**United
      States**




**Securities
      and Exchange Commission**


**Washington,
      D.C. 20549**







**FORM
      10-KSB**


**(Mark
      One)**


|X|
            **ANNUAL
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934**


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


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





**For
      the transition period from ____________ to
      ____________**





**Commission
      file number 00-32019**


________________________







**TASKER
      CAPITAL CORP.**


(Name
      of
      small business issuer in its charter)







**Nevada**
              (State
                or other jurisdiction of
              Incorporation
                or organization)
            
            **88-0426048**
              (I.R.S.
                Employer
              Identification
                No.)**39
                Old Ridgebury Road, Danbury, CT 06810**
              (Address
                of principal executive offices) (Zip Code)**203-730-4350**
              (Issuer’s
                telephone number)


****


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





**Securities
      registered under Section 12(g) of the Exchange Act:**




**Common
                Stock**
              **300,000,000
                Common Shares Par $0.001 Per Share****(Title
                of each class)**






Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act |_|





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. |X| Yes |_| 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 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. |_|





Indicate
      by checkmark whether the registrant is a shell company (as defined in Rule
      12b-2
      of the Exchange Act.) |_|  Yes  |X| No





State
      issuer’s revenues for its most recent fiscal year: $ 705,467





The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates of the registrant, based on the last sale of the registrant’s
      common stock at the close of March 17, 2006, was approximately $61.8
      million  (reference
      is made to Part II, Item 5 herein for a statement of assumptions upon which
      this
      calculation is based). The registrant has no non-voting stock.





The
      number
      of shares outstanding of our Company’s common stock at March 17, 2006 was
      approximately 104.8 million.





Transitional
      Small Business Disclosure Format (check one): |_|  Yes  |X|
      No





**DOCUMENTS
      INCORPORATED BY REFERENCE**




Items
      10,
      11, 12, 13 and 14 of Part III have been omitted from this report, as we expect
      to file with the Securities and Exchange Commission, not later than 120 days
      after the close of our fiscal year ended December 31, 2005, a definitive proxy
      statement for our annual meeting of stockholders. The information required
      by
      Items 10, 11, 12, 13 and 14 of Part III of this report, which will appear in
      our
      definitive proxy statement, is incorporated by reference into this report.











**INDEX**


Page
            
            **Page****PART
                I**Item
                1.
            Description
                of Business
            3Item
                2.
            Description
                of Property
            18Item
                3.
            Legal
                Proceedings
            19Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            19




**PART
                II**Item
                5.
            Market
                for Common Equity and Related Stockholder Matters and Issuer Purchases
                of
                Securities
            20Item
                6.
            Selected
                Financial Data
            20Item
                7.
            Management’s
                Discussion and Analysis of Financial Condition and Results
                of Operations
            21Item
                7A.
            Quantitative
                and Qualitative Disclosures About Market Risk
            32Item
                8.
            Financial
                Statements and Supplementary Data
            32Item
                9.
            Changes
                In and Disagreements With Accountants on Accounting and
                Financial Disclosure
            32Item
                9A.
            Controls
                and Procedures
            32Item
                9B.
            Other
                Information
            33




**PART
                III**Item
                10.
            Directors
                and Executive Officers of the Registrant
            33Item
                11.
            Executive
                Compensation
            33Item
                12.
            Security
                Ownership of Certain Beneficial Owners and
                Management and Related Stockholder Matters
            34Item
                13.
            Certain
                Relationships and Related Transactions
            34Item
                14.
            Principal
                Accountant Fees and Services
            34




**PART
                IV**Item
                15
            Exhibits
                and Financial Statement Schedules
            34Signatures
            76








2





**CAUTIONARY
      STATEMENT REGARDING FORWARD-LOOKING INFORMATION**





This
      Annual Report, as well as our other reports filed with the SEC and our press
      releases and other communications, contain forward-looking statements.
      Forward-looking statements include all statements regarding our expected
      financial position, results of operations, cash flows, dividends, financing
      plans, strategy, budgets, capital and other expenditures, competitive positions,
      growth opportunities, benefits from new technology, plans and objectives of
      management, and markets for stock. These forward-looking statements are based
      largely on our expectations and, like any other business, are subject to a
      number of risks and uncertainties, many of which are beyond our control. In
      some
      cases, you can identify forward-looking statements by words such as *“may,”
      “should,” “expect,” “plan,” “could,” “anticipate,” “intend,” “believe,”
“estimate,” “predict,” “potential,” “goal,”* or *“continue”* or
      similar terminology.




