our consolidated financial
statements.

Wibiki.
During 2005, our technology resources and
experience in wireless broadband enabled us to conceive a new software-based wireless
network that leverages existing Wi-Fi infrastructures to reduce cost, complexity and risk
for users when accessing the Internet wirelessly. We named that network Wibiki. Wibiki
offers free beta software designed to improve access to free Wi-Fi, including streamlining
registration and security configuration of Wi-Fi clients and routers. Wibiki software for
laptops and routers can be downloaded from www.wibiki.com. Wibikis business model
will employ a user opt-in advertising service we call AdChooser to generate revenues
that keep Wibiki services free to users.

Broadband
Patents.Through
our wholly owned subsidiaries, Broadband Patents, LLC and CellularVision
Technology & Telecommunications, L.P., we have accumulated a portfolio of
patents that allow for high-speed

14

wireless communication systems with greater information content,
reliability, clarity, or more efficient use of licensed spectrum as compared to
prior systems. We have six domestic patents with expiration dates ranging from
2007 through 2017, with approximately 38 international counterparts in 22
countries. We also
have 20 patents pending in an additional 5 countries. Certain wireless communications systems may
employ a number of different combinations of our patented technology to
maximize operational and spectrum efficiency. While we believe that it would be
difficult for such a wireless communications system to be constructed without
using one or more of our patented technologies, it is a lengthy and expensive
process to pursue licensing/patent infringement cases. We are evaluating a
strategy for the utilization of these patents in the future, which may include
pursuit of licensing or development of other strategic opportunities with users
of the underlying technology. We have licensed technology in the past, both
domestically and internationally, but are not currently receiving any license
fees.

Local Multipoint Distribution Service (LMDS)
license. We have an FCC commercial operating
license, awarded to us in recognition of our efforts in developing and
deploying LMDS technology and for spearheading its regulatory approval at the
FCC, which covers 150 MHz of spectrum in the New York City area. The license
has been renewed as a standard LMDS license through February 1, 2006. Renewal
of the license has been applied for and is currently pending. Under FCC
authorization, the license includes an additional 150 MHz of spectrum until the
first Ka band satellite is launched, an event which is not currently
determinable. The license provides that the spectrum may be used for a wide
variety of fixed wireless purposes, including wireless local loop telephony,
high-speed Internet access and two-way teleconferencing.

We will
not commence a full marketing effort using our LMDS technology until new LMDS
equipment becomes commercially available with cost and performance that allow
implementation of an economically viable business model. We cannot determine
when this will occur and this equipment may never be available to us on this
basis.

Other.We have
invested a portion of our assets in a portfolio of marketable securities
consisting of publicly traded equity securities. We have in the past and may in
the future sell publicly traded equity securities we do not own in anticipation
of declines in the fair market values of these securities.

We
have generated operating losses and negative operating cash flows since our
inception and expect to continue to do so in the near future.

Critical Accounting
Policies

Our
discussion and analysis of our financial condition and results of operations
are based upon our consolidated financial statements. The preparation of those
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the dates of the financial statements and the
reported amounts of operating revenues and expenses during the reporting
periods. Actual results could differ from those estimates. For a description of
all of our accounting policies, see Note 2 to our consolidated financial
statements included in this Form 10-K. However, we believe the following
critical accounting policies affect the more significant judgments and
estimates used in the preparation of our consolidated financial statements.

Financial instruments. Our financial instruments
consist primarily of cash equivalents, United States Treasury bills, marketable
securities and securities sold and not purchased. The carrying value of cash
equivalents and United States treasury bills approximates market value since
these highly liquid, interest earning investments are invested in money market
funds and short term government securities, respectively. Marketable securities
consist of publicly traded equity securities classified as trading securities
and are recorded at fair market value, i.e., closing prices quoted on
established securities markets. Securities sold and not repurchased are also
carried at the fair market value of the securities. Significant changes in the
market value of securities that we invest in could have a material impact on
our financial position and results of operations.

We
have also invested in equity and debt instruments of non-publicly held
companies and account for them under the cost method since we do not have the
ability to exercise significant influence over operations. We monitor these
investments for other than temporary impairment by considering current factors
including economic environment, market conditions, operational performance and
other specific factors relating to the business underlying the investment, and
record reductions in carrying values when necessary.

Long-lived assets. Long-lived assets, including fixed
assets, goodwill and other intangibles, are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of any
such asset may not be recoverable through estimated future cash flows from that
asset. The estimate of cash flow is based upon, among other things, certain
assumptions about expected future operating performance. Specifically, we own
broadband assets, included in intangible assets, which had a carrying value of
$0.4 million at December 31, 2005 and currently do not generate significant
revenues or cash flows. However, as of December 31, 2005, we estimated that,
based upon our review of historical transactions and other factors, the fair
value of certain patents that have no

15

carrying value
on our books would generate sufficient cash to fully realize our assets
described above as of December 31, 2005. These estimates may differ from actual
results due to, among other things, technological changes, economic conditions,
changes to our business model or changes in our operating performance.

Contingencies. We account for contingencies in
accordance with Statement of Financial Accounting Standards No. 5, Accounting
for Contingencies. SFAS No. 5 requires that we record an estimated loss when
information available prior to issuance of our financial statements indicates
that it is probable that an asset has been impaired or a liability has been
incurred at the date of the financial statements and the amount of the loss can
be reasonably estimated. Accounting for contingencies such as environmental,
legal and income tax matters requires us to use our judgment. While we believe
that our accruals for these matters are adequate, if the actual loss is
significantly different than the estimated loss, our results of operations will
be affected in the period that the difference is known.

Twelve Months Ended December 31, 2005
Compared to Twelve Months Ended December 31, 2004

Revenues increased $121,000 from $917,000 for the
twelve months ended December 31, 2004 to $1,038,000 for the twelve months ended
December 31, 2005. This increase is primarily a result of the opening of a
second F&B Güdtfood store during the second quarter of 2004. Revenues
generated by the second store were $430,000 and $279,000 for 2005 and 2004,
respectively. The 2005 increase is net of a decrease in revenues in the amount
of $39,000, generated by the first store in 2005 as a result of a reduction in
menu prices and unfavorable weather conditions that decreased store traffic.

Selling, general and administrative expenses decreased $463,000 from $4,314,000
for the twelve months ended December 31, 2004 to $3,851,000 for the twelve
months ended December 31, 2005. This decrease is primarily a result of
decreases in compensation and employee related expenses as a result of staff
reductions. This decrease is net of an increase as a result of the opening of a
second F&B Güdtfood store during the second quarter of 2004.

Research
and development expenses increased $281,000 from $1,516,000 for the twelve
months ended December 31, 2004 to $1,797,000 for the twelve months ended
December 31, 2005. This increase is primarily a result of new wireless
initiatives by the Company. This decrease is net of decreases in compensation
and employee related expenses as a result of staff reductions.

Depreciation
and amortization decreased $176,000 from $1,117,000 for the twelve months ended
December 31, 2004 to $941,000 for the twelve months ended December 31, 2005.
This decrease, net of an increase in the amount of $34,000 during 2005 compared
to 2004 for amortization of medical technology resulting from the Zargis
acquisition, is a result of assets becoming fully depreciated.

Cost
of sales increased $63,000 from $282,000 for the twelve months ended December
31, 2004 to $345,000 for the twelve months ended December 31, 2005. This
increase is primarily a result of the opening of a second F&B Güdtfood
store during the second quarter of 2004.

During
the twelve months ended December 31, 2004, the Company incurred $2,929,000 in
expenses in connection with a technology settlement in the amount of
$15,000,000. No such expenses were incurred in 2005. In connection with the settlement and as provided under the terms of his
2002 employment agreement, Shant S. Hovnanian, Chairman of the Board and Chief
Executive Officer of the Company, received a contingent participation in the
proceeds of the settlement in the amount of approximately $2.8 million during
the twelve months ended December 31, 2004.

During
the twelve months ended December 31, 2004, the Company recorded an impairment
charge in the amount of $621,000 in connection with goodwill recorded in
connection with the F&B Güdtfood acquisition. No such charge was recorded
in 2005.

  Investment
    income decreased $471,000 from a net gain in the amount of $419,000 for the
    twelve months ended December 31, 2004 to a net loss in the amount of $52,000
    for the twelve months ended December 31, 2005. This increase is primarily
    a result of realized and unrealized gains and losses. Realized losses decreased
    $177,000 from net losses of $352,000 for the twelve months ended December
    31, 2004 to net losses of $175,000 for the twelve months ended December 31,
    2005. Unrealized gains decreased $754,000 from net gains of $287,000 for the
    twelve months ended December 31, 2004 to net losses of $467,000 for the twelve
    months ended December 31, 2005. Interest income increased $307,000 from $283,000
    for the twelve months ended December 31, 2004 to $590,000 for the twelve months
    ended December 31, 2005. $81,000 of this increase is a result of interest
    received as a result of a tax refund from the filing of amended tax returns.
    The balance of the increase, net of a decrease as a result of a lesser amount
    of funds available for short-term investment, is a result of increased interest
    rates. These amounts will fluctuate based upon changes in the market value
    of the underlying investments, overall market conditions and the

16


  amount of funds available for short-term investment and are
  not necessarily indicative of the results that may be expected for any future
  periods.

  Minority
interest decreased $349,000 from $508,000 for the twelve months ended December
31, 2004 to $159,000 for the twelve months ended December 31, 2005. These
amounts represent the interest of minority stockholders in the losses of
F&B Güdtfood and Zargis Medical since the dates of acquisition of a
majority interest. During
2005, F&B Güdtfood and Zargis Medical continued to generate losses which reduced
the minority interest balance to zero.  As result, the Company is consolidating 100%
of the losses for these entities and continues to fund their operations with intercompany
loans or additional investment, which are eliminated in consolidation.

During
the twelve months ended December 31, 2004, the Company recorded a gain from
technology settlement in the amount of $15,000,000. No such gain was recorded
in 2005.

During
the twelve months ended December 31, 2005, the Company recorded a benefit from
taxes in the amount of $322,000 as a result of a tax refund from the filing of
amended tax returns.

Twelve Months Ended December 31, 2004
Compared to Twelve Months Ended December 31, 2003

Revenues
increased $206,000 from $711,000 for the twelve months ended December 31, 2003
to $917,000 for the twelve months ended December 31, 2004. This increase is
primarily a result of the opening of a second F&B Güdtfood store during the
second quarter of 2004. Revenues generated by the second store were $279,000
for 2004. This increase is net of a decrease in revenues in the amount of
$72,000, generated by the first store in 2004 as a result of unfavorable
weather conditions, decreasing store traffic.

Selling,
general and administrative expenses decreased $181,000 from $4,495,000 for the
twelve months ended December 31, 2003 to $4,314,000 for the twelve months ended
December 31, 2004. This decrease is primarily a result of decreases in
compensation and employee related expenses as a result of staff reductions by
Speedus. This decrease is net of an increase as a result of the opening of a
second F&B Güdtfood store during the second quarter of 2004.

