U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                  FORM 10-KSB/A
                                 AMENDMENT NO. 1
(Mark One)

[X]      Annual report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the annual period ended May 31, 2004

[ ]      Transition report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the transition period from ______ to ______.

                         Commission file number 0-16206

                             NEW WORLD BRANDS, INC.
                             ----------------------
        (Exact name of small business issuer as specified in its charter)

                  Delaware                                  02-0401674
                  --------                                  ----------
      (State or other jurisdiction of                   (I.R.S. Employer
       incorporation or organization)                  Identification No.)

         2019 SW 20th Street, Suite 109, Fort Lauderdale, Florida 33315
         --------------------------------------------------------------
                    (Address of principal executive offices)

                                 (954) 713-0410
                                 --------------
                              (Issuer's telephone)

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

Securities registered under Section 12(g) of the Exchange Act:  Common Stock,
                                                                par value $0.01
                                                                per share

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes __X__    No _____

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]

The Registrant's revenues for its most recent fiscal year:  $ 194,390

Number of shares of common stock outstanding as of August 9, 2004:  36,603,939.
The aggregate market value of voting and non-voting Common Stock (14,828,939
shares) held by non-affiliates computed by reference to the closing price of the
Common Stock as of August 9, 2004: $ 4,745,260.

Transitional Small Business Disclosure Format (check one):  Yes _____  No __X__

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                                     PART I

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

         This Annual Report on Form 10-KSB contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Exchange Act of 1934 (the "Exchange
Act"), including statements reflecting the Company's views as of the date they
are made with respect to future events and financial performance, but are
subject to many risks and uncertainties which could cause the actual results of
the Company to differ materially from any future results expressed or implied by
such forward-looking statements. Factors that may affect the business and
financial results of the Company include the following. The Company does not
undertake to update any forward-looking statements.

Item 1.  Business

Introduction and Background

         New World Brands, Inc. (the "Company") was incorporated in Delaware in
May 1986 under the name Oak Tree Construction Computers, Inc. From 1986 through
1990, the Company was engaged in the sale of computer systems for the
construction industry. For a number of years thereafter, the Company was
inactive. In August 1994, the Company changed its name to Oak Tree Medical
Systems, Inc. From January 1995 through May 2000, the Company was engaged in the
business of operating and managing physical therapy care centers and related
medical practices.

         On October 16, 2001, the Company and its subsidiary, Oak Tree Spirits,
Inc., entered into a Merger Agreement with International Importers, Inc.
("Importers") and its stockholders whereby Importers merged with and into the
Company. The merger marked a change in direction for the business of the Company
to the wine and spirits industry. In line with this change in business
direction, in December 2001, the Company changed its name to New World Brands,
Inc.

         Unless otherwise indicated by the text, reference herein to the term
"Company" will be deemed to refer to New World Brands, Inc. and all of its
subsidiaries.

The Business

         The Company, through its wholly owned subsidiary Importers, imports
wine and spirits for distribution in the United States. The Company holds the
exclusive right to import the wines of Vinicola L.A. Cetto, S.A. de C.V. ("L.A.
Cetto") in the United States. The Company has established arrangements for
distribution of Cetto, along with other products, with major wine and spirit
wholesale distributors for all 50 states. In some cases, the Company has written
agreements with its distributors. In other cases, the agreements with its
distributors are oral and products are delivered to the distributors pursuant to
purchase orders.

<PAGE>

         During May 2003, the Company acquired the formulas and packaging of the
"Xtreme Delight" cocktails. Xtreme Delight cocktails are ready to drink
spirit-based cocktails, including Cosmopolitan, Pina Colada, Tequila Sunrise,
Vodka Splash, and Margarita. The ready to drink cocktail is the fastest growing
segment of the spirits industry. Xtreme Delight is different from other products
on the market in that it is an actual spirit based cocktail as opposed to the
flavored beer offerings currently on the market.

         The Company has an agreement with Maple Leaf Distillers, Inc., a
distiller based in Canada, pursuant which the Company acts as the sole importer
of the Maple Leaf line of alcoholic beverages in the United States. The Company
and Maple Leaf intend to enter into a joint venture agreement pursuant to which
they will jointly develop and market additional products for importation into
the United States. In this regard, management anticipates that the Company will
be going to market in the fall of 2004 with a new line of ready to drink
cocktails called Norm's. This line of products was jointly developed and
marketed by the Company and Maple Leaf Distillers, Inc.

Competition

         There are significant barriers to entry into the wine and spirits
importation business. These barriers include but are not limited to:

         -  the need to establish importer/supplier to distributor
            relationships;

         -  significant government regulation of the alcohol-based beverages
            industry by federal, state and local regulatory agencies; and

         -  important industry knowledge regarding importation rules, consumer
            demand and pricing.

         The wine and spirits industry is highly competitive. Distributors do
compete for new suppliers based on reputation, market share, access to customers
and ability to satisfy supplier demands. However, importers/suppliers must be
able to anticipate consumer demand, provide such products and be able to provide
them on a consistent basis. Many of the Company's competitors are better
capitalized, better financed, more established and more experienced than the
Company. Should the Company not be able to compete effectively, its results of
operations and financial condition could be materially adversely affected.

Governmental Regulation

         The manufacturing, importation, distribution and sale of alcohol-based
beverages is subject to regulation by the federal government through the
Department of the Treasury, Bureau of Alcohol, Tobacco and Firearms (BATF), as
well as by state and local regulatory agencies. Suppliers, distributors and
retailers must be properly licensed in order to sell alcohol-based beverages.

         In most states, the alcohol-based beverage industry operates within
what is commonly referred to as a three-tier system of distribution. The three
tiers are identified as follows:

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         (1) Tier one is comprised of suppliers that produce alcohol-based
             beverages and/or importers of alcohol-based beverages.

         (2) Tier two is comprised of distributors.

         (3) Tier three is comprised of retail licensees.

         Under this system, suppliers and importers sell to distributors,
distributors sell to retailers, and retailers sell to consumers. For the most
part, suppliers may not sell to retailers or consumers and distributors may not
sell directly to consumers. All states prohibit suppliers or distributors from
having an interest in retail licensees. The Company directly and through its
affiliates holds federal basic permits and state permits/licenses as an
importer.

         The Company is required to have each of its officers, directors and
principal stockholders who own 5% or more of the issued and outstanding stock
qualified by federal and state governmental agencies to have an interest in a
licensed company. The Company's officers, directors and principal stockholders
have been qualified by BATF and state regulatory agencies to hold
licenses/permits as a wholesaler/importer.

         Importers like the Company face scrutiny in a number of important
areas, including initial licensing or permitting and sales and marketing
activities. The Company believes that it is in compliance with applicable
regulations in all material respects. Consistent with industry practice, the
sales and marketing activities permitted by distributors for the benefit of tier
one suppliers are generally regulated by state licensing authorities, which
authorize various trade practice activities by statute, regulation or
administrative bulletin. The Company relies on such enforcement guidance, which
is subject to change at the discretion of the regulatory authorities, in
determining the scope of its permitted sales and marketing activities.

Employees

         As of May 31, 2004 the Company had four full-time employees and no
part-time employees. The Company considers its employee relationships to be
good.

Certain Risks

         Our business faces certain risks. The risks described below may not be
the only risks we face. Additional risks that we do not yet know of or that we
currently think are immaterial may also impair our business. If any of the
events or circumstances described as risks below actually occurs, our business,
results of operations or financial condition could be materially and adversely
affected.

         WE HAVE A LIMITED OPERATING HISTORY. In October 2001, the Company
acquired International Importers, Inc. ("Importers") pursuant to a merger
agreement. Importers was incorporated in March 2000 for the purpose of acquiring
the exclusive rights to import L.A. Cetto Wines into the United States. In
September 2000, Importers acquired the exclusive importation rights of L.A.
Cetto Wines in the United States and its territories. Importers began

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<PAGE>

distributing wine in January 2001. Immediately prior to the acquisition of
Importers, the Company had substantially no operations.

         OUR BUSINESS IS DEPENDENT UPON OUR DISTRIBUTION NETWORK WHICH IS
CURRENTLY COMPRISED OF A RELATIVELY SMALL NUMBER OF DISTRIBUTORS. The Company
imports wines and spirits and sells these products principally to distributors
for resale to restaurants and retail outlets. Because the Company is in the
initial stages of implementing its business plan, the Company is dependent on a
relatively small number of distributors. As a result, the loss of one or more of
the Company's distributors could have a material adverse effect on the Company's
business, financial condition and results of operations. The success of the
Company will largely depend on its ability to expand its relationships with
distributors and other entities involved in the process of wine and spirits
distribution and sales. The failure to expand such relationships could impact
adversely on the Company's business.

         Additionally, the laws and regulations of several states prohibit
changes of distributors, except under certain limited circumstances, making it
difficult to terminate a distributor without reasonable cause, as defined by
applicable statutes. The resulting difficulty or inability to replace
non-performing distributors, poor performance of the Company's major
distributors or the Company's inability to collect accounts receivable from its
major distributors could have a material adverse effect on the Company's
business, financial condition and results of operations.