Forward-looking
      statements are not guarantees of performance. They involve risks, uncertainties
      and assumptions. Future results may differ materially from those expressed
      in
      the forward-looking statements. Many of the factors that will determine these
      results are beyond our ability to control or predict. Investors are cautioned
      not to put undue reliance on any forward-looking statements, which speak only
      to
      the date made.




For
      a
      discussion of some of the factors that may cause actual results to differ
      materially from those suggested by the forward-looking statements, please read
      carefully the information under “Risk Factors” beginning on page 18 of this
      Annual Report.




The
      identification in this document of factors that may affect future performance
      and the accuracy of forward-looking statements is meant to be illustrative
      and
      by no means exhaustive. All forward-looking statements should be evaluated
      with
      the understanding of their inherent uncertainty.




Unless
      we
      are required to do so under U.S. federal securities laws or other applicable
      laws, we do not intend to update or revise any forward-looking statements.





**PART
      I**





As
      used
      in this annual report on Form 10-KSB, "we," "us," "our," "Tasker" and "our
      Company" refer to Tasker Capital Corp. and our subsidiaries, unless the context
      otherwise requires.








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







**BUSINESS
      OF OUR COMPANY**





**Overview**





Tasker
      manufactures, distributes and markets products using a patented process (the
      “pHarlo technology”) that utilizes a safe solution that enables copper sulfate,
      a compound with bacteriostatic properties, to remain active throughout a wide
      range of pH values. The Company currently markets: Unifresh® Footbath, a
      grooming aid for dairy cows, Tasker Pacific BlueTM Seafood Wash, and Close CallTM
an oral hygiene breath drink.




The
      Company has begun the in-plant commercial verification process for United States
      Department of Agriculture (“USDA”) approval to use the pHarlo technology in the
      scalder process of poultry processing. The Company is in the process of
      conducting tests of the pHarlo technology in other pre- and post-harvest food
      processing applications including seafood and poultry farming. The Company
      is
      also in various stages of developing future product lines using the pHarlo
      technology.




The
      Company is in the development stage; therefore, recovery of its assets is
      dependent upon future events, the outcome of which is indeterminable.




**Corporate
      History**





Tasker
      Capital Corp. was organized as a Nevada corporation on February 2, 1999, to
      explore for and, if possible, develop mineral properties primarily in the
      Province of British Columbia, Canada, through its wholly owned subsidiary,
      Tanuta Ventures Corp. ("Tanuta"). Tanuta was incorporated under the laws of
      the
      Province of British Columbia, Canada, on May 13, 1996. This initial business
      endeavor ceased in 2002.




In
      late
      2002, the Company entered into an Exclusive License Agreement with a privately
      held development company, pHarlo Citrus Technologies, Inc. (“PCTI”), to sell,
      develop, market and distribute consumer deodorant breath products, animal breath
      products and soft drink products using PCTI’s patented pHarlo technology. In
      2004, the Company cancelled the 2002 license agreement and entered into two
      Exclusive License Agreements, one covering the products covered by the 2002
      license, and the other covering the sale, marketing and distribution of
      post-harvesting processing aids to the poultry industry. In July 2005 the
      Company acquired certain assets (see Note 12 to the Consolidated Financial
      Statements) of PCTI, Indian River Labs, LLC (“IRL”), pHarlo Citrus Properties
      Partnership, LLLP (“PCPP”), and Coast to Coast Laboratories, LLC (“C2C”, and
      together with PCTI, PCPP and IRL, the “Selling Companies”) and now owns the
      utility patent applications and provisional patent applications associated
      with
      the pHarlo technology in the Company’s fields of use. We refer to this
      acquisition as the “2005 Acquisition” in this Annual Report. In connection with
      the 2005 Acquisition, Tasker also entered into a new sub-license agreement
      for
      the base patents associated with the pHarlo technology.