During
the twelve months ended December 31, 2004, the Company incurred $2,929,000 in
expenses in connection with a technology settlement in the amount of
$15,000,000. In connection with the
settlement and as provided under the terms of his 2002 employment agreement,
Shant S. Hovnanian, Chairman of the Board and Chief Executive Officer of the
Company, received a contingent participation in the proceeds of the settlement
in the amount of approximately $2.8 million during the twelve months ended
December 31, 2004.

Research
and development expenses decreased $189,000 from $1,705,000 for the twelve
months ended December 31, 2003 to $1,516,000 for the twelve months ended
December 31, 2004. These decreases are primarily a result of decreases in
compensation and employee related expenses as a result of staff reductions by
Speedus.

Depreciation
and amortization decreased $42,000 from $1,159,000 for the twelve months ended
December 31, 2003 to $1,117,000 for the twelve months ended December 31, 2004.
This decrease, net of an increase in the amount of $128,000 during 2004
compared to 2003 for amortization of medical technology resulting from the
Zargis acquisition, is a result of assets becoming fully depreciated.

During
the twelve months ended December 31, 2004, the Company recorded an impairment
charge in the amount of $621,000 in connection with goodwill recorded in
connection with the F&B Güdtfood acquisition. No such charge was recorded
in 2003.

Cost
of sales increased $59,000 from $223,000 for the twelve months ended December
31, 2003 to $282,000 for the twelve months ended December 31, 2004. This
increase is primarily a result of the opening of a second F&B Güdtfood
store during the second quarter of 2004.

During
the twelve months ended December 31, 2004, the Company recorded a gain from
technology settlement in the amount of $15,000,000. No such gain was recorded
in 2003.

Investment
income increased $4,939,000 from a net loss in the amount of $4,520,000 for the
twelve months ended December 31, 2003 to a net gain in the amount of $419,000
for the twelve months ended December 31, 2004. This increase is primarily a
result of realized and unrealized gains and losses. Realized losses decreased
$6,316,000 from net losses of $6,668,000 for the twelve months ended December
31, 2003 to net losses of $352,000 for the twelve months ended December 31,
2004. Unrealized gains increased $394,000 from net losses of $107,000 for the
twelve months ended December 31, 2003 to net gains of $287,000 for the twelve
months ended December 31, 2004. Investment gains or losses will fluctuate based
upon changes in the market value of the underlying investments and are not
necessarily indicative of the results that may be expected for any future
periods.

Equity
in loss of associated company amounted to $93,000 for the twelve months ended
December 31, 2003. This amount reflects the Companys share in Zargis Medicals
operations, accounted for under the equity method, through February 27, 2003.
Zargis Medical is included in the consolidated financial statements of the
Company since February 28, 2003, the date of acquisition of a majority
interest. As a result, no amounts were recorded for the twelve months ended
December 31, 2004.

  

17


  Minority
    interest decreased $271,000 from $779,000 for the twelve months ended December
    31, 2003 to $508,000 for the twelve months ended December 31, 2004. These
    amounts represent the interest of minority stockholders in the losses of F&B
    Güdtfood and Zargis Medical since the dates of acquisition of a majority
    interest.
  During
the twelve months ended December 31, 2004, the Company recorded a provision for
taxes in the amount of $62,000.

Liquidity and Capital Resources

The
Company has recorded operating losses and negative operating cash flows in each
year of its operations since inception.

Net
cash used in operating activities was $5,070,000 for the year ended
December 31, 2005 compared to net cash provided by operating activities of
$6,570,000 for the year ended December 31, 2004. This net increase of
$11,640,000 in cash used in operating activities was primarily the result of a
gain from technology settlement in the amount of $15 million recognized during
the year ended December 31, 2004, reduced by $2,929,000 in technology
settlement expenses. In February 2004, the Companys wholly-owned subsidiary,
CellularVision Technology & Telecommunications, L.P., received $15,000,000
from a former international licensee in settlement of litigation that CT&T
instituted in May 2001. In connection
with the settlement and as provided under the terms of his 2002 employment
agreement, Shant S. Hovnanian, Chairman of the Board and Chief Executive
Officer of the Company, received a contingent participation in the proceeds of
the settlement in the amount of approximately $2,929,000 during the year ended
December 31, 2004.

Net
cash provided by investing activities was $6,115,000 for the year ended
December 31, 2005 compared to net cash used in investing activities of
$8,070,000 for the year ended December 31, 2004. This net increase of
$14,185,000 in cash provided by investing activities is primarily the result of
the net maturity of United States Treasury bills and a $1,057,000 decrease in
the purchase of other investments reduced by $498,000 in property and equipment
additions primarily as a result of the opening of a second F&B Güdtfood
store.

Net
cash used in financing activities was $223,000 for the year ended
December 31, 2004 compared to net cash used in financing activities of
$178,000 for the year ended December 31, 2004. This net increase of
$45,000 in cash used in financing activities was substantially the result of decreased
repurchases of treasury stock during 2005, net of an increase in proceeds from
the exercise of options or warrants.

At
December 31, 2005, the Companys future minimum lease payments due under
noncancelable leases aggregated $1,731,000. $376,000, $276,000, $284,000,
$233,000 and $138,000 of this amount is due during the years ending December
31, 2006, 2007, 2008, 2009 and 2010, respectively, and the balance is payable
thereafter. In addition, in connection with a license agreement to which the
Company is a party, a termination payment will be payable by the Company in the
amount of $500,000, $300,000 or $200,000 if the license agreement is terminated
by the Company before September 2007, September 2009 or September 2011,
respectively.

The
Company believes that it has sufficient liquidity to finance its current level
of operations and expected capital requirements through the 2006 fiscal year.
However, the Company does not expect to have earnings from operations until
such time as it substantially increases its customer base and/or forms a
strategic alliance for use of its capabilities in the future. We cannot predict
when this will occur. We have no material non-cancelable commitments and the
amount of future capital funding requirements will depend on a number of
factors that we cannot quantify, including the success of our business, the
extent to which we expand our high-speed Internet service if suitable equipment
becomes available and the types of services we offer, as well as other factors
that are not within our control, including competitive conditions, government
regulatory developments and capital costs. The lack of additional capital in
the future could have a material adverse effect on the Companys financial
condition, operating results and prospects for growth.

We
have invested a portion of our assets in a portfolio of marketable securities
consisting of publicly traded equity securities. We purchase these securities
in anticipation of increases in the fair market values of the securities. We
have in the past and may in the future sell publicly traded equity securities
we do not own in anticipation of declines in the fair market values of these
securities. When we sell securities that we do not own, we must borrow the securities
we sold in order to deliver them and settle the trades. Thereafter, we must buy
the securities and deliver them to the lender of the securities. Our potential
for loss on these transactions is unlimited since the value of the underlying
security can keep increasing.

Off-Balance Sheet Arrangements

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

  

18

Recent Accounting Pronouncements
  In
    December 2004, the Financial Accounting Standards Board issued Statement
    of Financial Accounting Standard No. 123 (revised 2004), Share-Based
    Payment which replaces SFAS No. 123 and supercedes APB Opinion
    No. 25. SFAS 123R requires all share-based payments to employees, including
    grants of employee stock options, to be recognized in the financial statements
    based on their fair values beginning with the first annual period after June 15,
    2005, with early adoption encouraged. The pro forma disclosures previously
    permitted under SFAS123 no longer will be an alternative
    to financial statement recognition. The Company is required to adopt SFAS
    No. 123R beginning January 1, 2006. Under SFAS No. 123R, the Company
    must determine the appropriate fair value model to be used for valuing share-based
    payments, the amortization method for compensation cost and the transition
    method to be used at date of adoption. The transition methods include modified
    prospective and modified retrospective adoption options, using the previously
    disclosed pro forma data. Under the modified retrospective option, prior periods
    may be restated either as of the beginning of the year of adoption or for
    all periods presented. The modified prospective method requires that compensation
    expense be recorded for all unvested stock options and restricted stock at
    the beginning of the first period of adoption of SFAS No. 123R, while
    the modified retrospective methods would record compensation expense for all
    unvested stock options and restricted stock beginning with the first period
    restated. The Company is evaluating the requirements of SFAS No. 123R
    and expects that the adoption of SFAS No. 123R could have a material impact
    on the Companys financial statements.

In
March 2005, the FASB issued Interpretation No. 47 Accounting for Conditional
Asset Retirement Obligations, an interpretation of FASB Statement No. 143. FIN
No. 47 clarifies that a conditional asset retirement obligation, as used in
SFAS No. 143, Accounting for Asset Retirement Obligations, refers to a legal
obligation to perform an asset retirement activity in which the timing and/or
method of the settlement are conditional on a future event that may or may not
be within the control of the entity. Accordingly, an entity is required to
recognize a liability for the fair value of a conditional asset retirement obligation
if the fair value can be reasonably estimated. FIN No. 47 is effective no later
than the end of fiscal years ending after December 15, 2005, with early
adoption allowed. The adoption of FIN No. 47 by the Company has not had a
material impact on the Companys consolidated results of operations or
financial position.

In
May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error
Corrections - a replacement of APB Opinion No. 20 and FASB Statement No. 3.
SFAS 154 requires retrospective application to prior periods financial
statements for any changes in accounting principle, unless it is impracticable
to determine either the period-specific effects or the cumulative effect of the
change. SFAS 154 defines retrospective application as the application of a
different accounting principle to prior accounting periods as if that principle
had always been used or as the adjustment of previously issued financial
statements to reflect a change in the reporting entity. SFAS 154 also requires
that a change in depreciation, amortization, or depletion method for
long-lived, non-financial assets be accounted for as a change in accounting
estimate affected by a change in accounting principle. SFAS 154 carries forward
without change the guidance contained in APB 20 for reporting the correction of
an error in previously issued financial statements and a change in accounting
estimate. The Company will be required to adopt SFAS 154 for any accounting
changes or corrections of errors on or after January 1, 2006. The Company does
not expect the adoption of SFAS 154 to have a material effect on the Companys
consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK

The
Companys financial instruments at December 31, 2005 consist primarily of cash
equivalents, which are subject to interest rate risk, and marketable
securities, which are subject to equity price risk.

As
part of our overall investment strategy, we invest in publicly traded equity
securities. We purchase these securities in anticipation of increases in the
fair market values of the securities. We have in the past and may in the future
sell publicly traded equity securities that we do not own in anticipation of
declines in the fair market values of the securities. When we sell securities
that we do not own, we must borrow the securities we sold in order to deliver
them and settle the trades. Thereafter, we must buy the securities and deliver
them to the lender of the securities. Our potential for loss on these
transactions is unlimited since the value of the underlying security can keep
increasing which could have a material adverse effect on the Companys
consolidated financial statements.