         OUR SUPPLIERS ARE HEAVILY DEPENDENT UPON RAW MATERIALS, WHICH MAY OR
MAY NOT BE AVAILABLE IN THE FUTURE ON COMMERCIALLY REASONABLE TERMS.
Additionally, current and future suppliers to the Company will be heavily
dependent upon raw materials, such as grapes, grape juice concentrate, grains,
alcohol and packaging materials from third-party suppliers. If the Company's
current or future suppliers experience raw material supply, production or
shipment difficulties, such difficulties could adversely affect the Company's
suppliers' ability to supply goods to the Company. These suppliers are also
directly affected by increases in the costs of such raw materials. In the past,
these suppliers have experienced increases in the cost of grapes. In the event
demand for certain wine products exceeds expectations, these suppliers could
experience shortages. Also, these suppliers must be able to obtain a sufficient
number of glass bottles, which have only a small number of producers. The
inability of glass bottle suppliers to satisfy requirements of these suppliers
could adversely affect these suppliers' ability to fulfill the Company's
purchase requirements from such supplier, which in turn could have a material
adverse effect on the Company's business, financial condition and results of
operations.

         WE ARE DEPENDENT UPON CONSUMER SPENDING AND PREFERENCES. The success of
the Company's business depends upon a number of factors related to the level of
consumer spending, including the general state of the economy and consumer
confidence in future economic conditions. Changes in consumer spending can
affect both the quantity and price level of wines and spirits that customers are
willing to purchase at restaurants or through retail outlets. Reduced consumer
confidence and spending may result in reduced demand for the Company's products,
limitations on its ability to increase prices and increased selling and
promotional expenses. A sudden and unexpected shift in consumer preferences or a
reduction in sales of wine and spirits generally could have a material adverse
effect on the Company's business, financial condition and results of operations.

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<PAGE>

         OUR BUSINESS IS HIGHLY COMPETITIVE. The wine and spirits industry is
highly competitive and highly fragmented. The wine and spirits industry has also
experienced significant consolidation in recent years and many of the Company's
competitors have significantly greater capital resources than the Company. There
can be no assurance that the Company's products will be able to successfully
compete with its competitors. In addition, the Company's distributors (and the
retailers that are the customers of distributors) offer products that compete
directly with the Company's products for retail shelf space and consumer
purchases. Accordingly, there is a risk that these distributors or retailers may
give higher priority to products of the Company's competitors. In the future,
the Company's distributors and retailers may not continue to purchase our
products or provide our products with adequate levels of promotional support.

         OUR BUSINESS IS SUBJECT TO GOVERNMENT REGULATION AND THE POSSIBILITY OF
INCREASED GOVERNMENT REGULATION. The wine and spirits industry is subject to
extensive regulation by the U.S. Federal Bureau of Alcohol, Tobacco and Firearms
and various foreign agencies, state liquor authorities and local authorities.
These regulations and laws dictate such matters as licensing requirements, trade
and pricing practices, permitted distribution channels, permitted and required
labeling, advertising and relations with wholesalers and retailers. In addition,
new regulations or requirements or increases in excise taxes, income taxes,
property and sales taxes and international tariffs could materially adversely
affect the financial results of the Company. The Company can provide no
assurance that there will not be future legal or regulatory challenges to the
industry, which could have a material adverse effect on the Company's business,
financial condition and results of operations.

         CONSUMER PERCEPTION OF HEALTH ISSUES RELATING TO THE CONSUMPTION OF
ALCOHOL MAY AFFECT OUR BUSINESS. While a number of research studies suggest that
various health benefits may result from the moderate consumption of alcohol,
other studies conclude or suggest that alcohol consumption does not have any
health benefits and may in fact increase the risk of stroke, cancer and other
illnesses. If an unfavorable report on alcohol consumption gains general
support, it could have a material adverse effect on the Company's business,
financial condition and results of operations.

         WE MAY NOT BE ABLE TO MANAGE THE SIGNIFICANT GROWTH THAT IS REQUIRED
FOR OUR BUSINESS. The Company plans to continue to grow its organization and to
spend significant funds to promote the Company and its services. The Company
expects to continue to hire additional people in order to support its business.
The Company believes that as its business plan is more fully realized, the
Company may experience a period of rapid growth that will result in new and
increased responsibilities for management personnel and will place a significant
strain upon the Company's management, operating and financial systems and
resources. To accommodate any rapid growth and to compete effectively and manage
future growth, the Company will be required to implement and improve its
operational, financial and management information systems, procedures and
controls on a timely and cost-effective basis and to expand, train, motivate and
manage its work force. There can be no assurance that the Company's personnel,
systems, procedures and controls will be adequate to support the Company's
existing and future operations. Any failure to implement and improve the
Company's operational, financial and management systems or to expand, train,

                                        5
<PAGE>

motivate or manage employees could have a material adverse effect on the
Company's business, operating results and financial condition.

         WE RELY ON CERTAIN KEY PERSONNEL WITH WHOM WE DO NOT HAVE WRITTEN
AGREEMENTS. Our success is greatly dependent upon the continued participation of
our executive officers. In addition to providing general supervision and
direction, our executive officers provide active direction, supervision and
management of our sales and marketing efforts. The loss of the Company's
management and/or key personnel could have a material adverse impact on the
Company. In addition, the Company will need to retain additional qualified and
experienced personnel to implement its business plan. There can be no assurance
that the Company will be able to retain its current employees, or that it will
be able to recruit additional knowledgeable and experienced employees and
consultants in the future to meet its business needs.

         OUR DEALINGS IN FOREIGN CURRENCY MAY HAVE AN ADVERSE EFFECT. The
Company may conduct some of its import activity for wine, spirits and packaging
supplies in foreign currency. Accordingly, there is a risk that a shift in
certain foreign exchange rates or the imposition of unforeseen and adverse trade
regulations could adversely impact the costs of these items and have an adverse
impact on the Company's profitability. In addition, the imposition of unforeseen
and adverse trade regulations could have an adverse effect on the Company's
imported wine and spirits operations and thus on the Company's business,
financial condition and results of operations.

         WE MAY NEED AN ADDITIONAL CAPITAL, WHICH MAY OR MAY NOT BE AVAILABLE TO
USE. Capital will be needed for the effective integration, operation and
expansion of the Company's business. In addition, the Company may from time to
time require capital for renovation and expansion. Although the Company believes
it will be able to secure all needed financing, the Company has no agreements
for financing, and there can be no assurance that the Company will be able to
obtain funds when needed on satisfactory terms or at all. Any limitation on the
Company's ability to obtain additional financing could have a material adverse
effect on the Company's business, financial condition and results of operations.

         PRESENT MANAGEMENT CONTROLS APPROXIMATELY 59% OF OUR OUTSTANDING COMMON
STOCK. Such percentage does provide our officers and directors with significant
control over the ability to elect a majority of the Board of Directors, to
control the management of the Company, and to influence the outcome of corporate
transactions or other matters submitted to our stockholders for approval. The
interests of our stockholders that are officers and directors of the Company
could differ from the interests of other stockholders.

         WE MAY ISSUE ADDITIONAL SHARES. The Company will likely issue
additional shares of Common Stock either in connection with future acquisitions
of assets, contract negotiations, retention of key personnel or subsequent fund
raising endeavors. Any additional issuance of shares of Common Stock will have
the effect of diluting the equity interest of the holders of shares of Common
Stock.

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<PAGE>

         WE DO NOT INTEND TO DECLARE ANY DIVIDENDS. Payment of dividends on the
Common Stock is within the discretion of the Board of Directors and will depend
upon the Company's future earnings, its capital requirements and financial
condition, and other relevant factors. The Company does not intend to declare
any dividends on its Common Stock for the foreseeable future.

Item 2.  Property

         The Company leased its headquarter office located at 901 NE 125th
Street, Suite 120, North Miami, Florida 33161, through May 31, 2004. As of June
1, 2004, the Company moved the headquarters to 2019 SW 20 Street, Suite 109,
Fort Lauderdale, Florida 33315. The space is leased pursuant to a written lease
agreement for a one year term with four options to renew for additional one year
terms.

Item 3.  Legal Proceedings

         The Company is a party to one lawsuit and claims arising from the
previous administration. While the ultimate resolution of such lawsuit or claim
cannot be predicted with certainty, management is vigorously defending such
claims and does expect that these matters will have a material adverse effect on
the financial position or results of operation of the Company.

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

         Not Applicable.

                                        7
<PAGE>
                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

Market for Common Stock

         The Company's Common Stock is currently traded in the over-the-counter
market on the OTC Electronic Bulletin Board of the National Association of
Securities Dealers (the "NASD"). The following table sets forth, for the fiscal
quarters indicated, high and low closing bid prices for the Common Stock in the
over-the-counter market as reported by the NASD. The information below reflects
inter-dealer prices, without retail mark-up, mark-down or commissions, and may
not necessarily represent actual transactions.

                                                            Low Bid     High Bid
                                                            -------     --------
Fiscal Year Ended May 31, 2004
         First Quarter.....................................  $0.360      $0.850
         Second Quarter....................................   0.250       0.680
         Third Quarter.....................................   0.180       0.330
         Fourth Quarter....................................   0.190       0.630

Fiscal Year Ended May 31, 2003
         First Quarter.....................................  $0.100      $0.460
         Second Quarter....................................   0.150       0.320
         Third Quarter.....................................   0.160       0.300
         Fourth Quarter....................................   0.160       0.600

Stockholders

         As of August 9, 2004, there were approximately 169 holders of record of
the Company's Common Stock. The closing bid and asked prices for the Company's
Common Stock on August 9, 2004, were $.31 and $.365, respectively.