**Management
      Changes**





On
      November 22, 2005, the Board of Directors of the Company (the “Board”)
      terminated Robert P. Appleby as the Company’s Chief Executive Officer and
      President. On December 23, 2005, Mr. Appleby resigned from the
      Board.  Effective
      January 26, 2006, the Board appointed Richard D. Falcone, Chairman of the
      Board’s Audit Committee since August 2005, as the new President and Chief
      Executive Officer of the Company. In connection with his appointment as
      President and Chief Executive Officer, Mr. Falcone resigned from service on
      the
      Audit Committee and Compensation Committee. Effective February 3, 2006, the
      Company appointed Mr. Albert A. Canosa to fill a vacancy on the Board. Mr.
      Canosa serves as the new Chairman of the Audit Committee and also serves on
      the
      Compensation Committee.




On
      February 8, 2006, the Company appointed Mr. Stathis Kouninis to serve as the
      Company’s Chief Financial Officer replacing Mr. Robert Jenkins, who resigned
      effective February 8, 2006.




3




**Financings**





To
      fund
      the Company’s operations, the Company completed three financings in 2004. In
      April 2004, the Company sold $800,000 of 7% debentures, convertible into common
      shares at $0.05 per share; warrants to purchase 8,000,000 shares at $0.10 per
      share (subsequently modified to $0.05 per share in September 2004 and $0.01
      per
      share in May 2005), which expire five years from the date of issuance and
      warrants to purchase 8,000,0000 shares of common stock at $0.20 per share
      (subsequently modified to $0.05 per share in September 2004 and $0.01 per share
      in May 2005). In July 2004, the Company completed a private placement of
      $1,647,674 of convertible debentures with an original discount of 16%, which
      were convertible into 8,238,370 common shares at $0.20 per share, and warrants
      to purchase 3,461,500 of its common shares at $0.25 per share (subsequently
      the
      exercise price of the warrant was modified to $0.05 per share in September
      2004
      and $0.01 per share in May 2005), which expire five years from the date of
      issuance. In December 2004, the Company completed the private placement of
      9,406,250 shares of its
      common stock with several accredited investors for an aggregate purchase price
      of $15,050,000. Emerging Growth Equities Ltd. served as placement agent and
      received a cash payment of 6% of
      the
      funds raised in the offering and
      a
      warrant to purchase 562,500 of
      Tasker’s common shares exercisable
      at $2.00 per
      common share, which expires in three years.




In
      September 2005, the Company raised an additional $6,484,599 through the sale
      of
      2,947,545 shares of its common stock, to a group of accredited investors, at
      a
      purchase price of $2.20 per share. As part of this placement the investors
      also
      received warrants exercisable for 1,473,679 of the Company’s common stock at an
      exercise price of $3.00 per share (subsequently the exercise price of the
      warrant was modified to $1.00 per share in January 2006). The warrants expire
      five years from the date of issuance.




In
      January 2006, the Company sold 13,335,925
      units consisting of one share of common stock and a warrant to purchase one
      share of common stock at an exercise price of $1.00 per share for $0.70 per
      unit. The gross proceeds to the Company at the closing of this private
      placement, exclusive of the exercise price of the warrants, were $9,335,148.
      The
      warrants expire five years from the date of issuance. Emerging Growth Equities,
      Ltd. served as placement agent for the transaction. As compensation for serving
      as placement agent, Emerging Growth Equities, Ltd. received a cash payment
      equal
      to 6% of the gross proceeds from the private placement, and also received a
      warrant exercisable for shares of the Company’s common stock in an amount equal
      to 6% of the gross proceeds from the sale of the shares and warrants divided
      by
      $0.70. The warrant to Emerging Growth Equities has an exercise price of $1.00
      and is exercisable immediately for a term of five years.