The
carrying value of cash equivalents approximates market value since these highly
liquid, interest earning investments are invested in money market funds. The
Companys investment in marketable securities consists of publicly traded
equity securities classified as trading securities and are recorded at fair
market value. Securities sold and not repurchased are carried at the fair
market value of the securities.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA

The
Consolidated Financial Statements of the Company and related Notes thereto and
the financial information required to be filed herewith are included under Item
15 of this Form 10-K.

  

19

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
    ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  None.
  ITEM 9A. CONTROLS AND PROCEDURES
  Management
    of the Company, including the Chief Executive Officer and the Chief Financial
    Officer, evaluated the effectiveness of the design and operation of the Companys
    disclosure controls and procedures (as suchterm is defined
    in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
    1934) as of the end of the period covered by this report. Based upon that
    evaluation, the Companys Chief Executive Officer and the Chief Financial
    Officer concluded that the Companys disclosure controls and procedures
    were effective as of the end of the period covered by this report for the
    information required to be disclosed by the Company in the reports it files
    or submits under the Securities Exchange Act of 1934, as amended, to be recorded,
    processed, summarized and reported within the time periods specified in the
    Securities and Exchange Commissions rules and forms.

There
have not been any changes in the Companys internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under
the Exchange Act) during the fiscal quarter ended December 31, 2005 that
have materially affected, or are reasonably likely to materially affect, the
Companys internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

20


  PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT

The
table below sets forth the names, ages and titles of the persons who were
directors and/or executive officers of the Company as of March 15, 2006.

Name

Age

PositionShant S. Hovnanian

46

Chairman of the Board of Directors, President and
  Chief Executive OfficerVahak S. Hovnanian

74

DirectorWilliam F. Leimkuhler

54

DirectorJeffrey Najarian

47

DirectorChristopher Vizas

56

DirectorThomas M. Finn

58

Secretary, Treasurer and Chief Financial OfficerJohn A. Kallassy

41

Executive Vice President, Chief Executive Officer 
  Zargis Medical Corp.Shant
S. Hovnanian has served as our Chairman of the Board of Directors, President and
Chief Executive Officer since October 1995. From June 1980 until January 1991,
Mr. Hovnanian served as Executive Vice President of the V. S. Hovnanian Group
(the Hovnanian Group), consisting of home building operations, real estate
development and utility companies.  In
1995, Mr. Hovnanian served as a U.S. Delegate to the World Radio Conference of
the International Telecommunications Union in Geneva, Switzerland.  Mr. Hovnanian is the son of Mr. Vahak S.
Hovnanian.

Vahak
S. Hovnanian has served as a Director since October 1995. Mr. Hovnanian has
been Chairman of the Board and President of the Hovnanian Group since 1968. Mr.
Hovnanian is the father of Mr. Shant S. Hovnanian.

William
F. Leimkuhler has served as a Director since September 2000. Mr. Leimkuhler is
the General Counsel and Director of Business Development of Paice Corporation,
a privately held developer of advanced vehicle powertrains.  From 1994 through 1999, he held various
positions with Allen & Company, a New York investment banking firm,
initially serving as the firms General Counsel.  Prior to that, Mr. Leimkuhler was a corporate partner with the
New York law firm of Werbel & Carnelutti (now Heller Ehrman White &
McAuliffe).

Jeffrey
Najarian has served as a Director since October 2000. Mr. Najarian has been
Chief Executive Officer of Starpoint Solutions, Inc., formerly TIS Worldwide,
Inc., since its inception in 1992. A creator and founder of Starpoint, he has
been instrumental in building one of the countrys fastest growing,
privately-held companies, as cited by Inc.
magazine. From 1984-1992, Mr. Najarian worked at Setford-Shaw-Najarian, a
recruiting/placement firm for technology specialists, becoming a partner after
only three years. He led the staff in billing, propelling SSN to become a
leading search firm for Wall Street banks.

Christopher
Vizas has served as a Director since July 2001. Mr. Vizas is a principal in the strategic
advisory firm of East Wind Partners. He serves as non-executive Chairman of the
Board of i1, Inc., a privately held, Chinese software provider, as well as a
member of the Boards of a few other privately held companies. Mr. Vizas
positions during the 1990s included Chairman of eGlobe, Inc, a turn around
company reorganized under Chapter 11 of the Bankruptcy Act, CEO of  Quo
Vadis International, Managing Director of Kouri Capital Group and its
Telecommunications & Technology affiliate, and founder and Vice Chairman of
Orion Network Systems. Earlier in his career, he was a founder and part of the
management in Trinity Cellular and Asia Pacific Space & Communications. Mr.
Vizas served in the White House Office of Telecommunications Policy in the Ford
Administration, as Special Counsel to the U.S. Privacy Commission, and on congressional
staff.

Thomas
M. Finn has served as Secretary, Treasurer and Chief Financial Officer since
March 2003. Mr. Finn has been a consultant since 1994. Prior to that time, Mr.
Finn was a Senior Vice President of Integrated Resources, Inc., a diversified
financial services firm, and was the Chief Financial Officer of Integrateds
publicly-traded investment programs, including American Real Estate Partners,
L.P., a New York Stock Exchange master limited partnership. Previously, Mr.
Finn was an Audit Manager for Deloitte & Touche LLP. Mr. Finn is a graduate
of Long Island University.

  John
    A. Kallassy has served as Executive Vice President since September 2000 and
    was named Chief Executive Officer of Zargis Medical Corp. in November 2004.
    In addition to developing and executing Zargis business strategy, Mr.
    Kallassy is also responsible for evaluating new business investment opportunities
    at Speedus

21

within several business
    sectors. Prior to his leadership roles at Speedus and Zargis, Mr. Kallassy
    was a founder and Chief Executive Officer of American Data Consultants, Inc.
    (ADC), a firm specializing in information services, direct marketing and marketing
    research. Mr. Kallassy sold ADC to R.L. Polk in 1997 and continued his employment
    for three years at R.L. Polk as the ADC division president and later as a
    corporate vice president where he led the product management and analytical
    consulting groups for a $100 million business unit that was ultimately sold
    to Equifax Inc. Mr. Kallassy holds a Bachelor of Science Degree in Biochemistry
    that was completed at Leeds University in Leeds, England and earned his MBA
    from the Johnson School of Management at Cornell University.

ITEM 11.
EXECUTIVE COMPENSATION

The
following table shows, for the fiscal years ended December 31, 2005, 2004 and
2003, the cash compensation we paid, as well as certain other compensation paid
or accrued for those years, to each of the most highly compensated executive
officers of the Company in 2005 (the Named Executive Officers) in all
capacities in which they served. See Employment Agreements.

Summary Compensation Table

Annual CompensationName and Principal Position

Year

Salary

Bonus

Other
  Compen-
  sation (1)

Securities
  Underlying
  Options (#)

All Other
  Compen-
  sationShant S. Hovnanian

2005

$
250,000

$


$
158,411




$
Chairman of the Board of
  Directors,

2004


250,000


2,845,186


144,000




$
President and Chief Executive
  Officer

2003


250,000





140,000





Thomas M. Finn

2005

$
191,000

$


$





$
Secretary, Treasurer and
  Chief

2004


198,000











Financial officer

2003


152,000







100,000



John A. Kallassy

2005

$
216,666

$
12,500

$


100,000


$
Executive Vice President

2004


175,000


50,000








2003


175,000


50,000








(1)
Under the terms of his employment contract, Mr. Hovnanian is entitled to
certain benefits. See Employment Agreements. The amount shown in the table
above represents the total cost of these items to the Company without
adjustment for the portion of these costs allocable to business use by the
Company.

In
addition, in February 2004, the Companys wholly-owned subsidiary,
CellularVision Technology & Telecommunications, L.P. (CT&T), received
$15 million from a former international licensee in settlement of litigation
that CT&T instituted in May 2001. In connection with the settlement and as
provided under the terms of his employment agreement, Mr. Hovnanian received a
contingent participation in the proceeds of the settlement in the amount of
$2,845,186.

Stock
Option Grants Table

The
following table sets forth information concerning individual grants of options
to purchase Common Stock made to Named Executive Officers during 2005

Name

Number of
  Securities
  Underlying
  Options
  Granted

% of Total
  Options
  Grtanted to
  Employees
  in Fiscal
  Year

Exercise
  or Base
  Price

Expiration
  Date

Potential Realizable
  Value at Assumed
  Annual Rates of Stock
  Price Appreciation for
  Option Term5%

10%John Kallassy

100,000

47.6
%

$
1.50

7/14/15

$
94,000

$ 239,000For
information regarding stock option grants to employees in 2005, see Notes to
Consolidated Financial StatementsNote 5, Stockholders Equity.

22

Aggregate Stock Option Exercise Table

The
following table sets forth information regarding the number and value of
unexercised options that were held by the Named Executive Officers as of
December 31, 2005. None of the Named Executive Officers exercised any options
during 2005.

Name

Number of
  Shares
  Acquired
  on Exercise

Value
  Realized

Number of Securities
  Underlying
  Unexercised Options
  Exercisable/
  Unexercisable

Value of Unexercised
  In-the-Money Options
  Exercisable/UnexercisableShant S. Hovnanian

0

$



633,100
/ 0

$
43,403 /

$
0Thomas M. Finn

0





124,238
/ 9,170


2,727
  /


18John A. Kallassy

0





337,500
/ 100,000


19,913
  /


0For
information regarding stock option grants to employees in 2005, see Notes to Consolidated
Financial StatementsNote 5, Stockholders Equity.

Director
Compensation

During
2005, our Directors who are not officers or employees (Non-Employee Directors)
received an annual retainer of $24,000. Mr. Leimkuhler received an additional
retainer for services as a Director of two of the Companys majority-owned
subsidiaries, as lead outside director of the Company and as the Chairman of
the Companys Audit Committee in the aggregate amount of $48,000. Mr. Vizas
received an additional retainer for services as a Director of two of the
Companys subsidiaries and as the Chairman of the Companys Governance and
Nominating Committee in the aggregate amount of $48,000. In addition, upon
their initial election to the Board, new Non-Employee Directors are granted
options to purchase 5,000 shares of Common Stock that are fully vested and
immediately exercisable. Upon the date of each annual meeting, Non-Employee
Directors are granted options at fair market value to purchase an additional
10,000 shares of Common Stock that are fully vested and immediately
exercisable. Our Directors of the Company who are officers or employees do not
receive any additional compensation for serving on the Board or on any Board
committee.

Employment
Agreements

In
April 2002, the Compensation Committee of the Board of Directors approved a new
employment agreement for Mr. Shant S. Hovnanian, effective as of April 25,
2002. The agreement provides that Mr. Hovnanian will act as our President and
Chief Executive Officer. The agreement has a three-year term and provides for
an annual salary of $250,000. Under the agreement, Mr. Hovnanian is entitled to
be considered for annual performance based bonuses targeted at 50% or greater
of his base salary and a contingent bonus based on certain performance factors,
use of a Company apartment and car, a country club membership (which Mr.
Hovnanian has not taken) and a $1,000,000 term life insurance policy with the
beneficiary designated by Mr. Hovnanian. Under the agreement, Mr. Hovnanian was
also granted 250,000 options to purchase shares of our Common Stock at the
market value as of the effective date of the agreement. The options are fully
vested and immediately exercisable.