         The Company has not paid any cash dividends on its Common Stock to
date, and the Company does not contemplate the payment of cash dividends in the
foreseeable future. The future dividend policy will depend on the Company's
earnings, capital requirements, financial condition, and other factors
considered relevant to the Company's ability to pay dividends.

Recent Sales of Unregistered Securities

         Effective May 19, 2004, the Company issued an aggregate of 17,000,000
new shares of its Common Stock and warrants to purchase an additional 2,250,000
shares of Common Stock to thirteen new stockholders. In connection with such
transaction, the Company received gross proceeds of $1,700,000. The principal
investors in the transaction were Dr. and Mrs. Selvin Passen, who acquired
9,950,000 shares of Common Stock, and Maple Leaf Distillers, Inc., who acquired
5,000,000 shares of Common Stock. Maple Leaf is also a primary vendor of the

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Company. The securities were offered and sold in a transaction exempt from
registration under the Securities Act of 1933, as amended.

         For the twelve months ended May 31, 2004, the Company has issued
1,800,000 shares of the Company's common stock in exchange for services of which
980,000 shares have been returned. The consultants performed services related to
product promotion. The securities were offered and sold in a transaction exempt
from registration under the Securities Act of 1933, as amended.

         For the twelve months ended May 31, 2004, the Company has issued 75,000
options to purchase the Company's common stock in exchange for services. The
consultants performed services related to product promotion, general business,
financing, and public/investor relations. The securities were offered and sold
in a transaction exempt from registration under the Securities Act of 1933, as
amended.

Item 6.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations.

General

         The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of the
Company's results of operations and financial operations and financial
conditions. This discussion should be read in conjunction with the financial
statements and notes thereto appearing elsewhere herein.

Results of Operations

         Revenue decreased from $294,063 to $194,390 for the year ended May 31,
2004 ("Fiscal 2004") compared to the year ended May 31, 2003 ("Fiscal 2003").
The decrease in sales is due to several factors. During Fiscal 2004, the Company
lost two customers; one to bankruptcy and the other to another supplier. The
Company also reduced its sales prices on volume orders, thus decreasing overall
sales and gross margin. In addition to these items, during Fiscal 2004 our
former CEO was diagnosed with cancer and was unable to put in the time and
effort required to grow sales in our current markets or open up new markets for
the Company's products. We have taken steps to address the decrease in sales and
gross margin and believe that both will improve in Fiscal 2005. Specifically,
the Company has hired two additional sales people who are focused both on our
existing customers and opening new markets. Moreover, the Company increased
other income by $25,830 made up of $11,667 for exclusive distribution rights in
Honduras and $14,163 in interest income on two notes.

         Total expenses increased to $1,198,543 for Fiscal 2004 from $1,196,701
for Fiscal 2003. Cost of sales decreased to $156,612 in Fiscal 2004 from
$196,019 in Fiscal 2003 due to lower sales. Selling, general, and administrative
expenses decreased to $219,912 for Fiscal 2004 from $388,593 for Fiscal 2003 due
to lower sales activities. Management expects that the cost of sales will
increase in Fiscal 2005 as it continues to improve sales.

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         Consulting fees increased to $951,460 for Fiscal 2004 from $777,946 for
Fiscal 2003. The Company retained consultants to assist with promotions,
marketing, and investor relations. In the past consultants were used to initiate
contacts and pursue negotiations with potential customers as well as attempt to
increase the image and visibility of our products. The consultants were also
used to identify and pursue potential mergers, acquisitions, and investors for
the Company. The consultants were compensated with a combination of cash, the
Company's common stock, and options to purchase the Company's common stock. The
consulting expense recorded by the Company in Fiscal 2004 is made up of $506,878
in Common Stock and options to purchase the Company's Common Stock, $197,700 in
variable accounting for stock options that were re-priced, and $246,882 paid in
cash. The consulting expense recorded by the Company in Fiscal 2003 is made up
of $284,946 in Common Stock and options to purchase the Company's Common Stock,
$323,500 in variable accounting for stock options that were re-priced, and
$169,500 paid in cash. The Company intends to reduce its dependence on
consultants and perform much of its own promotion and marketing efforts in the
future. However, the Company will continue to incur consulting expenses as the
current consultants finish up their contracts and until the stock options that
are subject to variable accounting expire or are exercised. Management believes
that consulting expense will decrease in the future; however, there can be no
assurance that this will be the case. Moreover, any decrease in consulting
expense will be partially offset by an increase in selling, general and
administrative expenses as the Company performs more of these functions itself.

         The above factors contributed to a net loss of ($1,134,935) or ($0.05)
per share for Fiscal 2004 as compared to a net loss of ($1,098,657) or ($0.07)
per share for Fiscal 2003.

Liquidity and Capital Resources

         In the past, the Company has funded its cash requirements from sales of
product, bank borrowings and sales of equity securities. Moreover, the Company
has also issued equity securities in exchange for services rendered. To date,
sales of the Company's products have not been sufficient to fund cash
requirements. The Company has negative cash flow from operating activities.
Thus, the Company has relied heavily on bank borrowings and/or sales of its
securities.

         The Company had negative working capital of $425,523 at May 31, 2003.
As a result of investments made by thirteen outside investors in May 2004, the
Company had positive working capital of $1,027,234, as of May 31, 2004. However,
the Company incurred substantial losses in Fiscal 2004 and in Fiscal 2003. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern.

         Net cash used in operating activities increased to $363,219 in Fiscal
2004 from $216,120 in Fiscal 2003. The increase is primarily due to the paying
down of accounts payable and accrued expenses in Fiscal 2004 of $61,117 versus
an increase of $89,157 in Fiscal 2003.

         There was no cash used or provided from investing activities in Fiscal
2004. This represents a decrease of $32,500 from Fiscal 2003. The Company
foresees minimal capital expenditures in the near future.

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<PAGE>

         Net cash provided by financing activities increased to $1,563,798 in
Fiscal 2004 from $193,299 in Fiscal 2003 due primarily to the sale of the
Company's securities. During Fiscal 2004, the Company was provided with a
capital infusion of $1,700,000 and paid off its operating loan, auto loan, and
line of credit. These steps were taken to improve the liquidity of the Company.

         Based upon the Company's current cash reserves, the Company has
adequate resources to meet its short-term cash requirements. However, the
Company's ability to meet its long-term cash requirements remains uncertain. The
Company ultimately plans to fund future cash requirements through the sale of
its products; however, the Company is only in the initial stages of the
development of its business plan and does not currently fund its operations
through its operations. Although management believes the Company can accomplish
its business plan, no assurances can be made that this will be achieved or that
it will be achieved prior to the depletion of the Company's current cash
reserves. Thus, management continues to explore opportunities to raise private
equity capital and, in conjunction therewith, to provide credit support for the
Company's operations. Management believes that the Company will require
additional financing, through debt or equity, to fund its operations. Although
the Company has in the past been and continues to be in discussions with
potential investors, there can be no assurance that its efforts to raise any
substantial amount of private capital will be successful.

Intangible Assets

         In May 2003, the Company acquired the formulas and packaging for
"Xtreme Delight" ready to drink cocktails. This intangible asset is subject to
annual impairment testing. Management believes that the Company's brand of ready
to drink cocktails remains as viable and competitive today as when originally
conceived, primarily because the brand addresses an area of the marketplace that
still requires servicing. The continued value of this brand is confirmed by the
January 2004 agreement to market the products in Honduras.

         As indicated, the products were not fully launched due to cash flow
limitations and operating losses which were not a result of the product but
rather the cause of their not being properly launched. With the new infusion of
capital and addition of personnel, management intends to launch the products.
Thereafter, as now, the Company will continue to regularly evaluate its
long-lived and intangible assets for impairment.

CRITICAL ACCOUNTING POLICIES

Use of Estimates

         The accompanying consolidated financial statements have been prepared
in conformity with accounting principles generally accepted in the United
States. When more than one accounting principle, or method of its application,
is generally accepted, management selects the principle or method that is
appropriate in the Company's specific circumstances. Application of the

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<PAGE>

accounting principles requires that the Company's management make estimates
about the future resolution of existing uncertainties and that affect the
reported amounts of assets, liabilities, revenues, expenses which in the normal
course of business are subsequently adjusted to actual results. Actual results
could differ from such estimates. In preparing these financial statements,
management has made its best estimates and judgments of the amounts and
disclosures included in the consolidated financial statements giving due regard
to materiality.

Revenue Recognition and Accounts Receivable

         Sales are recorded when title and risks of ownership transfer to the
buyer. Shipping and handling fees charged to customers are recorded as revenues
and the related costs are recorded as cost of sales.

         The Company markets its products to a diverse customer base in the
United States and in other countries. Credit is extended after a credit review
by management, which is based on a customer's ability to perform its
obligations. Such reviews are regularly updated. Accounts receivable at May 31,
2004 and May 31, 2003 were $16,525 and $53,878, respectively.