**Current
      and Projected Markets**





On
      November 21, 2005, the Company announced that it planned to refocus the
      Company’s operations, reduce costs, strengthen management and streamline
      operations. As part of this refocusing effort, the Company reviewed its various
      product lines, and announced its intention to concentrate its resources on
      the
      development of its poultry processing products, its seafood processing products
      and its Unifresh ® Footbath
      and Unifresh ® Pen
      Spray products.





4





**Products**





*Unifresh* ® *Footbath*





The
      Company currently markets Unifresh ® Footbath
      concentrate, a grooming aid that helps clean and disinfect the hooves of dairy
      cows. Because of the bacteriostatic properties of the pHarlo technology, the
      product helps control bacteria that infect the hooves of cows and cause
      interdigital dermatitis and interdigital papillomatosis. Unifresh ® Footbath
      concentrate was launched during the third quarter of 2005. In the fourth quarter
      of 2005, the Company discovered that its Unifresh ® Footbath
      product’s effectiveness was diminished in water that had abnormally high
      alkaline content. The Company reformulated its Unifresh ® Footbath
      concentrate with the addition of a compound that neutralizes alkali. In the
      first quarter of 2006, the Company introduced its enhanced formulation to the
      market. It is currently being sold to dairy farms throughout the U.S. through
      the company’s sales force, independent brokers and farm product distributors.
      The Company currently markets the product as a grooming aid, but there can
      be no
      assurance that the US Food and Drug Administration (the “FDA”) will agree with
      this characterization or the product claims, which could result in additional
      regulatory requirements or potentially subject the Company to a variety of
      enforcement actions. See “Risk Factors”.





*Unifresh* ® *Pen Spray*





In
      2005,
      Groupe Doux, one of Europe’s premier poultry processors, began conducting
      in-house tests on Tasker’s Unifresh ® Pen
      Spray, a product that is still in development in the United States. These
      initial tests were designed to verify the appropriate delivery mechanism for
      Unifresh ® Pen
      Spray in pens with high concentrations of poultry and to test the efficacy
      of
      the product. Unifresh ® Pen
      Spray is a product designed to reduce or neutralize the ammonia byproduct in
      poultry pens. High ammonia levels can have adverse effects on poultry health,
      including impacting weight and mortality rates. Unifresh ® Pen
      Spray, which is in development and is expected to begin testing in the United
      States this year, is a product designed to reduce or neutralize the ammonia
      byproduct in poultry pens. On February 9, 2006, the Company announced that
      Groupe Doux had begun the second phase of testing of Unifresh ® Pen
      Spray. This phase of testing will be conducted at several of Groupe Doux’s
      poultry farms in France, over a fifteen week period and is expected to achieve
      a
      suitable statistical representation that will provide more reliable results.
      The
      Company also expects to begin testing Unifresh ® Pen
      Spray in the United States in 2006.





*Poultry
      Processing Products*





In
      August
      2005, the Company began the in-plant commercial verification process for USDA
      approval to use the pHarlo technology in the scalder process of poultry
      processing. The first in-plant commercial verification test was completed in
      October 2005, and submitted to the USDA shortly thereafter. On February 6,
      2006
      the Company received a Letter of No Objections from the Food Safety and
      Inspection Service (“FSIS”) of the USDA for the continuation of in-plant trials
      at the facility in Athens, Georgia, as well as two additional poultry
      processors. The trial involves the use of the Company’s pHarlo Blue product as
      an antimicrobial in the scalder and post-feather picker processes. Upon the
      successful completion of these trials, which began in March 2006 and are
      scheduled to be completed late in the second quarter of 2006, a summary of
      the
      results will be submitted to the FSIS for review and, upon the receipt of a
“No
      Objections” letter from the FSIS, the Company will begin the commercialization
      phase for the specific applications. While the Company expects the product
      to be
      approved for this use, there can be no assurance of this result.