We
entered into an employment agreement effective September 5, 2000 with Mr. John
A. Kallassy. The agreement provides that Mr. Kallassy will act as our Executive
Vice President. The agreement, which has no term, provides for an annual salary
of $175,000, subject to periodic review, and annual bonuses aggregating $50,000
based on the executives attainment of certain performance goals. Under this
agreement, Mr. Kallassy was granted 225,000 options to purchase shares of our
Common Stock at the market value as of the effective date of the agreement.
18,750 of these options were fully vested and immediately exercisable at the
date of grant. Of the balance, 18,750 options became exercisable each three
months after September 5, 2000 and all options are now fully vested and
exercisable. In 2005, Mr. Kallassys bonus and salary were combined and the
aggregate total paid as salary.

23

ITEM 12. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The
following table sets forth information as of February 15, 2006 with respect to
the beneficial ownership of our stock by (i) each person known by us to be the
beneficial owner of more than 5% of the Common Stock; (ii) each person serving
as a director or director nominee of the Company; (iii) each of our executive
officers, and (iv) all of our directors and executive officers as a group.
Unless otherwise indicated, all shares are owned directly and the indicated
owner has sole voting and dispositive power with respect thereto.

Common Stock Beneficially
  Owned (1)Beneficial Owner

Number

PercentShant S. Hovnanian
(2)(3)


4,309,754

26.8Vahak S. Hovnanian
(4)(5)


2,953,655

18.3William F. Leimkuhler
(6)


100,250

*Jeffrey Najarian (7)


80,000

*Christpher Vizas (8)


70,000

*Thomas M. Finn (9)


128,821

*John Kallassy (10)


427,500

2.7XO Communications,
Inc.


2,000,000

12.4All Directors and Executive
Officers as a group (total 7 persons)


8,069,980

50.1*
Less than 1% of the outstanding Common Stock

(1)
Pursuant to the regulations of the Securities and Exchange Commission (the Commission),
shares are deemed to be beneficially owned by a person if such person
directly or indirectly has or shares (i) the power to vote or dispose of such
shares, whether or not such person has any pecuniary interest in such shares,
or (ii) the right to acquire the power to vote or dispose of such shares within
60 days, including any right to acquire through the exercise of any option,
warrant or right.

(2)
Includes options to purchase 633,100 shares of Common Stock pursuant to the
Stock Incentive Plan, which are fully vested and exercisable.

(3)
Includes 137,500 shares of Common Stock owned by Mr. Shant S. Hovnanians minor
children for which Mr. Hovnanian, as custodian, has sole voting power.

(4)
Includes options to purchase 102,500 shares of Common Stock pursuant to the
Stock Incentive Plan, which are fully vested and exercisable.

(5)
Includes 55,431 and 22,175 shares of Common Stock which Mr. Vahak S. Hovnanian
is required to sell upon the exercise of outstanding warrants at a per share
exercise price of $13.16 and $11.28, respectively.

(6)
Includes options to purchase 100,250 shares of Common Stock pursuant to the
Stock Incentive Plan, which are fully vested and exercisable.

(7)
Includes options to purchase 80,000 shares of Common Stock pursuant to the
Stock Incentive Plan, which are fully vested and exercisable.

(8)
Includes options to purchase 70,000 shares of Common Stock pursuant to the
Stock Incentive Plan, which are fully vested and exercisable.

(9)
Includes options to purchase 128,821 shares of Common Stock pursuant to the
Stock Incentive Plan, which are fully vested and exercisable.

(10)
Includes options to purchase 337,500 shares of Common Stock pursuant to the
Stock Incentive Plan, which are fully vested and exercisable.

Stockholders
Agreements.

Verizon
Communications, formerly Bell Atlantic Corporation, has the right to
appoint one director to the Board, so long as Verizon shall hold at least 1% of
the shares of Common Stock outstanding on a fully diluted basis.

Pursuant
to a Stock Purchase Agreement dated as of June 13, 1999, the Company is
required to use all reasonable efforts, subject to fiduciary duties under
applicable law, to cause an XO Communications, Inc. representative to be
elected to the Companys Board.

24

Equity Compensation Plans

The
following table sets forth certain information as of December 31, 2005 for all
compensation plans, including individual compensation arrangements, under which
equity securities of the Company are authorized for issuance.

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 further issuanceEquity compensation plans
  approved by security holders


1,726,459



$
2.32


1,169,368Equity compensation plans not approved by security
  holdersTotal


1,726,459



$
2.32


1,169,368ITEM
13.  CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS

The
information under Director Compensation included in Item 11. of this Form
10-K is incorporated by reference.

ITEM
14.  PRINCIPAL ACCOUNTANT FEES AND
SERVICES

Audit
Fees represent fees for services rendered in connection with the annual audit
and quarterly reviews of the Companys financial statements. For the years
ended December 31, 2005 and 2004, the Company paid or accrued $177,500 and
$180,000, respectively, for audit fees to PricewaterhouseCoopers LLP.

Audit
- Related Fees represent fees for services rendered in connection with assurance
and related services that are reasonably related to the performance of the
audit or review of the financial statements and are not reported as Audit Fees.
For the years ended December 31, 2005 and 2004, the Company did not pay or
accrue any amounts for audit related fees.

Tax
Fees represent fees for services rendered in connection with tax compliance,
tax advice and tax planning. For the years ended December 31, 2005 and 2004,
the Company paid or accrued $102,100 and $50,000, respectively, for tax fees to
PricewaterhouseCoopers LLP.

All
Other Fees represent fees for services rendered other than those described
above. For the years ended December 31, 2005 and 2004, the Company did not pay
or accrue any amounts for these services.

The
Audit Committee of the Companys Board of Directors has established a policy
requiring its pre-approval of all audit and non-audit services provided by its
independent registered public accounting firm. The policy requires the general
pre-approval of annual audit services and all other permitted services.

All
of the audit and non-audit services described above were approved by the Audit
Committee and not pursuant to the waiver of pre-approval provisions set forth
in applicable rules of the SEC.

25

PART IV

ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) Financial
Statements and Financial Statement Schedules

Page(s)(1)
Consolidated Financial StatementsReport of Independent Registered Public Accounting
  Firm

28Consolidated Balance Sheets as of December 31, 2005
  and 2004

29Consolidated Statements of Operations for the years
  ended December 31, 2005, 2004 and 2003

30Consolidated Statements of Changes in Stockholders
  Equity for the years ended December 31, 2005, 2004 and 2003

31Consolidated Statements of Cash Flows for the years
  ended December 31, 2005, 2004 and 2003

32Notes to Consolidated Financial Statements

33-42(b)
Exhibits

3.1a

Certificate of Incorporation. (1)3.1b

Certificate of Ownership and Merger of CVUSA Merger
  Corporation With and Into CellularVision USA, Inc. (2)3.2

By-laws. (1)4.1

Form of Common Stock Certificate. (1)4.3

Form of Rights Agreement between SPEEDUS.COM, Inc.
  and Equiserve Trust Company, N.A., as Rights Agent. The Rights Agreement
  includes as Exhibit A the Certificate of Designation, Preferences and Rights
  of Series A Junior Participating Preferred Stock of SPEEDUS.COM, Inc., as
  Exhibit B the form of Rights Certificate and as Exhibit C the form of Summary
  of Rights to Purchase Shares of Series A Junior Participating Preferred
  Stock. (3)10.1

Speedus Corp. 2005 Stock Incentive Plan. (4)10.2

Employment Agreement, dated as of April 25, 2002,
  between SPEEDUS.COM, Inc. and Shant S. Hovnanian. (5)10.3

Amended and Restated Agreement of Limited
  Partnership  of CellularVision of New
  York, L.P., dated  as  of
  July  7, 1993,  by
  and between Hye Crest Management,
  Inc.,  Bell Atlantic  Ventures, XXIII, Inc. and the limited  partners set forth on the signature page
  thereto. (1)10.4

Agreement, dated as of January 12, 1996, by  and
  among CellularVision  USA,
  Inc., CellularVision  of  New
  York, L.P.,  Hye  Crest Management, Inc., Shant  S.
  Hovnanian, Vahak S. Hovnanian, Bernard B. Bossard and Bell Atlantic Ventures
  XXIII, Inc. (1)21

Subsidiaries of Speedus Corp. (1)23.1

Consent of PricewaterhouseCoopers LLP (6)31.1

Certification of Chief Executive Officer Pursuant To
  Rule 13a-14 of the Securities Exchange Act of 1934, As Adopted Pursuant To
  Section 302 of The Sarbanes-Oxley Act Of 2002 (6).31.2

Certification of Chief Financial Officer Pursuant To
  Rule 13a-14 of the Securities Exchange Act of 1934, As Adopted Pursuant To
  Section 302 of The Sarbanes-Oxley Act Of 2002 (6).32.1

Certification of Chief Executive Officer Pursuant To
  18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The
  Sarbanes-Oxley Act Of 2002 (6).32.2

Certification of Chief Financial Officer Pursuant To
  18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The
  Sarbanes-Oxley Act Of 2002 (6).(1)

Incorporated by reference to the Companys
  Registration Statement in Form S-1 (File No. 33-98340) which was declared
  effective by the Commission on February 7, 1996.26

(2)

Incorporated by reference to the Companys Form 10-K
  filed on March 31, 1999.(3)

Incorporated by reference to the Companys Form 8-K
  filed on January 16, 2001.(4)

Incorporated by reference to the Companys
  Definitive Proxy Statement filed on October 13, 2005.(5)

Incorporated by reference to the Companys Form 10-K
  filed on March 31, 2003.(6)

Filed herewith.(c) Financial
  Statement SchedulesNone.27

REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Speedus Corp.:

In our opinion, the consolidated financial statements
listed in the index appearing under Item 15(a)(1) present fairly, in all
material respects, the financial position of Speedus Corp. and its subsidiaries
at December 31, 2005 and December 31, 2004, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 2005 in conformity with accounting principles generally accepted in the
United States of America.  These
financial statements are the responsibility of the Companys management.  Our responsibility is to express an opinion
on these financial statements based on our audits.  We conducted our audits of these statements in accordance with
the standards of the Public Company Accounting Oversight Board (United
States).  Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation.  We believe that our
audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP 
New York, New York
March 31, 2006

28

SPEEDUS
CORP.
CONSOLIDATED BALANCE SHEETS

December
  31,2005

2004ASSETSCurrent assets:Cash and cash
  equivalents

$
18,563,088

$
17,740,865United States
  Treasury bills





5,977,200Marketable
  securities


1,174,825


1,060,592Prepaid
expenses
  and other


181,508


173,979Accounts and
  other receivables


500


49,134Total current
  assets


19,919,921


25,001,770Property and
  equipment, net of accumulated depreciation of $321,256 and $175,457


426,201


609,840Other intangible
  assets, net of accumulated amortization of $2,607,133 and $1,812,249


622,911


1,417,795Other investments


800,000


900,000Other assets


691,444


752,869Total
assets

$
22,460,477

$
28,682,274LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts
payable

$
68,692

$
315,742Accrued
  liabilities


1,215,859


1,357,720Total current
  liabilities


1,284,551


1,673,462Minority interest





159,294Commitments and ContingenciesStockholders equity:Common stock
  ($.01 par value; 50,000,000 shares authorized; 21,750,174 and 21,587,674
  shares issued)


217,502


215,877Preferred stock
  ($.01 par value; 20,000,000 shares authorized):Series A Junior
  Participating ($.01 par value; 4,000 shares authorized; no shares issued and
  outstanding)





Additional
  paid-in-capital


90,724,450


90,546,583Treasury stock
  (at cost; 5,632,275 and 5,368,949 shares)


(5,884,863
)

(5,499,684
)Accumulated
  deficit


(63,881,163
)

(58,413,258
)Stockholders
  equity


21,175,926


26,849,518Total
  liabilities and stockholders equity

$
22,460,477

$
28,682,274The accompanying
notes are an integral part of these consolidated financial statements.