Stock-Based Compensation

         The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" and related interpretations
in accounting for stock options and awards. Accordingly, no compensation costs
for stock options is included in operating results since all awards were made at
exercise prices at or above their fair value on the dates of grants.

         In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-
Based Compensation - Transition and Disclosure, amending FASB Statement No. 123,
Accounting for Stock Based Compensation." This statement amends SFAS No. 123 to
provide alternative methods of transition for an entity that voluntarily changes
to the fair value based method of accounting for stock- based employee
compensation. It also amends the disclosure provisions of SFAS No. 123 to
require prominent disclosure about the effects on operating results of an
entity's accounting policy decisions with respect to stock-based employee
compensation. SFAS No. 148 also amend APB 28, "Interim Financial Reporting" to
require disclosure about those effects in interim financial information. We
adopted the disclosure provisions for the year ended May 31, 2003.

                                       12
<PAGE>

         The following table illustrates the effect on results of operations if
the Company had applied the fair value recognition provisions of SFAS No. 123.

                                                   2004               2003
                                                   ----               ----

Net (loss) income as reported                 $(1,134,935)       $(1,098,657)
Deduct: Total stock-based employee
     compensation determined
     under fair value method for
     stock options, net of tax                          0            (67,060)
                                              -----------        -----------
Pro forma loss applicable
     to common stockholders                   $(1,134,935)       $(1,165,717)
                                              ===========        ===========

Basic loss per share, as reported             $     (0.05)       $     (0.07)
                                              ===========        ===========

Basic loss per share, pro forma               $     (0.05)       $     (0.07)
                                              ===========        ===========

Diluted loss per share, as reported           $     (0.05)       $     (0.07)
                                              ===========        ===========

Diluted loss per share, pro forma             $     (0.05)       $     (0.07)
                                              ===========        ===========

Item 7.  Financial Statements

         The financial statements and information required by Item 7 are
included in this Report.

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

         On October 16, 2003, the Company terminated its relationship with Wiss
& Company, LLP, independent public accountants ("Wiss"), effective that date.
During the fiscal years ended May 31, 2003 and May 31, 2002 and through October
16, 2003, (i) there were no disagreements between the Company and Wiss on any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure which, if not resolved to the satisfaction of Wiss
would have caused Wiss to make reference to the matter in its reports on the
Company's financial statements, and (ii) the Wiss report on the Company's
financial statements did not contain any other adverse opinion, disclaimer of
opinion, or modification or qualification of opinion. During the last two fiscal
years ended May 31, 2003 and May 31, 2002 and through October 16, 2003, there
were no reportable events as the term described in Item 304(a)(1)(iv) of
Regulation S-B.

         On October 16, 2003, the Company engaged Mahoney Cohen & Company, CPA,
P.C. ("Mahoney"), as its independent public accountants. The Company did not
previously consult with Mahoney regarding any matter, including but not limited
to:

                                       13
<PAGE>

         -  the application of accounting principles to a specified transaction,
            either completed or proposed; or the type of audit opinion that
            might be rendered on the Company's financial statements; or

         -  any matter that was either the subject matter of a disagreement (as
            defined in Item 304(a)(1)(iv) of Regulation S-B and the related
            instructions) or a reportable event (as defined in Item 304(a)(1)(v)
            of Regulation S-B).

Item 8A. Controls and Procedures

         As of the end of the period covered by this report, the Company carried
out an evaluation under the supervision and with the participation of our
management, including our chief executive officer and chief financial officer,
of the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 13a-15(c) and 5d-15(c). Based upon that
evaluation, our chief executive officer and chief financial officer concluded
that our disclosure controls and procedures are effective in ensuring that
information required to be disclosed by the Company in the reports that it files
or submits under the Securities Act is accumulated and communicated to the
Company's management, including its principal executive and principal financial
officers, or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure.

         There have been no changes in our internal controls over financial
reporting or other factors which has materially affected, or is reasonably
likely to materially affect, the Company's internal control over financial
reporting.

Item 8B. Other Information

         Not Applicable.

                                       14
<PAGE>
                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act.

         The directors and executive officers of the Company and their positions
at August 9, 2004 were as follows:

       Name              Age             Position
       ----              ---             --------

Selvin Passen, M.D.      69      Chairman of the Board
Costas Ataliotis         52      President, Chief Executive Officer and Director
Mark Weber               48      Chief Financial Officer, Secretary, Treasurer
                                 and Director
Marvin Ribotsky          69      Director

         SELVIN PASSEN, M.D. has served as Chairman of the Board of the company
since May 22, 2004. Dr. Passen is a retired Pathologist who was the Medical
Director of Maryland Medical Laboratory, Inc., Corning until 1994. Since then
Dr. Passen has been involved in real estate development and is the principal
holder in Baltimore Marine Center in Baltimore, Maryland, and Lauderdale Marine
Center in Fort Lauderdale, Florida. Dr. Passen is the owner of 2.5% of Maple
Leaf Distillers, a major supplier for New World Brands, Inc.

         COSTAS ATALIOTIS has been a Director of the Company since June 2003 and
has been President and Chief Executive Officer since May 2004. Mr. Ataliotis is
also involved with several other business ventures and is current President and
Chief Executive Officer of Protos International, Maple Leaf Distillers,
Salisbury House of Canada, Sun Ice Beverages, PET Plastico, Star Leisure and
Ataliotis Investments. Over the last five years, Mr. Ataliotis has been , a
senior officer in a number of international corporations involved in the
development, hospitality, tourism and entertainment industries, including Vinco
Beverages, Wet'n'Wild Water Park (Limassol), Star Developers, Pal's Investments,
Winnipeg Jeep Eagle, WAG Canada Leasing and Thrifty Car Rental of Manitoba.

         MARK WEBER has served as Chief Financial Officer, Secretary and
Treasurer and a Director of the Company since May 2004. In addition, Mr. Weber
has served since 1996 and continues to serve as financial advisor and Chief
Financial Officer for Dr. Passen, M.D.'s various other ventures. From 1985 to
1996, Mr. Weber was controller of Maryland Medical Laboratory, Inc. prior to the
sale to Metpath Laboratory a division of Corning. He is a Certified Public
Accountant with a Bachelor of Administration in Accounting from Towson State
University.

         MARVIN RIBOTSKY has served as Vice President and Chairman of the Board
of the Company from November 2001 through May 22, 2004. Mr. Ribotsky is also a
partner with a public accounting firm called Ribotsky, Levine and Company,
CPA's. Mr. Ribotsky has been a consultant to many large enterprises during the
past 40 years through his work as a principal in CPA firms in Miami, Florida. He
is an active Certified Public Accountant with a Bachelor of Science in
accounting from New York University. Marvin Ribotsky resigned effective
September 9, 2004.

                                       15
<PAGE>

Section 16(a) Beneficial Ownership Reporting Compliance

         Section 16(a) of the Exchange Act requires the Company's officers,
directors, and persons who beneficially own more than 10% of a registered class
of the Company's equity securities ("10% stockholders") to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Officers, directors and 10% stockholders also are required to
furnish the Company with copies of all Section 16(a) forms they file.

         To the Company's knowledge, based solely upon a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required during the Fiscal 2004, and except as specifically noted
below, all Section 16(a) filing requirements applicable to its directors,
executive officers and 10% beneficial owners were complied with. Based on a
review of the records, it appears that Messrs. Ataliotis and Ribotsky must file
reports under Section 16(a) of the Exchange Act. The Company is in the process
of assisting these officers and directors with these filings.

Item 10. Executive Compensation

         Summary Compensation Table. The following table sets forth compensation
earned, whether paid or deferred, by the Company's former Chief Executive
Officer who resigned on April 29, 2004, and its most highly compensated
executive officer who earned over $100,000 during the fiscal year (collectively,
the "Named Executive Officers") for services rendered in all capacities to the
Company during fiscal years ended May 31, 2004, 2003 and 2002.
<TABLE>
<CAPTION>
                                                 Annual Compensation                Long Term Compensation
                                        -------------------------------------     ---------------------------
                                                                                    No. of
                                                                    Other         Securities         All
         Name and            Fiscal      Salary      Bonus          Annual        Underlying        Other
    Principal Position        Year          $          $         Compensation       Options      Compensation
 ------------------------------------------------------------------------------------------------------------
<S>                           <C>       <C>            <C>            <C>           <C>               <C>
 Allen Salzman (1)            2002       75,000        -              -             300,000           -
 Chief Executive Officer      2003      115,500        -              -                -              -
                              2004      136,800        -              -                -              -
</TABLE>

                                       16
<PAGE>

Option/SAR Grants in the Last Fiscal Year

         The following table reflects option grants to our executive officers in
the prior fiscal year.