5




In
      February 2005, the Company announced that it was working with Groupe Doux to
      procure European Union regulatory approval for use of the pHarlo technology
      in
      the scalder and chill processes of poultry processing. Upon receiving approval
      from the European Union, Groupe Doux has indicated to the Company that it
      anticipates utilizing the pHarlo technology in its European poultry processing
      plants. There can be no assurance that the European Union will approve the
      use
      of the pHarlo technology for use in poultry processing and, if such approval
      is
      achieved, there can be no assurance that the Company will enter into a
      commercial contract with Groupe Doux or, if it does, that such a commercial
      contract will be profitable.




In
      addition to the testing of the Company’s pHarlo technology for use in poultry
      processing and in poultry pens by Groupe Doux in France, the Company has a
      number of initiatives for use of the technology underway in several
      international markets, including Mexico, Chile, New Zealand and Australia.
      Product registrations and regulatory approvals are underway in some of these
      markets. Commercial site testing will begin upon receipt of all necessary
      government approvals.





*Seafood
      Processing Products*





The
      Company recently began marketing the pHarlo technology for use in pathogen
      reduction and shelf life extension in seafood processing subject to the receipt
      of any necessary regulatory approvals. Its product, Tasker Pacific BlueTM Seafood
      Wash, has been tested at the North Carolina State Center for Marine Science
      & Technology, Virginia Tech University and Mississippi State University on
      shrimp, mahi mahi, salmon, flounder, scallops and catfish. The results of these
      studies indicated that the pHarlo technology could possibly double the shelf
      life on catfish filets and significantly increase the shelf life of scallops.
      Commercial scale run tests began in December 2005.








*Close
      CallTM*





The
      Company’s oral hygiene drink, Close
      Call Ô ,
      is
      marketed as an oral hygiene breath drink that eliminates odors from tobacco,
      garlic, onion and alcohol. The Company currently markets the product as a
      cosmetic, but there can be no assurance that the FDA will agree with this
      characterization or the product claims, which could result in additional
      regulatory requirements and potentially subject the Company to a variety of
      enforcements actions. See “Risk Factors”.





The
      Company believes that its Close CallTM product could be marketed more efficiently
      by a company either already established in the industry or with more commercial
      resources. Therefore, the Company currently plans to seek to license and/or
      sell
      the Close CallTM brand or derivative applications.




**Government** **Approvals
      and**  **Regulations**





The
      ingredients used to produce the pHarlo concentrate are acknowledged
      as **"** Generally
      Recognized as Safe" ("GRAS") by the Food and Drug Administration
      (“FDA” **)** . 
      Therefore, the Company believes that our current line of products that utilize
      the pHarlo concentrate, including the intended uses of these products do not
      require further approval by the FDA.  These ingredients are already in wide
      use in the food industry and are readily available.  The unique combination
      of these ingredients and the preparation process of the pHarlo formula are
      protected under two U.S. patents and are covered in several pending patent
      applications in the U.S. and elsewhere.  The use of the pHarlo technology
      in food processing, with the exception of meat and poultry, is covered by
      FDA.




6





The
      use
      of the pHarlo technology in meat and poultry food processing applications
      requires the approval of the USDA. In August 2005, the Company began the
      in-plant commercial verification process for USDA approval to use the pHarlo
      technology in the scalder process of poultry processing. The first in-plant
      commercial verification test was completed in October 2005. On February 6,
      2006
      the Company announced that it had received a Letter of No Objections from FSIS
      of the USDA for the continuation of in-plant trials at the facility in Athens,
      Georgia, as well as two additional poultry processors. While the Company expects
      the product to be approved for this use, there can be no assurance of this
      result.