29

SPEEDUS
CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS

For the
  years ended December 31,2005

2004

2003Revenues

$
1,038,343

$
917,237

$
710,786Expenses:Selling,
general
  and administrative


3,851,332


4,313,889


4,494,589Research and
  development


1,797,315


1,515,934


1,705,233Depreciation
and
  amortization


940,683


1,116,759


1,158,753Cost of
sales


345,354


282,370


222,662Technology
  settlement expenses





2,928,583


Goodwill
  impairment loss





620,875


Total operating
  expenses


6,934,684


10,778,410


7,581,237Operating loss


(5,896,341
)

(9,861,173
)

(6,870,451
)Investment income/(loss)


(52,397
)

419,197


(4,519,600
)Minority interest


159,294


508,261


778,950Gain from technology settlement





15,000,000


Equity in loss of associated company








(92,996
)Earnings/(loss)
  before benefit from/(provision for) income taxes


(5,789,444
)

6,066,285


(10,704,097
)Benefit from/(provision for) income taxes


321,539


(62,000
)

Net earnings/(loss)

$
(5,467,905
)
$
6,004,285

$
(10,704,097
)Per share:Basic earnings/(loss) per common share

$
(0.34
)
$
0.37

$
(0.65
)Weighted average
  common shares outstanding - basic


16,182,208


16,245,281


16,498,267Diluted earnings/(loss) per common share

$
(0.34
)
$
0.36

$
(0.65
)Weighted average
  common shares outstanding - diluted


16,182,208


16,799,298


16,498,267The accompanying notes
are an integral part of these consolidated financial statements.

30

SPEEDUS CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY

For the years ended December 31, 2003, 2004 and
2005

Common
  Stock



Treasury
  Stock



TotalAdditional



Accumulated

StockholdersAmount

Shares

Paid-in-capital

Amount

Shares

Deficit

EquityBalance, January 1,
2003

$
213,848


21,384,838

$
90,289,432

$
(4,371,778
)

4,418,577

$
(53,713,446
)
$
32,418,056Exercise of warrants


1,313


131,250


129,938











131,251Stock based
compensation








22,750











22,750Repurchase of common
stock











(878,774
)

839,072





(878,774
)Net loss

















(10,704,097
)

(10,704,097
)Balance, December 31,
2003


215,161


21,516,088


90,442,120


(5,250,552
)

5,257,649


(64,417,543
)

20,989,186Exercise of options and
warrants


716


71,586


70,870











71,586Stock based
compensation








33,593











33,593Repurchase of common
stock











(249,132
)

111,300





(249,132
)Net earnings

















6,004,285


6,004,285Balance, December 31,
2004


215,877


21,587,674


90,546,583


(5,499,684
)

5,368,949


(58,413,258
)

26,849,518Exercise of options


1,625


162,500


160,875











162,500Stock based
compensation








16,992











16,992Repurchase of common
stock











(385,179
)

263,326





(385,179
)Net loss

















(5,467,905
)

(5,467,905
)Balance, December 31,
2005

$
217,502


21,750,174

$
90,724,450

$
(5,884,863
)

5,632,275

$
(63,881,163
)
$
21,175,926The
accompanying notes are an integral part of these consolidated financial
statements.

31

SPEEDUS
CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS

For
        the years ended December 31,2005
    
    2004
    
    2003Cash
        flows from operating activities:Net
        earnings/(loss)
    
    $
    (5,467,905
    )
    $
    6,004,285
    
    $
    (10,704,097
    )Adjustments
        to reconcile net earnings/(loss) to net cash provided by/(used in) operating
        activities:Depreciation
        and amortization
    
    
    940,683
    
    
    1,116,759
    
    
    1,158,753Goodwill
        impairment loss
    
    
    
    
    
    620,875
    
    
    Unrealized
        investment (gains)/losses
    
    
    402,617
    
    
    (287,089
    )
    
    107,055Equity
        in loss of associated company
    
    
    
    
    
    
    
    
    92,996Minority
        interest
    
    
    (159,294
    )
    
    (508,261
    )
    
    (778,950
    )Stock
        based compensation
    
    
    16,992
    
    
    33,593
    
    
    22,750Changes
        in operating assets and liabilities:Marketable
        securities
    
    
    (516,850
    )
    
    1,969,969
    
    
    (556,548
    )Due
        from broker
    
    
    
    
    
    3,131,835
    
    
    8,015,734Accounts
        and other receivables
    
    
    48,634
    
    
    (6,634
    )
    
    (2,401
    )Prepaid
        expenses and other
    
    
    (7,529
    )
    
    (90,757
    )
    
    (65,734
    )Other
        assets
    
    
    61,425
    
    
    (98,717
    )
    
    (62,851
    )Accounts
        payable
    
    
    (247,050
    )
    
    164,484
    
    
    (192,563
    )Accrued
        liabilities
    
    
    (141,861
    )
    
    (74,706
    )
    
    (405,095
    )Securities
        sold and not purchased
    
    
    
    
    
    (5,406,135
    )
    
    (9,564,382
    )Net
        cash provided by/(used in) operating activities
    
    
    (5,070,138
    )
    
    6,569,501
    
    
    (12,935,333
    )Cash
        flows from investing activities:Property
        and equipment:Additions
    
    
    (26,432
    )
    
    (536,253
    )
    
    (92,060
    )Dispositions
    
    
    64,272
    
    
    
    
    
    United
        States Treasury bills:Purchases
    
    
    (14,022,800
    )
    
    (5,977,200
    )
    
    Maturities
    
    
    20,000,000
    
    
    
    
    
    Other
        investments:Purchases
    
    
    (500,000
    )
    
    (1,556,834
    )
    
    Transfer
        to marketable securities
    
    
    600,000
    
    
    
    
    
    Loans
        to related parties
    
    
    
    
    
    
    
    
    120,000Loans
        and other receivables, net of repayments
    
    
    
    
    
    
    
    
    2,500Acquisition
        of business, net of cash acquired
    
    
    
    
    
    
    
    
    18,798Net
        cash provided by/(used in) investing activities
    
    
    6,115,040
    
    
    (8,070,287
    )
    
    49,238Cash
        flows from financing activities:Proceeds
        from exercise of options or warrants
    
    
    162,500
    
    
    71,586
    
    
    131,251Repurchase
        of stock
    
    
    (385,179
    )
    
    (249,132
    )
    
    (878,774
    )Net
        cash provided by/(used in) financing activities
    
    
    (222,679
    )
    
    (177,546
    )
    
    (747,523
    )Net
        increase/(decrease) in cash and cash equivalents
    
    
    822,223
    
    
    (1,678,332
    )
    
    (13,633,618
    )Cash
        and cash equivalents, beginning of period
    
    
    17,740,865
    
    
    19,419,197
    
    
    33,052,815Cash
        and cash equivalents, end of period
    
    $
    18,563,088
    
    $
    17,740,865
    
    $
    19,419,197Supplemental
        information of business acquired:Fair
        value of assets acquired:Cash
    
    $
    
    
    $
    
    
    
    18,798Non
        current assets
    
    
    
    
    
    
    
    
    34,283Other
        intangible assets
    
    
    
    
    
    136,500
    
    
    1,023,544Less-liabilities assumed:Current
        liabilities
    
    
    
    
    
    
    
    
    (218,946
    )Minority
        interest
    
    
    
    
    
    (136,500
    )
    
    (857,679
    )Cash
        paid
    
    
    
    
    
    
    
    
    less-cash
        acquired
    
    
    
    
    
    
    
    
    18,798Acquisition
        of business, net of cash acquired
    
    $
    
    
    $
    
    
    $
    (18,798
    )The accompanying notes
are an integral part of these consolidated financial statements.

32

SPEEDUS
CORP.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

1.
Organization and Business

Organization

Speedus
Corp. (Speedus or the Company), a Delaware corporation, was formed in
October 1995 as CellularVision USA, Inc. (CVUS) to combine the ownership of
predecessor companies that were under common control. In January 1999, through
a short form merger as allowed under Delaware law, CVUS changed its name to
SPEEDUS.COM, Inc. In June 2002, in the same manner, SPEEDUS.COM, Inc. changed
its name to Speedus Corp. Unless the context requires otherwise, the term
Company includes Speedus and its wholly- and majority-owned subsidiaries.

Business
activities

Speedus
Corp. is a holding company that owns significant equity interests in diverse
businesses. We seek business opportunities across all industries for potential
transactions and relationships in which we can apply our current resources and
management strengths. The companies that we target, either public or privately
held, will be seeking growth or restructuring capital to pursue near term
business objectives in demonstrated markets. We will continue to pursue
opportunities involving our expertise in the medical device and wireless
markets as well as those areas involving our broadband assets as attractive
opportunities present themselves.

We
have co-invested with Siemens Corporate Research, Inc., a subsidiary of Siemens
Corporation, in Zargis Medical Corp. to develop advanced diagnostic decision
support products and services for primary care physicians, pediatricians,
cardiologists and other healthcare professionals. Zargis Acoustic Cardioscan
(ZAC), Zargis core product, is the first and only FDA-authorized
computer-assisted medical device designed to support physicians in analyzing
heart sounds for the identification of suspected murmurswhich are a
potential sign of heart disease. We own 90% of F&B Güdtfood Holding
Corp., the creator and operator of the original Eurocentric chic and
quick café, which is operating two stores in Manhattan. In 2005, we
conceived Wibiki, a new software-based wireless network that leverages existing
Wi-Fi infrastructures to reduce cost, complexity and risk for users when
accessing the Internet wirelessly. Wibikis business model will employ
a user opt-in advertising service we call AdChooser to generate revenues that
keep Wibiki services free to users. We own a portfolio of patents that allow for
high-speed wireless communications. We also own fixed wireless spectrum in the
New York City metropolitan area that we may commercialize in the future to
support high-speed, or broadband, Internet access service.