                                  % Total Options/
           # of Securities        SAR's Granted to     Exercise or
         Underlying Options/    Employees in Fiscal        Base       Expiration
 Name      SAR's Granted               Year            Price ($/Sh)      Date
 -------------------------------------------------------------------------------

 None


Aggregate Option Exercises and Fiscal Year-End Option Values

         The following table sets forth certain information relating to the
exercise of stock options during the fiscal year ended May 31, 2004 for each of
our executive officers and the fiscal year-end value of the unexercised options
held by our executive officers.
<TABLE>
<CAPTION>
                                                                                    Value of Unexercised
                         Shares                    # of Unexercised Options         In-The-Money Options
                        Acquired      Value           At Fiscal Year End             At Fiscal Year End
       Name           On Exercise    Realized    Exercisable    Unexercisable    Exercisable    Unexercisable
 ------------------------------------------------------------------------------------------------------------
<S>                      <C>          <C>          <C>                <C>          <C>                <C>
 Allen Salzman (1)       50,000       5,000        200,000            -            102,000            -
</TABLE>
 --------------
 (1)  Value is calculated on the basis of the difference between the option
      exercise price and the closing price for the Common Stock at .61 as of May
      31, 2004 as quoted on the over-the-counter market, multiplied by the
      number of shares underlying the option.


                                       17
<PAGE>

Item 11. Security Ownership of Certain Beneficial Owners and Management

         The following table sets forth certain information as of August 9, 2004
with respect to (i) those persons known to the Company to beneficially own more
than 5% of the Company's Common Stock, (ii) each director of the Company, (iii)
each executive officer, and (iv) all directors and executive officers of the
Company as a group. The information is determined in accordance with Rule 13d-3
promulgated under the Securities Exchange Act. Except as indicated below, the
beneficial owners have sole voting and dispositive power with respect to the
shares beneficially owned.

                                                Common Stock
                                           Beneficially Owned (1)
 Name and Beneficial Owner                        Shares                Percent
 ------------------------------------------------------------------------------
 Selvin & Sylvia Passen, TBTE                  11,450,000(2)             31.28%
   2019 S.W. 20th Street, Suite 109
   Fort Lauderdale, FL  33315

 Costas Ataliotis                               6,750,000(3)             18.44%
   251 Saulteaux Crescent
   Winnipeg, Montiba, Canada R3J 3C7

 Marvin Ribotsky                                3,375,000(4)              9.22%
   901 N.E. 125th Street, Suite 120
   North Miami, FL  33161

 Mark Weber                                       200,000                 0.55%
   2019 S.W. 20th Street, Suite 109
   Fort Lauderdale, FL  33315

 All directors and executive
   officers as a group (4 persons)             21,775,000(5)             59.49%

 (1)  Based on 36,603,939 shares of Common Stock and options and warrants to
      purchase Common Stock outstanding as of August 9, 2004. Pursuant to the
      rules of the SEC, certain shares of Common Stock which a person has the
      right to acquire within 60 days of August 9, 2004 pursuant to the exercise
      of stock options or warrants are deemed to be outstanding for the purpose
      of computing the percentage ownership of such person but are not deemed
      outstanding for the purpose of computing the percentage ownership of any
      other person.

 (2)  Includes (i) 1,500,000 shares of Common Stock subject to currently
      exercisable warrants, and (ii) 9,950,000 shares of Common Stock.

 (3)  Includes (i) 750,000 shares of Common Stock subject to currently
      exercisable warrants owned through Maple Leaf Distillers, and (ii)
      6,000,000 shares of Common Stock owned through Maple Leaf Distillers.

 (4)  Includes (i) 850,000 shares of Common Stock subject to currently
      exercisable options, and (ii) 2,525,000 shares of Common Stock.

                                       18
<PAGE>

 (5)  Includes (i) 3,100,000 shares of Common Stock subject to currently
      exercisable options and warrants, and (ii) 18,675,000 shares of Common
      Stock

         The following table provides information, as of May 31, 2004, with
respect to all of our compensation plans under which equity securities are
authorized for issuance:
<TABLE>
<CAPTION>
                                        Number of Securities
                                         to be issued upon         Weighted average
                                            exercise of           exercise price of       Number of securities
                                        outstanding options,     outstanding options,     remaining available
            Plan Category               warrants, and rights     warrants, and rights     for future issuance
 -------------------------------------------------------------------------------------------------------------
<S>                                          <C>                         <C>                   <C>
 Plans approved by stockholders                  -                        -                       -
 Plans not approved by stockholders          4,155,000                   0.38                  845,000
</TABLE>

Item 12. Certain Relationships and Related Transactions

         Selvin Passen, Chairman of the Board of the Company, is the owner of
2.5% of Maple Leaf Distillers, Inc. Costas Ataliotis, Chief Executive Officer of
the Company, is the beneficial owner of 25% of Maple Leaf Distillers, Inc.
("MLD"). MLD is one of the Company's main suppliers. Moreover, the Company has
an agreement with MLD to act as an importer of the MLD line of alcoholic
beverages in the United States. Finally, the Company and MLD intend to enter
into a joint venture agreement pursuant to which they will jointly develop and
market additional products for importation into the United States.

         The Company leased its office space on a month-to-month basis from a
company in which the former chairman of the board is a partner. Rent payments
totaled $3,210 for the period ending May 31, 2004.

         For the period ended May 31, 2004, the Company paid $8,235 for
accounting services to a company in which the former Chairman of the Board is a
partner.

         In July 2001, a consulting company owned by the daughter in law of the
former Chairman of the Board, exercised stock options to purchase 800,000 shares
of the Company's Common Stock at $0.10 per share. The consulting company offset
a $23,102 advance to the Company as a partial payment of the exercise price. For
the $56,898 balance, the consulting company issued a three-year,
interest-bearing note at prime plus 1% to the Company. In October 2001, the
consulting company exercised stock options to purchase 500,000 shares of the
Company's common stock. The consulting company offset a $7,414 advance to the
Company as a partial payment of the exercise. For the $42,586 balance, the
consulting company issued a three-year, interest-bearing note at the prime
interest rate to the Company. As of May 31, 2004, the current balance due under
the notes with accrued interest was $113,366.

                                       19
<PAGE>

Item 13. Exhibits and Reports on Form 8-K

         The following documents are filed as part of this Annual Report on form
10-KSB.

         (a) Exhibits:

             23.1     Consent of Mahoney, Cohen & Company, CPA P.C.

             23.2     Consent of Wiss & Company, LLP

             31.1     Certification of Periodic Report pursuant to Section 302
                      of the Sarbanes Oxley Act of 2002

             31.2     Certification of Periodic Report pursuant to Section 302
                      of the Sarbanes Oxley Act of 2002

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

             32.2     Certification pursuant to 18 U.S.C., Section 1350, as
                      adopted pursuant to Section 906 of the Sarbanes Oxley Act
                      of 2002

         (b) Reports on From 8-K:

             Current Report on Form 8-K, dated October 17, 2003, and filed on
             October 17, 2003, regarding a change in the Company's certified
             public accountants.

             Current Report on Form 8-K, dated May 19, 2004 and filed on May 26,
             2004, regarding a change in control of the Company.

Item 14. Principal Accountant Fees and Services

Fees Paid to Independent Public Accountants

The following table sets forth, for each of the years indicated, the fees paid
to our independent public accountants and the percentage of each of the fees out
of the total amount paid to the accountants.

                                            Year Ended May 31,
                           -----------------------------------------------------
                                    2004                          2003
                           -----------------------       -----------------------
 Services Rendered          Fees       Percentages        Fees       Percentages
 -------------------       -------     -----------       -------     -----------
   Audit (1)               $27,640         100%          $16,800         100%
   Audit-related (2)             -           -                 -           -
   Tax (3)                       -           -                 -           -
   Other                         -           -                 -           -
                           -------         ----          -------         ----
   Total                   $27,640         100%          $16,800         100%
                           =======         ====          =======         ====

                                       20
<PAGE>

 --------------
 (1)  Audit fees consist of services that would normally be provided in
      connection with statutory and regulatory filings or engagements, including
      services that generally only the independent accountant can reasonably
      provide.


 (2)  Audit-related fees relate to assurance and associated services that
      traditionally are performed by the independent accountant, including:
      attest services that are not required by statute or regulation; accounting
      consultation and audits in connection with mergers, acquisitions and
      divestitures; employee benefit plans audits; and consultation concerning
      financial accounting and reporting standards.

 (3)  Tax fees relate to services performed by the tax division for tax
      compliance, planning, and advice.

Pre-Approval Policies and Procedures

         Our Board of Directors has adopted a policy and procedures for the
pre-approval of audit and non-audit services rendered by our independent public
accountants, Mahoney Cohen & Company, CPA, P.C. The policy generally
pre-approves certain specific services in the categories of audit services,
audit-related services, and tax services up to specified amounts, and sets
requirements for specific case-by-case pre-approval of discrete projects, those
which may have a material effect on our operations or services over certain
amounts. Pre-approval may be given as part of the Board of Directors' approval
of the scope of the engagement of our independent auditor or on an individual
basis. The pre-approval of services may be delegated to one or more of the Board
members, but the decision must be presented to the full Board at its next
scheduled meeting. The policy prohibits retention of the independent public
accountants to perform the prohibited non-audit functions defined in Section 201
of the Sarbanes-Oxley Act or the rules of the SEC, and also considers whether
proposed services are compatible with the independence of the public
accountants.

                                       21
<PAGE>
                                   SIGNATURES

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

                                   NEW WORLD BRANDS, INC.