The
      Company also intends to market the pHarlo technology for use in seafood
      processing, and may resume efforts to introduce the pHarlo technology in skin
      care and pet care products. If marketed in the US, each of these product lines
      could potentially be subject to a variety of federal, state, and regulatory
      authorities which could require additional testing, registration, pre-market
      approval, labeling, manufacturing, safety, recordkeeping and other obligations.
      There can be no assurance that the Company will ultimately market these
      products, that the products will obtain the necessary approvals, or, if granted,
      that the approvals will not include significant limitations on the indicated
      use
      for which the products may be marketed or other restrictions or requirements
      that may reduce the value of the products.





**Manufacturing**





The
      Company currently manufactures the concentrate used for all of the products
      it
      currently markets, including Close Call Ô and
      Unifresh ® Footbath, in its facility located in Conroe, Texas. The Company believes its
      facility procedures and manufacturing process assures the finished products
      meet
      specifications and comply with applicable regulatory requirements, but there
      can
      be no assurance that the pertinent regulatory authorities will agree with this
      conclusion, which could result in a variety of enforcement actions. It is
      possible that additional manufacturing facilities or controls will be necessary
      to market the product lines currently under development.





**Str** **ategic
      Relationships**





In
      2004,
      the Company entered
      into an Exclusive Field of Use License Agreement and Product Sale Agreement
      with
      Wynn Star Specialty Flavors LLC ("Wynn Starr"). Under the terms of this
      agreement and its subsequent amendments, the Company has granted Wynn Starr
      the
      exclusive, worldwide right to market and distribute products used as
      post-harvesting processing aids for the poultry industry based on the pHarlo
      technology. Wynn Starr is also responsible for taking the pHarlo concentrate
      provided by the Company and blending it with liquids to create the finished
      product that is ultimately distributed by Wynn Starr. In return for this
      license, Wynn Starr has agreed to pay the Company a royalty of $70.00 per gallon
      on all net sales (as defined in the Exclusive Field of Use License Agreement
      and
      Product Sale Agreement) sold by Wynn Starr for which payment is received from
      customers. The Company is currently renegotiating the royalty payments
      associated with the Exclusive Field of Use License Agreement and Product Sale
      Agreement. As has been previously disclosed in our filings with the Securities
      and Exchange Commission, Steven Zavagli, one of the Company’s directors, is the
      founder, Chairman and the Chief Executive Officer of Wynn Starr and Wynn Starr’s
      ultimate parent company, Wynn Starr Flavors.




7





Due
      to
      the 2005 Acquisition, Tasker now owns the tangible assets used in the
      manufacturing process for the pHarlo concentrate. The pHarlo concentrate is
      based upon both the patent applications that the Company purchased in the
      acquisition, as well as on the base patents associated with the pHarlo
      technology. The Company has entered into an exclusive worldwide license, the
      Sub-License Agreement, with pHarlo IP, LLC (“pHarlo IP”), the exclusive licensee
      of the base patents, to exploit the base patents in the Company’s fields of use.
      Pursuant to the Sub-License Agreement, the Company also granted pHarlo IP an
      exclusive (even to Tasker) royalty-free worldwide right and license to import,
      export, make, manufacture, use and sell any inventions outside of the Company’s
      fields of use that were disclosed and claimed in the patent applications that
      the Company purchased in the acquisition. The terms of the Sub-License Agreement
      are more fully discussed under the caption “Business of Our Company—Tasker’s
      Intellectual Property Rights”.




**Distribution
      Channels**





Tasker
      expects to sell its products through distributors, strategic intermediaries
      (such as Wynn Starr), and directly to commercial end-users. The choice of
      distribution channel will vary by product and will be decided by Company
      management according to its strategic objectives.