2.
Summary of Significant Accounting Policies

Financial statements and principles of consolidation

The
consolidated financial statements include the accounts of Speedus and its
wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.

Companies
in which Speedus directly or indirectly owns more than 50% of the outstanding
voting securities or that Speedus has effective control over are accounted for
under the consolidation method of accounting. Under this method, those
companies balance sheets and results of operations, from the date Speedus
acquired control, are included in Speedus consolidated financial statements.
The interest in the net assets and operations of these companies other
stockholders is reflected in the caption Minority interest in Speedus
consolidated balance sheet and statements of operations.

The
Companys share of earnings or losses of associated companies that are 20% to
50% owned is included in the consolidated operating results using the equity
method of accounting.

Companies
in which Speedus owns less than 20% of the outstanding voting securities and
does not have the ability to exercise significant influence are accounted for
under the cost method of accounting.

Estimates

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

Cash
and Cash Equivalents

The
Company considers all highly liquid interest earning investments with original
maturities of three months or less to be cash equivalents. At December 31, 2005
and 2004, cash equivalents consisted of money market funds.

  

33

Marketable Securities
  All
    marketable securities are defined as trading securities under the provisions
    of Statement of Financial Accounting Standards No. 115, Accounting for
    Certain Investments in Debt and Equity Securities. At December31,
    2005 and 2004, marketable securities consisted of publicly traded equity securities
    which were recorded at fair market value. Their original cost was $1,419,000
    and $877,000, unrealized gains/(losses) in 2005 and 2004 were $403,000 and
    $(287,000) and the carrying value was $1,175,000 and $1,061,000, respectively.
    At December 31, 2005, based upon the fair market value of these securities,
    52% was invested in a coal company and 48% was invested in technology and
    telecommunications companies.
  Other
investments

The
Company has invested in equity and debt instruments of non-publicly held
companies and accounts for them under the cost method since the Company does
not have the ability to exercise significant influence over operations. The
Company monitors these investments for other than temporary impairment by
considering current factors including economic environment, market conditions,
operational performance and other specific factors relating to the business
underlying the investment, and records reductions in carrying values when
necessary. The Company does not believe there has been any impairment of other
investments at December 31, 2005.

Other
investments consist of:

December
  31,2005

2004(a) 791,667 shares of preferred stock of a
  non-publicly held cardiovascular technology company, recorded at cost in the amount of
  $300,000. In connection with this investment, the Company also received warrants to purchase
  375,000 shares of
  common stock at the lesser of $.40 or 80% of the per share price sold in the next round of financing.
  This investment was acquired in 2004.

$
300,000

$
300,000(b) an investment in an entity specifically formed
  to invest in convertible preferred stock in a non-publicly held online and directory
  assistance company, recorded at cost in the amount of
  $250,000. The preferred stock is convertible into shares of common stock at a conversion price
  equal to 50% of
  the price of the common stock in an initial public offering. This investment was acquired in 2005.


250,000


(c) an investment in an entity specifically formed
  to invest in a senior third-party note of a non-publicly held online and directory
  assistance company, recorded at cost in the amount of $250,000. The note is convertible into
  shares of common
  stock at a conversion price equal to the price of the common stock in an initial public offering. This
  investment was acquired in 2005.


250,000


(d) a convertible promissory note in a subsidiary of
  a publicly
  held drug delivery technology company, recorded at cost in the amount of $600,000. In connection
  with this investment,
  the Company also received warrants to purchase 300,000 shares of common stock at $1 per
  share, subject
  to adjustment under certain circumstances. During 2005, this investment was transferred to
  Marketable Securities
  upon the commencement of public trading. This investment was acquired in 2004.





600,000$
800,000

$
900,000Securities sold and not purchased

  The
    Company has in the past and may in the future sell publicly traded equity
    securities it does not own in

34

anticipation of declines
    in the fair market values of the securities. When the Company effects such
    transactions, it must borrow the securities it sold in order to deliver them
    and settle the trades. The amounts shown on the balance sheet as Securities
    sold and not purchased represent the value of these securities at fair
    market value. At December 31, 2005 and 2004, there were no securities sold
    and not purchased.

Due
from broker

In
connection with selling publicly traded securities that it does not own, the Company
is obligated to maintain balances with brokerage firms as security for these
transactions. At December 31, 2005 and 2004, there were no restricted cash
balances.

Concentrations
of Credit Risk

Financial
instruments that potentially could subject the Company to concentrations of
credit risk consist largely of cash equivalents, amounts due from brokers and
marketable securities. These instruments are potentially subject to
concentrations of credit risk but the Company believes that this risk is
limited due to diversification and investments being made in investment grade
securities.

The
Company has in the past and may in the future sell publicly traded equity
securities that it does not own in anticipation of declines in the fair market
values of the securities. When the Company sells securities that it does not
own, it must borrow the securities it sold in order to deliver them and settle
the trades. Thereafter, the Company must buy the securities and deliver them to
the lender of the securities. The Companys potential for loss on these
transactions is unlimited since the value of the underlying security can keep
increasing which could have a material adverse effect on the Companys
consolidated financial statements.

Property
and Equipment

Office
equipment and leasehold improvements are recorded at cost and depreciated on a
straight-line basis over the estimated useful lives of the assets, ranging from
three to seven years, but not longer than initial lease terms in the case of
leasehold improvements.

When
assets are fully depreciated, it is the Companys policy to remove the costs
and related accumulated depreciation from its books and records.

Long-lived
assets

The
Company periodically evaluates the net realizable value of long-lived assets,
including fixed and intangible assets, in accordance with Statement of
Financial Accounting Standards No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, relying on anticipated future cash flows. The
Companys evaluation of anticipated future cash flows considers operating
results, business plans and economic projections, as well as, non-financial
data such as market trends, product and development cycles, and changes in
managements market emphasis. An impairment in the carrying value of an asset
is recognized when the expected future operating cash flows derived from the
asset are less than its carrying value.

Goodwill
and Other Intangible Assets

The
Company accounts for goodwill and other intangible assets in accordance with
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets which requires the use of a nonamortization approach to
account for purchased goodwill and certain intangibles. Under the
nonamortization approach, goodwill is not being amortized into results of
operations, but instead is reviewed for impairment on a reporting unit basis at
least annually and charged against results of operations only in the periods in
which the recorded value of goodwill is more than its implied fair value.
During the fourth quarter of 2004, after determining that the estimated present
value of future cash flows was less than its carrying value, the Company
recorded a charge for impairment of goodwill in connection with the acquisition
of F&B Güdtfood in the amount of $621,000, the balance at December 31,
2003.

The
Company owns broadband assets, included in intangible assets, with a carrying
value of $0.4 million at December 31, 2005 and currently does not generate
significant revenues or cash flows. However, the Company estimated that, based
upon its review of historical transactions and other factors, the fair value of
certain patents that have no carrying value on its books would generate
sufficient cash to fully realize the assets described above.

Other
intangible assets consist of: (i) the cost of a broadband patent and (ii)
medical technology in connection with the acquisition of a controlling interest
in Zargis Medical during 2003. The broadband patent, in the aggregate cost of
$2,070,000 with accumulated amortization of $1,657,000 at December 31, 2005 is
being amortized over its remaining useful life of four years. Medical
technology, in the aggregate amount of $1,160,000 with accumulated amortization
of $950,000 at December 31, 2005, is being amortized over a period of three
years.

  Amortization
    expense relating to intangible assets for the years ended December 31, 2005,
    2004 and 2003 amounted to $795,000, $761,000 and $633,000, respectively. The
    estimated annual amortization expense for 2006 and 2007, the expiration of
    the remaining useful life of the Companys intangible assets at December
    31, 2005, is

35

$589,000 and $34,000, respectively.
    Amortization expense is included in Depreciation and amortization
    on the accompanying Consolidated Statement of Operations and not allocated
    to Selling, General and Administrative, Research and Development or Cost of Sales.
  Revenue Recognition

Revenues
from F&B Güdtfoods operations are recorded on a cash basis.

Income Taxes

As
required by Statement of Financial Accounting Standards No. 109, Accounting
for Income Taxes, the Company is required to provide for deferred tax assets
or liabilities arising due to temporary differences between the book and tax
basis of the Companys assets and liabilities.

As
of December 31, 2005, the Company has a deferred tax asset of approximately
$4.8 million, relating primarily to operating losses. An offsetting valuation
allowance of $4.8million has been established as the Company had no ability to
carryback its losses and a limited earnings history. During 2005, the Company
recorded a benefit from income taxes in the amount of $322,000 as a result of a
tax refund from the filing of amended tax returns.

A
reconciliation of the Companys effective income tax rate and the federal tax
rate is as follows:


Year
        ended December 31,2005
    
    2004
    
    2003Statutory
        rate
    
    
    (34
    %)
    
    (34
    %)
    
    (34
    %)Benefit
        from tax refund
    
    
    (6
    %)
    
    0
    %
    
    0
    %Permanent
        difference: goodwill impairment
    
    
    0
    %
    
    10
    %
    
    0
    %State
        and local income taxes, net of federal benefit
    
    
    (10
    %)
    
    (10
    %)
    
    (10
    %)Change
        in valuation allowance
    
    
    44
    %
    
    35
    %
    
    44
    %Effective
        rate
    
    
    (6
    %)
    
    1
    %
    
    0
    %At
December 31, 2005, the Company had net operating loss carryforwards of
approximately $14.2 million which expire between 2020 and2027. Under the provisions
of the Internal Revenue Code, certain substantial changes in the Companys
stock ownership may result in a limitation on the amounts of net operating loss
carryforwards which can be utilized in future years.

Earnings Per Share          Basic
and diluted earnings/(loss) per common share are determined in accordance with
Statement of Financial Accounting Standards No. 128, Earnings Per Share.

For
the years ended December 31, 2005 and 2003, outstanding stock options in the
weighted average amounts of 1,724,000 and 1,743,000 and outstanding warrants in
the weighted average amounts of 113,000 and 278,000, respectively, have been
excluded from the diluted loss per share since their effect would be
antidilutive.

For
the year ended December 31, 2004, the weighted average common shares for
diluted earnings per share were determined by adding 550,000 and 4,000 weighted
average shares for the assumed exercise of stock options and warrants,
respectively, calculated using the treasury stock method, to the weighted average
shares outstanding used for basic earnings per share for a total of 16,799,000
weighted average shares outstanding for diluted earnings per share. Outstanding
stock options and warrants in the weighted average amounts of 691,000 and
113,000, respectively, were excluded from the computation of diluted earnings
per share for the year ended December 31, 2004 since the exercise prices were
greater than the average market price of the common stock.