Date: March 11, 2005               By: /s/ Costas Ataliotis
                                       ----------------------------------------
                                       Costas Ataliotis, Chief Executive Officer


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


 SIGNATURE                              TITLE                         DATE


 /s/ Selvin Passen              Chairman of the Board            March 11, 2005
 -----------------------
 Selvin Passen, M.D.


 /s/ Costas Ataliotis           President, Chief Executive       March 11, 2005
 -----------------------        Officer and Director
 Costas Ataliotis


 /s/ Mark Weber                 Chief Financial Officer,         March 11, 2005
 -----------------------        Secretary and Treasurer
 Mark Weber                     and Director




                                       22
<PAGE>
                          INDEX OF FINANCIAL STATEMENTS


                                                                            Page
                                                                            ----


Report of Independent Registered Public Accounting Firm                      F-1


Report of Independent Public Accountants                                     F-2


Consolidated Balance Sheet as of May 31, 2004                                F-3


Consolidated Statements of Operations for the years ended
May 31, 2004 and 2003                                                        F-4


Consolidated Statements of Stockholders' Equity for the
Years ended May 31, 2004 and 2003                                            F-5


Consolidated Statements of Cash Flows for the years ended
May 31, 2004 and 2003                                                        F-6


Notes to Consolidated Financial Statements                                   F-7



                                       23
<PAGE>

             Report of Independent Registered Public Accounting Firm
             -------------------------------------------------------


We have audited the accompanying consolidated balance sheet of New World Brands,
Inc. and Subsidiaries as of May 31, 2004, and the related consolidated
statements of operations, stockholders' equity and cash flows for year then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of New
World Brands, Inc. and Subsidiaries at May 31, 2004, and the consolidated
results of its operations and its consolidated cash flows for the year then
ended, in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note C to the
consolidated financial statements, the Company incurred substantial losses from
operations. This factor raises substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to this matter are
also described in Note C. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.


                                        Mahoney Cohen & Company, CPA, P.C.


New York, New York
July 27, 2004

                                       F-1
<PAGE>

                    Report of Independent Public Accountants
                    ----------------------------------------

Board of Directors
New World Brands, Inc.


We audited the consolidated balance sheet of New World Brands, Inc. and
Subsidiaries (formerly Oak Tree Medical Systems, Inc.)(not presented herein) and
the accompanying consolidated statements of operations and cash flows for the
year ended May 31, 2003. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of New
World Brands, Inc. and Subsidiaries at May 31, 2003, and the results of their
consolidated operations and cash flows for the year ended May 31, 2003, in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note C to the May 31,
2003 financial statements, the Company incurred substantial losses from
operations, and has a working capital deficiency. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note C. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.


                                        WISS & COMPANY LLP


Livingston, New Jersey
July 15, 2003

                                       F-2
<PAGE>
                     NEW WORLD BRANDS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET

                                                                   May 31, 2004
                                                                   ------------
 Assets:
 -------
 Cash ...........................................................  $  1,213,953
 Prepaid expenses ...............................................         8,505
 Accounts receivable ............................................        16,525
 Inventory ......................................................         9,075
                                                                   ------------
 Total current assets ...........................................     1,248,058

 Intangible Assets ..............................................       300,000
 Fixed assets, net of accumulated depreciation of $24,300 .......        29,700
 Deposits .......................................................         3,269
                                                                   ------------
 Total assets ...................................................  $  1,581,027
                                                                   ============

 Liabilities and stockholders equity:
 ------------------------------------
 Accounts payable and accrued expenses ..........................  $    185,824
 Current portion of deferred revenue ............................        35,000
 Total current liabilities ......................................       220,824

 Deferred revenue, less current portion .........................        58,333
 Total liabilities ..............................................       279,157
                                                                   ------------

 Contingencies ..................................................             -
 Preferred Stock - $0.01 par value, 10,000,000 shares authorized,
   none issued ..................................................             -
 Common stock - $0.01 par value, 50,000,000 shares authorized,
   36,603,939 shares issued and outstanding .....................       366,040
 Additional paid in capital .....................................    22,785,942
 Note receivable - common stock .................................      (113,366)
 Deficit ........................................................   (21,736,746)
                                                                   ------------
 Total stockholders' deficiency .................................     1,301,870
                                                                   ------------
 Total liabilities and stockholders' equity .....................  $  1,581,027
                                                                   ============

           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       F-3
<PAGE>
                     NEW WORLD BRANDS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                     Year Ended     Year Ended
                                                    May 31, 2004   May 31, 2003
                                                    ------------   ------------
Revenues
   Wine and spirit sales .......................... $    194,390   $    294,063

Cost of goods sold ................................      156,612        196,019
                                                    ------------   ------------

Gross Profit ......................................       37,778         98,044
                                                    ------------   ------------

Expenses
   Selling, general, and administrative ...........      219,912        388,593
   Depreciation and amortization ..................       10,800         10,440
   Consulting fees ................................      951,460        777,946
   Interest .......................................       16,371         19,722
                                                    ------------   ------------

   Total expenses .................................    1,198,543      1,196,701
                                                    ------------   ------------

Other Income
   Distribution Rights ............................       11,667              -
   Interest Income ................................       14,163              -
                                                    ------------   ------------

   Net loss ....................................... $ (1,134,935)  $ (1,098,657)
                                                    ============   ============

Basic and diluted (loss) per share of common stock: $      (0.05)  $      (0.07)

Weighted average number of common and common
   share equivalents outstanding-basic and diluted:   21,823,672     16,179,907
                                                    ============   ============

           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       F-4
<PAGE>
<TABLE>
                                             NEW WORLD BRANDS, INC. AND SUBSIDIARIES
                                         CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                                 FOR THE YEAR ENDED MAY 31, 2004
<CAPTION>

                                                 Additional                                                            Total
                             Common Stock         Paid-in-      Notes     Subscriptions   Prepaid                   Stockholders'
                          Shares      Amount      Capital     Receivable    Receivable   Consulting    Deficit        Equity
                        ----------   --------   -----------   ----------  -------------  ----------  ------------   ------------
<S>                     <C>          <C>        <C>           <C>           <C>          <C>         <C>            <C>
BALANCE MAY 31, 2002 .. 15,446,564   $154,466   $19,251,843   $(144,484)    $(54,000)    $       -   $(19,503,154)  $  (295,329)

Exercise of stock
  options .............    735,000      7,350        83,900           -            -             -              -        91,250
Issuance of shares for
  services ............    655,000      6,550       124,450           -            -             -              -       131,000
Issuance of shares for
  assets ..............  1,000,000     10,000       290,000           -            -             -              -       300,000
Issuance of stock
  options for services           -          -       323,445           -            -             -              -       323,445
Repricing of options ..          -          -       323,500           -            -             -              -       323,500
Payment on notes
  receivable ..........          -          -             -      32,500            -             -              -        32,500
Discount on notes
  receivable ..........          -          -       (12,500)     12,500            -             -              -             -
Cancellation of shares     (60,000)      (600)            -           -            -             -              -          (600)
Net loss ..............          -          -             -           -            -             -     (1,098,657)   (1,098,657)
                        ----------   --------   -----------   ---------     --------     ---------   ------------   -----------

BALANCE MAY 31, 2003 .. 17,776,564   $177,766   $20,384,638   $ (99,484)    $(54,000)    $       -   $(20,601,811)  $  (192,891)

Exercise of stock
  options .............  1,000,000     10,000       207,500           -            -             -              -       217,500
Issuance of shares .... 17,000,000    170,000     1,530,000           -            -             -              -     1,700,000
Issuance of shares for
  services ............  1,800,000     18,000       722,000           -            -      (320,000)             -       420,000
Issuance of stock
  options for services           -          -       108,378           -            -             -              -       108,378
Repricing of options ..          -          -       197,700           -            -             -              -       197,700
Return of shares ......   (980,000)    (9,800)     (364,200)          -       54,000       320,000              -             -
Adjustment for un-
  exchanged shares ....      7,375         74           (74)          -            -             -              -             -
Interest accrual on
  notes receivable ....          -          -             -     (13,882)           -             -              -       (13,882)
Net loss ..............          -          -             -           -            -             -     (1,134,935)   (1,134,935)
                        ----------   --------   -----------   ---------     --------     ---------   ------------   -----------

BALANCE MAY 31, 2004 .. 36,603,939   $366,040   $22,785,942   $(113,366)    $      -     $       -   $(21,736,746)  $ 1,301,870
                        ==========   ========   ===========   =========     ========     =========   ============   ===========

                                   SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                                               F-5
</TABLE>
<PAGE>
                     NEW WORLD BRANDS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                      Year Ended     Year Ended
                                                     May 31, 2004   May 31, 2003
                                                     ------------   ------------
Cash flow from operating activities:
  Net loss .......................................   $(1,134,935)   $(1,098,657)
  Adjustments to reconcile net loss to net cash
    used  in operating activities:
    Depreciation and amortization ................        10,800         10,440
    Common stock and stock options
       issued for services .......................       528,378        453,845
    Repricing of options .........................       197,700        323,500
    Changes in operating assets and liabilities:
       Accounts receivable .......................        37,353        (15,405)
       Prepaid expenses ..........................        (8,505)        21,000
       Inventory .................................        (9,075)             -
       Deposits ..................................        (3,269)             -
       Accrued interest on note receivable .......       (13,882)             -
       Accounts payable and accrued expenses .....       (61,117)        89,157
       Deferred Revenue ..........................        93,333              -
                                                     -----------    -----------
    Net cash used in operating activities ........      (363,219)      (216,120)
                                                     -----------    -----------