Stock
Options          The
Company accounts for its employee stock options in accordance with Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation, as amended by SFAS148, Accounting
for Stock-Based CompensationTransition and Disclosurean amendment of FASB
Statement No. 123, which defines a fair value method of measuring
and accounting for compensation expense from employee stock options. This
standard also allows accounting for such options under the intrinsic value
method in accordance with Accounting Principles Board No. 25, Accounting for
Stock Issued to Employees. The Company has elected to use the intrinsic value
method. Pro forma earnings information giving effect to compensation expense
based upon the fair value at the date of grant in accordance with SFAS 123 for
the years ended December 31, 2005, 2004 and 2003 is summarized as follows:

36

2005

2004

2003Net earnings/(loss) as
  reported

$
(5,467,905
)
$
6,004,285

$
(10,704,097
)After tax effect of pro
  forma compensation


(74,000
)

(50,000
)

(267,000
)Pro forma net loss

$
(5,541,905
)
$
5,954,285

$
(10,971,097
)Loss per share:Basic - as reported

$
(0.34
)
$
0.37

$
(0.65
)Basic - pro forma

$
(0.34
)
$
0.37

$
(0.66
)Diluted - as reported

$
(0.34
)
$
0.36

$
(0.65
)Diluted - pro forma

$
(0.34
)
$
0.35

$
(0.66
)In
determining fair value, the stock options were valued using the Black-Scholes
option pricing model. Key assumptions used in valuing the options granted
during the years ended December 31, 2005, 2004 and 2003 are summarized as
follows:

2005

2004

2003Risk free investment rate


4
%

2
%

2
%Expected lives


3
  years


3
  years


3
  yearsExpected volatility
  factors


65
%

70
%

51
%Recent Accounting
Pronouncements          In
December 2004, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 123 (revised 2004), Share-Based Payment which replaces
SFAS No. 123 and supercedes APB Opinion No. 25. SFAS 123R requires
all share-based payments to employees, including grants of employee stock
options, to be recognized in the financial statements based on their fair
values beginning with the first annual period after June 15, 2005, with
early adoption encouraged. The pro forma disclosures previously permitted under
SFAS 123 no longer will be an alternative to financial statement recognition.
The Company is required to adopt SFAS No. 123R beginning January 1, 2006.
Under SFAS No. 123R, the Company must determine the appropriate fair value
model to be used for valuing share-based payments, the amortization method for
compensation cost and the transition method to be used at date of adoption. The
transition methods include modified prospective and modified retrospective
adoption options, using the previously disclosed pro forma data. Under the
modified retrospective option, prior periods may be restated either as of the
beginning of the year of adoption or for all periods presented. The modified
prospective method requires that compensation expense be recorded for all
unvested stock options and restricted stock at the beginning of the first
period of adoption of SFAS No. 123R, while the modified retrospective
methods would record compensation expense for all unvested stock options and
restricted stock beginning with the first period restated. The Company is
evaluating the requirements of SFAS No. 123R and expects that the adoption
of SFAS No. 123R could have a material impact on the Companys financial
statements.

In
March 2005, the FASB issued Interpretation No. 47 Accounting for Conditional
Asset Retirement Obligations, an interpretation of FASB Statement No. 143. FIN
No. 47 clarifies that a conditional asset retirement obligation, as used in
SFAS No. 143, Accounting for Asset Retirement Obligations, refers to a legal
obligation to perform an asset retirement activity in which the timing and/or
method of the settlement are conditional on a future event that may or may not
be within the control of the entity. Accordingly, an entity is required to
recognize a liability for the fair value of a conditional asset retirement obligation
if the fair value can be reasonably estimated. FIN No. 47 is effective no later
than the end of fiscal years ending after December 15, 2005, with early
adoption allowed. The adoption of FIN No. 47 by the Company has not had a
material impact on the Companys consolidated results of operations or
financial position.

  In
    May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error
    Corrections - a replacement of APB Opinion No. 20 and FASB Statement No. 3.
    SFAS 154 requires retrospective application to prior periods financial
    statements for any changes in accounting principle, unless it is impracticable
    to determine either the period-specific effects or the cumulative effect of
    the change. SFAS 154 defines retrospective application as the application
    of a different accounting principle to prior accounting periods as if that
    principle had always been used or as the adjustment of previously issued financial
    statements to reflect a change in the reporting entity. SFAS 154 also requires
    that a change in depreciation, amortization, or depletion method for long-lived,
    non-financial assets be accounted for as a change in accounting estimate affected
    by a change in accounting principle. SFAS 154 carries forward without change
    the guidance contained in APB 20 for reporting the correction of an error
    in previously issued financial statements and a change in accounting estimate.
    The Company will be required to adopt SFAS 154

37

for any accounting changes
    or corrections of errors on or after January 1, 2006. The Company does not
    expect the adoption of SFAS 154 to have a material effect on the Companys
    consolidated financial statements.
  Reclassifications

Certain
reclassifications have been made to prior years financial
information to conform to the current year presentation.

3. Acquisitions

a.
On February 28, 2003, the Company increased its investment in Zargis Medical to
57.7% with an additional investment of $1,250,000. Prior to February 28, 2003,
the Company held a 46.4% interest in Zargis and accounted for its investment
under the equity method of accounting. On
July 28, 2003, the Company increased its ownership in Zargis Medical to 68.9%
with an additional investment of $2,000,000. As of December 31, 2003 and
February 1, 2004, our ownership increased to 70.5% and 71.2%, respectively, as
a result of Zargis not having met certain milestones. On September 22, 2004,
the Company increased its ownership in Zargis Medical to 72.7% with an
additional investment of $500,000. At December 31, 2005, as a result of
continued advances aggregating $1,480,000 during 2005, our ownership interest increased to
approximately 78%.

This
acquisition was accounted for using the purchase method of accounting. The
results of operations of Zargis Medical have been included in the consolidated
statements of operations from the date of acquisition. The $3,750,000 aggregate
purchase price was allocated as follows: $3,769,000 to cash, $34,000 to non
current assets, $1,160,000 to other intangible assets, $(219,000) to current
liabilities and $(994,000) to minority interest. An aggregate of $1,160,000 has
been allocated as medical technology to an intangible asset and is being
amortized over a period of three years.

b.
On May 6, 2002, the Company acquired a 51% interest in F&B Güdtfood, the
creator and operator of the original Eurocentric chic and quick café, which
is operating two stores in Manhattan. The acquisition price was $3,500,000. On
February 8, 2003, the Company reduced its cash investment in F&B Güdtfood
and received $1,775,000 while maintaining its 51% interest. In December 2003,
as a result of renegotiation, our interest increased to 80% without an
additional investment. As a result of certain milestones not
having been met, in 2005 our interest increased to 90%.

4. Property and Equipment

Property
and equipment consists of the following:

December 31,2005

2004Leasehold improvements

$
389,693

$
439,255Office equipment


357,764


346,042747,457


785,297Less accumulated
  depreciation


(321,256
)

(175,457
)Property and equipment

$
426,201

$
609,840Depreciation
expense was $146,000, $346,000 and $526,000 for the years ended December 31,
2005, 2004 and 2003, respectively. Depreciation expense is included in
Depreciation and amortization on the accompanying Consolidated Statement of
Operations and not allocated to Selling, General and Administrative, Research
and Development or Cost of Sales.

5. Stockholders
Equity

Stock Options          In
November 2005, stockholders approved the Companys 2005 Stock Incentive Plan to
replace the 1995 Stock Incentive Plan which expired in October 2005. While no
new grants can be made under the 1995 Plan, 1,259,368 options outstanding at
the expiration of the 1995 Plan will remain outstanding until exercise,
cancellation or expiration. 1,636,459 options available for grant at the
expiration of the 1995 Plan have been made available for grant under the 2005
Plan. To the extent that options granted under the 1995 Plan are cancelled or
expire, those options would be available for issuance under the 2005 plan.
Similar to the 1995 Plan, the 2005 Plan provides for the grant of various
stockbased incentives, including non-qualified and incentive stock options, to
employees, directors and consultants.

  The
    Company accounts for its employee stock options in accordance with Statement
    of Financial Accounting Standards No. 123, Accounting for Stock-Based
    Compensation, as amended by SFAS 148, Accounting for Stock-Based
    CompensationTransition and Disclosurean amendment of FASB Statement
    No. 123, which defines a fair value method of measuring
    and accounting for compensation expense from employee stock options. This
    standard also allows accounting for such options under the intrinsic
    value method in accordance with Accounting Principles Board No. 25,
    Accounting for Stock Issued to Employees. The Company

38


  has elected to use
  the intrinsic value method. See Note 2 for pro forma earnings information giving
  effect to compensation expense based upon the fair value at the date of grant
  in accordance with SFAS 123 for the years ended December 31, 2005, 2004 and
  2003.






Aggregate
stock option activity and weighted average prices under both Plans for the
three years ended December 31, 2005 is summarized as follows:

2005
    
    2004
    
    2003Options
    
    Price
    
    Options
    
    Price
    
    Options
    
    PriceOutstanding
        at January 1
    
    
    1,778,959
    
    $
    2.37
    
    
    1,777,465
    
    $
    2.43
    
    
    1,701,524
    
    $
    2.61Granted
    
    
    210,000
    
    
    1.45
    
    
    100,000
    
    
    2.05
    
    
    140,000
    
    
    1.21Exercised
    
    
    (162,500
    )
    
    1.00
    
    
    (27,836
    )
    
    1.00
    
    
    
    
    
    Cancelled
    
    
    (100,000
    )
    
    3.59
    
    
    (70,670
    )
    
    4.00
    
    
    (64,059
    )
    
    4.51Outstanding
        at December 31
    
    
    1,726,459
    
    $
    2.32
    
    
    1,778,959
    
    $
    2.37
    
    
    1,777,465
    
    $
    2.43Exercisable
        at December 31
    
    
    1,535,401
    
    $
    2.43
    
    
    1,700,623
    
    $
    2.41
    
    
    1,731,631
    
    $
    2.47Available
        for grant at December 31
    
    
    1,169,368
    
    
    
    
    
    1,279,368
    
    
    
    
    
    808,698The following table aggregates certain information
concerning currently outstanding and exercisable stock options under both Plans
at December 31, 2005:

Stock
        options outstanding
    
    Stock
        options exercisableRange
        of
        exercise prices
    
    Options
    
    Weightedaverage
        remaining
        life (years)
    
    Weightedaverage
        exercise
        price
    
    Options
    
    Weightedaverage
        exercise
        price$
    0.83
        - 1.00
    
    
    393,220
    
    
    5
    
    $
    0.97
    
    
    393,220
    
    $
    0.971.07
        - 2.08
    
    
    720,000
    
    
    8
    
    
    1.34
    
    
    528,942
    
    
    1.302.27
        - 4.84
    
    
    566,500
    
    
    4
    
    
    3.92
    
    
    566,500
    
    
    3.925.20
        - 8.00
    
    
    31,739
    
    
    2
    
    
    6.99
    
    
    31,739
    
    
    6.9913.75
        - 15.00
    
    
    15,000
    
    
    3
    
    
    14.17
    
    
    15,000
    
    
    14.171,726,459
    
    
    
    
    
    
    
    
    1,535,401Warrants

The
Company accounts for warrants granted to non-employees under the provisions of
Statement of Financial Accounting Standards No. 123 and Emerging Issues Task
Force No. 96-18, Accounting for equity instruments that are issued to other
than employees for acquiring or in conjunction with selling, goods and
services. The fair value of the warrants at the time of issuance was
determined using the Black-Scholes option-pricing model. Expenses are
recognized over the service terms. No such expenses were recognized during the
years ended December 31, 2005, 2004 or 2003.