Cash flows from investing activities:
  Repayment of note receivable ...................             -         32,500
                                                     -----------    -----------
    Net cash provided by investing activities ....             -         32,500
                                                     -----------    -----------

Cash flows from financing activities:
  Net borrowings (repayments) to stockholder .....      (167,888)       128,888
  Net proceeds from issuance of common stock .....     1,917,500         91,250
  Net borrowings (repayments) - bank .............      (185,814)       (26,839)
                                                     -----------    -----------
    Net cash provided by financing activities ....     1,563,798        193,299
                                                     -----------    -----------

       Net change in cash ........................     1,200,579          9,679
                                                     -----------    -----------

Cash at beginning of year ........................        13,374          3,695
                                                     -----------    -----------

Cash at end of year ..............................   $ 1,213,953    $    13,374
                                                     ===========    ===========

Supplemental disclosure of cash flow information:
  Interest paid ..................................   $    12,621    $    15,640
                                                     ===========    ===========

Non-cash investing and financing activity
  Increase in assets .............................   $         -    $   300,000
  Discount on stockholder loans ..................   $         -    $    12,500

           SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       F-6
<PAGE>
                     NEW WORLD BRANDS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - BACKGROUND OF THE COMPANY

         New World Brands, Inc. (formerly Oak Tree Medical Systems, Inc.), a
Delaware corporation, and its subsidiaries (the "Company") import wine and
spirits for distribution in the United States. The Company holds the exclusive
rights to import the wines of Vinicola L.A. Cetto, S.A. de C.V. ("L.A. Cetto")
in the United States. The Company has established arrangements for distribution
of its products with major wine and spirit wholesale distributors from New York
to California. The Company will be going to market in the fall of 2004 with a
new line of ready to drink cocktails.

         On October 16, 2001, the Company entered into a Plan and Agreement of
Reorganization with International Importers, Inc. ("Importers") whereby all
shares of common stock of Importers were converted into and became the right to
receive, in the aggregate, 5,500,000 shares of the Company's common stock. For
accounting purposes, the acquisition of Importers was recorded as a
recapitalization of Importers, with Importers as the acquirer.

         On October 17, 2001, the Board of Directors adopted a resolution to
change the Company's name to New World Brands, Inc. This reflects the new
business plan of the company after the October 16, 2001 reorganization with
International Importers, Inc., a wine and spirits importer.

         On May 19, 2004, the Company received an equity infusion $1,700,000.
The investment group making the investment was led by Dr. Selvin Passen, M.D., a
prominent businessman based in Maryland and Florida and Chairman of Board and
principal executive officer of the Company. $500,000 (5,000,000 common stock
shares) of the equity investment was made by Maple Leaf Distillers, Inc.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

         The consolidated financial statements include the accounts of New World
Brands, Inc. and Subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.

Revenue Recognition

         Wine and spirit revenues are recognized upon delivery of merchandise to
the customers' carrier. Shipping and handling fees are recorded as revenues and
the related costs are recorded as costs of sales. However, one single exception
for Fiscal 2004 was the revenue realized from the Company's three-year agreement
with Gerald Kay pursuant to which Mr. Kay was granted the exclusive rights to
market and sell Xtreme Delight cocktails in the Country of Honduras in

                                       F-7
<PAGE>

consideration for a fee of $105,000. The Company is amortizing this revenue over
the three-year term of the agreement.

Use of Estimates

         In preparing financial statements in conformity with accounting
principles generally accepted in the United States of America, management is
required to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements, as well as the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

Fixed Assets

         The automobile is stated at cost and is being depreciated utilizing the
straight-line method over its estimated useful life of five years.

         Depreciation expense for the years ending May 31, 2004 and 2003
amounted to $10,800 and $10,440, respectively.

Impairment of Long-Lived Assets

         The Company evaluates its long-lived assets and intangible assets for
impairment whenever events or change in circumstances indicate that the carrying
amount of such assets may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount of the asset to
the future net undiscounted cash flows expected to be generated by the asset. If
such assets are considered to be impaired, the impairment to be recognized is
measured by the future discounted cash flows compared to the carrying amount of
the asset.

Income Taxes

         Deferred tax assets and liabilities are recognized for the estimated
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases (principally net operating loss carry forwards). Deferred
tax assets and liabilities are measured using enacted tax rates in effect for
the years in which those temporary differences are expected to be recovered or
settled. A valuation allowance has been established to reduce deferred tax
assets as it is more likely than not that such deferred tax assets will not be
realized. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.

Earnings (Loss) Per Share

         Basic earnings (loss) per common share is based on the weighted-average
number of all common shares outstanding. The computation of diluted earnings
(loss) per share does not assume the conversion, exercise or contingent issuance
of securities that would have an anti-dilutive effect on earnings (loss) per
share.

                                       F-8
<PAGE>

                                                   Year Ended       Year Ended
                                                  May 31, 2004     May 31, 2003
                                                  ------------     ------------
Numerator:
   Net Loss - Basic ..........................    $ (1,134,935)    $ (1,098,657)
                                                  ============     ============
   Net Loss - Diluted ........................    $ (1,134,935)    $ (1,098,657)
                                                  ============     ============

Denominator
   Denominator for basic loss per share
   Weighted average shares ...................      21,823,672       16,179,907

Effect of dilutive securities
   Stock options .............................               -                -
                                                  ------------     ------------

   Denominator for diluted loss per share ....      21,823,672       16,179,907
   Loss per share
      Basic: .................................    $      (0.05)    $      (0.07)
                                                  ============     ============
      Diluted: ...............................    $      (0.05)    $      (0.07)
                                                  ============     ============

         At May 31, 2004 and 2003, approximately 4,155,000 and 2,880,000
potential common shares, respectively, are excluded from the determination of
diluted loss per share, as the effect of such shares is non-dilutive.

Financial Instruments

         Financial instruments include cash, accounts receivable and accounts
payable. The amounts reported for financial instruments are considered to be
reasonable approximations of their fair values. The fair value estimates
presented herein were based on market or other information available to
management. The use of different market assumptions and/or estimation
methodologies could have a material effect on the estimated fair value amounts.

Recent Accounting Pronouncements

         The FASB has issued FIN 46 and related revisions, "Consolidation of
Variable Interest Entities." FIN 46 clarifies the application of Accounting
Research Bulletin No. 51, "Consolidated Financial Statements," to certain
entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activity without additional subordinated financial support
from other parties. FIN 46 should be applied no later than the end of the first
reporting period that ends after March 15, 2004. The Company does not expect the
adoption of FIN 46 to have a material effect on its financial position, results
of operations or cash flows.

NOTE C - LIQUIDITY AND GOING CONCERN

         The accompanying consolidated financial statements have been prepared
in conformity with accounting principles generally accepted in the United States
of America, which contemplate continuation of the Company as a going concern.

                                       F-9
<PAGE>

The Company incurred ongoing substantial losses and used cash from operating
activities in 2004. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. These consolidated financial statements
do not include any adjustments to reflect the possible future effect on the
recoverability and classification of assets or the amounts and classifications
of liabilities that may result from the outcome of these uncertainties.

         During the current year the Company was provided with a capital
infusion of $1,700,000 and has paid off its operating loan, auto loan and line
of credit. These steps were taken to improve the liquidity of the Company. The
Company is in the initial stages of its business plan in an effort to fund
future capital requirements through the sale of its products. Although we
believe we can accomplish our business plan, no assurances exist that we will.
If we fail to accomplish our business plan, it could have an adverse impact on
the Company's liquidity, financial position and future operations.

NOTE D - COMMON STOCK

Consulting Agreements and Option Grants

         In May 2004, 17,000,000 shares of the Company's common stock, along
with Warrants to purchase an additional 2,250,000 shares of the Company's common
stock were sold to several new investors in consideration for $1,700,000 in the
aggregate. The Company has allocated $1,700,000 to the shares shares of common
stock and $0 to the warrants.

         During May 2003, the Company issued 1,000,000 shares of stock to
acquire formulas and packaging of the "Xtreme Delight" spirit-based ready to
drink cocktails.

         For the twelve months ended May 31, 2004, the Company has issued
1,800,000 shares of the Company's common stock in exchange for services of which
980,000 have been returned. The consultants performed services related to
product promotion at a value of $420,000 determined based on the market price of
the common stock. The expense is for past services and reflected in consulting
expenses.

         For the twelve months ended May 31, 2004, the Company has issued 75,000
options to purchase the Company's common stock in exchange for services. The
consultants performed services related to product promotion, general business,
financing, and public/investor relations.

         The Company recorded an expense of approximately $108,000 relating to
options to purchase 1,500,000 shares issued with lives and exercise prices
ranging from 3 to 27 months and $0.14 and $0.40 per share, respectively. Expense
is recorded ratably over the term of each agreement.