Warrant
activity and weighted average prices for the three years ended December 31,
2005 is summarized as follows:

2005

2004

2003Warrants

Price

Warrants

Price

Warrants

PriceOutstanding at January
  1


113,256

$
13.77


157,006

$
10.21


413,256

$
5.64Granted

















Exercised








(43,750
)

1.00


(131,250
)

1.00Cancelled


(113,256
)

13.77








(125,000
)

4.78Outstanding at December
  31


0

$



113,256

$
13.77


157,006

$
10.21Exercisable at December
  31


0

$



113,256

$
13.77


157,006

$
10.21Treasury
Stock

During
the years ended December 31, 2005, 2004 and 2003, the Company repurchased
263,326, 111,300 and 839,072 shares, respectively, of its own Common Stock.

Stockholder
Rights Plan

On
January 11, 2001, the Companys Board of Directors adopted a stockholder rights
plan in which preferred stock purchase rights will be distributed as a dividend
at the rate of one right for each share of the Companys Common Stock.


39

Each right generally will
    entitle stockholders, in certain circumstances, to buy one one-ten thousandth
    of a newly issued share of Series A Junior Participating Preferred Stock of
    the Company at an exercise price of $50.00. The rights generally will be exercisable
    and transferable apart from the Common Stock only if a person or group acquires
    beneficial ownership of 17% or more of the Common Stock or commences a tender
    or exchange offer upon consummation of which such person or group would beneficially
    own 17% or more of the Common Stock.

If
any person becomes the beneficial owner of 17% or more of the Companys Common
Stock, then each right not owned by a 17% or more stockholder or certain
related parties will entitle its holder to purchase, at the rights
then-current exercise price, shares of Common Stock (or, in certain
circumstances as determined by the Board, cash, other property, or other
securities) having a value of twice the rights exercise price. In addition,
if, after any person has become a 17% or more stockholder, the Company is involved
in a merger or other business combination transaction with another person in
which its Common Stock is changed or converted, or sells 50% or more of its
assets or earning power to another person, each right will entitle its holder
to purchase, at the rights then-current exercise price, shares of common stock
of such other person having a value of twice the rights exercise price.

The
Company will generally be entitled to redeem the rights at $.01 per right at
any time until the tenth day following public disclosure that a person or group
has become the beneficial owner of 17% or more of the Companys common stock.
The rights will expire on January 26, 2011.

6. Gain from Technology Settlement

In
February 2004, the Companys wholly-owned subsidiary, CellularVision Technology
& Telecommunications, L.P. (CT&T), received $15 million from a former
international licensee in settlement of litigation that CT&T instituted in
May 2001.

In
connection with the settlement and as provided under the terms of his 2002
employment agreement, Shant S. Hovnanian, Chairman of the Board and Chief
Executive Officer of the Company, received a contingent participation in the
proceeds of the settlement in the amount of approximately $2.8 million. In
addition, approximately $0.1 million in legal and other closing costs was paid
at closing to unaffiliated third parties. These expenses are included in Technology
Settlement Expenses for the year ended December 31, 2004 in the accompanying
consolidated statement of operations.

7.
Commitments and Contingencies

Noncancelable Leases

At December
31, 2005, future minimum lease payments due under noncancelable leases are as
follows:

2006

$
376,0002007


276,0002008


284,0002009


233,0002010


138,000Thereafter


424,000$
1,731,000In
addition, in connection with a license agreement to which the Company is a
party, a termination payment will be payable by the Company in the amount of
$500,000, $300,000 or $200,000 if the license agreement is terminated by the
Company before September 2007, September 2009 or September 2011, respectively.

Rent
expense was approximately $477,000, $491,000 and $401,000 for the years ended
December 31, 2005, 2004 and 2003, respectively.

Indemnification

As
permitted under Delaware law, the Companys Certificate of Incorporation and
By-Laws provide circumstances by which the Company shall indemnify each
director, officer, employee or agent of the Company. The maximum potential
exposure under these provisions is unlimited; however, the Company has an
Officers and Directors insurance policy that limits its exposure and enables it
to recover a portion of any amounts paid. The Company has not provided for any
potential exposure under these provisions at December 31, 2005.

8. Legal
Proceedings

The
Company is not currently involved in any material pending legal proceedings.

40

9. Business Segment Information

The
following table sets forth the Companys financial performance by reportable
operating segment for the years ended December 31, 2005, 2004 and 2003. F&B
Güdtfood and Zargis Medical are included in the consolidated financial
statements of the Company since May 6, 2002 and February 28, 2003,
respectively, the dates of acquisition of majority interests. The development
of Wibiki commenced in 2005.

Year ended
  December 31, 2005F&B

Zargis

Wibiki

Corporate
  and other

TotalsRevenues from external
  customers

$
1,037,703

$
0

$
0

$
640

$
1,038,343Depreciation and
  amortization


111,863


13,986


0


814,834


940,683Operating loss


(655,030
)

(1,281,559
)

(685,566
)

(3,274,186
)

(5,896,341
)Investment income/(loss)


1,231


83


0


(53,711
)

(52,397
)Goodwill and other
  intangible assets


0


210,143


0


412,768


622,911Fixed assets


372,165


17,462


0


36,574


426,201Total assets


549,410


450,007


0


21,461,060


22,460,477Year ended
  December 31, 2004F&B

Zargis

Corporate
  and other

TotalsRevenues from external
  customers

$
913,620

$
0

$
3,617

$
917,237Depreciation and
  amortization


90,035


25,589


1,001,135


1,116,759Operating loss


(686,026
)

(1,875,028
)

(7,300,119
)

(9,861,173
)Investment income/(loss)


2,367


4,751


412,079


419,197Goodwill and other
  intangible assets


0


592,259


825,536


1,417,795Fixed assets


532,626


20,690


56,524


609,840Total assets


696,480


768,002


27,217,792


28,682,274Year ended December 31, 2003F&B

Zargis

Corporate
  and other

TotalsRevenues from external
  customers

$
705,916

$
0

$
4,870

$
710,786Depreciation and
  amortization


43,077


20,915


1,094,761


1,158,753Operating loss


(786,042
)

(1,529,290
)

(4,555,119
)

(6,870,451
)Investment income/(loss)


16,466


0


(4,536,066
)

(4,519,600
)Goodwill and other
  intangible assets


620,875


803,747


1,238,304


2,662,926Fixed assets


169,035


24,205


226,628


419,868Total assets


762,689


1,397,079


26,350,292


28,510,060The
Company has no foreign operations. During the years ended December 31, 2005,
2004 and 2003, the Company did not have sales to any individual customer
greater than 10% of total Company revenues. The Companys accounting policies
for segments are the same as those described in Note 2.

41

10. Selected Quarterly Data (unaudited)

Quarterly
financial information is summarized in the table below (amounts in thousands,
except per share amounts):

Year
        ended December 31, 2005First
        Quarter
    
    Second
        Quarter
    
    Third
        Quarter
    
    Fourth
        QuarterRevenues
    
    $
    227
    
    $
    283
    
    $
    294
    
    $
    234Selling,
        general and administrative expenses
    
    
    975
    
    
    965
    
    
    981
    
    
    930Research
        and development
    
    
    327
    
    
    370
    
    
    389
    
    
    711Cost
        of sales
    
    
    77
    
    
    94
    
    
    93
    
    
    81Operating
        loss
    
    
    (1,382
    )
    
    (1,379
    )
    
    (1,399
    )
    
    (1,736
    )Investment
        income/(loss)
    
    
    282
    
    
    (1
    )
    
    151
    
    
    (484
    )Net
        earnings/(loss)
    
    $
    (975
    )
    $
    (1,381
    )
    $
    (890
    )
    
    (2,222
    )Per
        share (1):Basic
    
    $
    (0.06
    )
    $
    (0.09
    )
    $
    (0.06
    )
    $
    (0.14
    )Diluted
    
    $
    (0.06
    )
    $
    (0.09
    )
    $
    (0.06
    )
    $
    (0.14
    )Year
        ended December 31, 2004First
        Quarter
    
    Second
        Quarter
    
    Third
        Quarter
    
    Fourth
        QuarterRevenues
    
    $
    151
    
    $
    200
    
    $
    309
    
    $
    257Selling,
        general and administrative expenses
    
    
    993
    
    
    1,170
    
    
    998
    
    
    1,153Technology
        settlement expenses
    
    
    2,929
    
    
    
    
    
    
    
    
    Research
        and development
    
    
    371
    
    
    368
    
    
    378
    
    
    399Goodwill
        impairment loss
    
    
    
    
    
    
    
    
    
    
    
    (621
    )Cost
        of sales
    
    
    45
    
    
    84
    
    
    66
    
    
    87Operating
        loss
    
    
    (4,471
    )
    
    (1,728
    )
    
    (1,413
    )
    
    (2,249
    )Gain
        from technology settlement
    
    
    15,000
    
    
    
    
    
    
    
    
    Investment
        income/(loss)
    
    
    (258
    )
    
    155
    
    
    136
    
    
    386Net
        earnings/(loss)
    
    $
    10,412
    
    $
    (1,382
    )
    $
    (1,133
    )
    $
    (1,893
    )Per
        share (1):Basic
    
    $
    0.64
    
    $
    (0.09
    )
    $
    (0.07
    )
    $
    (0.12
    )Diluted
    
    $
    0.62
    
    $
    (0.09
    )
    $
    (0.07
    )
    $
    (0.12
    )(1) Earnings per share is
  computed separately for each period. Therefore, the sum of the quarterly per
  share amounts may differ from the total for the year.

42

SIGNATURES

Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, in New York, New York on March 31,
2006.

SPEEDUS CORP.s/s Shant S.
  HovnanianShant S.
  HovnanianPresident,
  Chief Executive Officer andChairman of
  the Board of DirectorsPursuant
to the requirements of the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant in the
capacities and on the dates indicated.

Signature

Title

Dates/s Shant S.
  Hovnanian

Chairman of
  the Board of Directors,

March 31,
  2006President
  and Chief Executive OfficerShant S.
  Hovnanians/s Thomas
  M. Finn

Treasurer
  and Chief Financial and

March 31,
  2006Accounting
  OfficerThomas M.
  Finns/s Vahak S.
  Hovnanian

Director

March 31,
  2006Vahak S.
  Hovnanians/s William
  F. Leimkuhler

Director

March 31,
  2006William F. Leimkuhlers/s Jeffrey
  Najarian

Director

March 31,
  2006Jeffrey
  Najarians/s
  Christopher Vizas

Director

March 31,
  2006Christopher
  Vizas43