Stock Option Plans

         1. The Company has a Performance Equity Plan (the "Plan") under which
it may grant incentive and nonqualified stock options, stock appreciation
rights, restricted stock awards, deferred stock, stock reload options, and other
stock-based awards to purchase up to 600,000 shares of common stock to officers,
directors, key employees, and consultants. The Company may not grant any options

                                      F-10
<PAGE>

with a purchase price less than fair market value of common stock as of the date
of grant.

         2. During October 2001, the Company adopted a stock option plan ("2001
Plan") whereby the Company has reserved 5,000,000 shares of its common stock for
purposes of granting options to purchase such shares pursuant to the Plan.
Options are granted to its officers and employees by the Board of Directors and
to members of the Board on a non-discretionary basis, provided that the exercise
price of the options is equal or greater than the fair market price of the
Company's common stock on the date the option is granted. The Plan terminates 10
years from its effective date.

         For the years ended May 31, 2004 and 2003, a summary of the status of
stock options was as follows:
                                         2004                     2003
                                ---------------------    ---------------------
                                             Weighted                 Weighted
                                              Average                  Average
                                 Number of   Exercise     Number of   Exercise
                                  Shares      Price        Shares      Price
                                ----------   --------    ----------   --------

Outstanding-beginning of year    2,880,000   $   0.25     1,590,000   $   0.45
Granted ......................   2,325,000       0.49     2,550,000       0.18
Exercised ....................  (1,000,000)      0.19      (735,000)      0.12
Expired ......................     (50,000)      0.25      (400,000)      0.63
Cancelled ....................           -          -      (125,000)      0 15
                                ----------   --------     ---------   --------
Outstanding and exercisable-
  end of year ................   4,155,000   $   0.38     2,880,000   $   0.25
                                ==========   ========     =========   ========

         The following table summarizes option data as of May 31, 2004:

                                      Weighted
                                       Average       Weighted
                                      Remaining      Average
                        Number       Contractual     Exercise        Number
                     Outstanding        Life          Price       Exercisable
                     -----------     -----------     --------     -----------

 $0 to $0.99          4,030,000          3.78         $ 0.34       4,030,000
 $1 to $1.99             75,000          2.33         $ 1.33          75,000
 $2 to $3.50             50,000          2.33         $ 2.00          50,000
                      ---------                                    ---------
                      4,155,000                                    4,155,000
                      =========                                    =========

         Statement of Financial Accounting Standards No. 123 ("SFAS No. 123"),
"Accounting for Stock-Based Compensation", establishes financial accounting and
reporting standards for stock-based employee compensation plans. The financial
accounting standards of SFAS No. 123 permit companies to either continue
accounting for stock-based compensation in the results of operations as
additional expense. The disclosure requirements of SFAS No. 123 require

                                      F-11
<PAGE>

companies that elect not to record the fair value in the statement of operations
to provide pro forma disclosures of net income and earnings per share in the
notes to the financial statements as if the fair value of stock-based
compensation had been recorded.

         The Company follows Accounting Principles Board Opinion No. 25 and its
related interpretations in accounting for its stock-based compensation plan. The
Company utilized the Black-Scholes option-pricing model to quantify the expense
of options issued to non-employees and the pro forma effects on net income and
net income per share for the value of the options granted to employees during
the fiscal years ended May 31, 2004 and 2003.

         Under FASB Interpretation No, 44, Accounting for Certain Transactions
Including Stock Compensation (An interpretation of APB No.25), the Company's
repriced options must be valued on a quarterly basis, and the compensation cost
must be recognized and adjusted quarterly for vested options or ratably over the
vesting period for unvested options. Repriced options covering a total of
880,000 shares of the Company's common stock were fully vested on issuance and
are exercisable at prices ranging from $.10 to $.25 per share at May 31, 2004.
On May 31, 2004, the closing price of the Company's common stock was $0.61 per
share. The increase in market price from the end of the prior year resulted in
an expense adjustment of $197,700 for the year ended May 31, 2004, adjusting the
previously recorded compensation adjustment for the year ended May 31, 2003. As
long as the repriced options remain outstanding, the compensation adjustment
remains subject to ongoing quarterly adjustments based on changes in the market
price of the Company's common stock.

         The following assumptions were made in estimating fair value:

                                                  2003
                                                  ----

         Risk-free interest rate                   3%
         Expected volatility                    140-180%
         Expected option life                  1-10 years

         In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-
Based Compensation - Transition and Disclosure, amending FASB Statement No. 123,
Accounting for Stock Based Compensation." This statement amends SFAS No. 123 to
provide alternative methods of transition for an entity that voluntarily changes
to the fair value based method of accounting for stock- based employee
compensation. It also amends the disclosure provisions of SFAS No. 123 to
require prominent disclosure about the effects on operating results of an
entity's accounting policy decisions with respect to stock-based employee
compensation. SFAS No. 148 also amends APB 28, "Interim Financial Reporting" to
require disclosure about those effects in interim financial information. We
adopted the disclosure provisions for the year ended May 31, 2003. The following
table illustrates the effect on results of operations if the Company had applied
the fair value recognition provisions of SFAS No. 123 for the years ended May
31, 2004 and 2003:

                                      F-12
<PAGE>

                                                      2004            2003
                                                      ----            ----

Net loss as reported ........................     $(1,134,935)    $(1,098,657)
Deduct: Total stock-based employee
        compensation determined
        under fair value method for
        stock options, net of tax ...........               -         (67,060)
Pro forma loss applicable
  to common stockholders ....................     $(1,134,935)    $(1,165,717)
                                                  ===========     ===========
Basic loss per share, as reported ...........     $     (0.05)    $     (0.07)
                                                  ===========     ===========
Basic loss per share, pro forma .............     $     (0.05)    $     (0.07)
                                                  ===========     ===========
Diluted loss per share, as reported .........     $     (0.05)    $     (0.07)
                                                  ===========     ===========
Diluted loss per share, pro forma ...........     $     (0.05)    $     (0.07)
                                                  ===========     ===========


NOTE E - INTANGIBLE ASSETS

         During May 2003, the Company purchased the rights, title, and ownership
of the "Xtreme Delight" ready to drink cocktails. The Company issued 1,000,000
shares of the Company's common stock valued at $300,000 on that day. The
intangible assets are deemed to have indefinite useful life and therefore not
subject to amortization.

NOTE F - INCOME TAXES

         For the year ended May 31, 2004, the Company had no current tax expense
and a deferred tax benefit of approximately $40,000. The deferred tax benefit of
$40,000 was offset by an increase to the valuation allowance for the same
amount, resulting in no income tax expense.

         At May 31, 2004, the Company had a deferred tax asset of approximately
$3,600,000,which had a full valuation allowance taken against it.

         The Company has a net operating loss carryforward of approximately
$9,000,000 at May 31, 2004, which can be used to offset future taxable income
through 2024.

         The Company believes there is no limitation on the usage of Federal net
operating losses under Internal Revenue Code Section 382.

NOTE G - RELATED PARTY TRANSACTIONS

         The Chairman of the Board and Chief Executive Officer are a 2.5% and
25% owner of Maple Leaf Distillers respectively, a supplier for New World
Brands, Inc.

         The Company leased its office space on a month-to-month basis from a
company that the former Chairman of the Board is a partner. Rent payments
totaled $3,210 for the period ending May 31, 2004.

                                      F-13
<PAGE>

         For the period ended May 31, 2004, the Company paid $8,235 for
accounting services to a company that the former Chairman of the Board is a
partner.

         In July 2001, a consulting company owned by the daughter in law of the
former Chairman of the Board, exercised stock options to purchase 800,000 shares
of the Company's Common Stock at $0.10 per share. The consulting company offset
a $23,102 advance to the Company as a partial payment and the Company issued a
three-year, interest-bearing note at prime plus 1% for the remaining amount of
$56,898. In October 2001, the consulting company exercised stock options to
purchase 500,000 shares of the Company's common stock. The consulting company
offset a $7,414 advance to the Company as a partial payment and issued to the
Company a three-year, interest-bearing note at the prime interest rate for the
remaining $42,586. The current balance as of May 31, 2004 with accrued interest
$113,366.

NOTE H - VENDOR CONCENTRATIONS

         The Company has an exclusive distributorship agreement with a Mexican
company, which maintains a vineyard and produces various types of wines and
other related wine mixes. The Company has approval from the Federal Agency
(Alcohol, Tobacco, Firearms [ATF]) for the importation of wines into the United
States from Mexico and includes provisions for minimum annual quantity
commitments. The agreement expires August 30, 2006 with a three-year renewal
option, if agreeable by both parties.

         The Company is dependent on a relatively small number of distributors.
As a result, the loss of one or more of the Company's distributors could have a
material adverse effect on the Company's business, financial condition and
results of operations.

NOTE I - MAJOR CUSTOMERS

         Sales to three major customers totaled 86% of our total net sales, made
up of $86,980 (45%), $46,049 (24%) and $33,512 (17%) in 2004.

         Sales to two domestic customers totaled $125,623 (43%) and $48,577
(16%) in 2003.

NOTE J - CONTINGENCIES

         The Company from time to time may be party to various litigation,
claims or assessments. Management believes that the ultimate outcome of these
matters will not have a material affect on the Company's financial position or
results of operations.

                                      F-14