**Competition**





Several
      of the industries in which Tasker will be marketing its products are
      characterized by intense competition. Although its oral hygiene product, Close
      Call TM ,
      is
      swallowed rather than expectorated like mouthwash, this product may have to
      compete within the mouthwash industry generally. The mouthwash industry is
      a
      mature industry with several participants, many of which are divisions of large
      corporations, such as Listerine ® (Pfizer), Scope ® (Procter
& Gamble), ACT ® (Johnson
& Johnson), Peroxyl ® (Colgate), and Cepacol ® (Combe).
      The Company believes Close Call TM has a
      major advantage over its competition because of Tasker’s use of pHarlo as a key
      ingredient, which effectively eliminate bad breath odors caused from eating,
      smoking and drinking.




Currently,
      there is no competition for bacterial inhibitors in the scalding process of
      poultry processors. The Company believes that the introduction of the pHarlo
      technology to this specific operation will be considered a breakthrough in
      the
      endeavor to reduce pathogenic bacteria in poultry products. Since Tasker intends
      to expand the use of the pHarlo technology into the remaining operations of
      poultry processing—specifically, the on-line reprocessing area and the chill
      process—it will encounter competition in the chill process from manufacturers of
      sodium hydrochloride. Tasker believes that its product presents a healthier,
      yet
      more effective, alternative to the use of sodium hydrochloride. The Company
      further believes that, because the poultry processing industry is a very large
      industry, Tasker’s presence in that market will attract other products designed
      to reduce or eliminate bacteria. The Company believes that the efficacy of
      the
      pHarlo technology and its price competitiveness will enable it to effectively
      compete against existing and future competitive products in the poultry
      processing industry.




8




The
      Company’s license with pHarlo IP entitles it to develop and market uses of the
      pHarlo technology in pre-harvest and post-harvest food processing, skin care,
      oral care (including hangover remedy and alcohol abatement), water purification
      and pet care industries. Competition in these markets is intense; however,
      the
      Company believes that the pHarlo technology will provide it with competitive
      advantages in these selected markets.




**Dependence
      on Certain Customers**





Since
      the
      Company is in the development stages of the introduction of its
      products ,
      it has
      not developed a sufficient revenue source to determine a dependence on any
      one
      group of customers for revenue.





**Tasker’s
      Intellectual Property Rights**





Pursuant
      to the 2005 Acquisition, the Company acquired the rights to the following
      utility patent applications, which applications include both US applications
      and
      applications in other countries (pursuant to The Patent Cooperation Treaty),
      and
      include two US Provisional Applications not yet subject to any international
      application (the “Transferred Patents”):





·
            Antimicrobial
                Composition for Pre-Harvest and Post-Harvest Treatment of Plants
                and
                Animals


·
            Skin
                Care Composition for Dermatological Disorders including burn and
                wrinkle
                creams (US Provisional Application)


·
            Oral
                Health Care Drink and Method for Reducing Malodors


·
            Antimicrobial
                Food Additive and Treatment for Cooked Food, Water and Wastewater


·
            Antimicrobial
                Processing Aid and Food Additive (US Provisional Application)


·
            Hangover
                Remedy and Alcohol Abatement Composition





In
      addition to the utility patent applications and provisional patent applications
      described above, the Company has also entered into a Patent and Technology
      Sub-License Agreement (the "Sub-License Agreement"), with pHarlo IP. Pursuant
      to
      the Sub-License Agreement, pHarlo IP has granted the Company an exclusive
      worldwide license to exploit the Base Patents (as defined below) in the
      following fields of use (the "Fields of Use"):





1.
            Pre-harvest
                food processing and safety applications, including treatment for
                plants
                and animals;





2.
            Post-harvest
                food processing and safety applications, including treatment for
                plants
                and animals, including the
                following:





a.
            antimicrobial
                processing aide and food additive including specific seafood applications,
                and




b.
            antimicrobial
                for airborne contaminants on cooked
                food;





3.
            Breath
                and mouthwash applications;





4.
            Hangover
                and alcohol abatement applications;





5.
            Topical
                palliative for dermatological disorders, including skin moisturizing
                applications, anti-wrinkle applications and burn treatment applications;





6.
            Pet
                product applications; and





7.
              Antimicrobial
                  water treatment applications.
 9


Pursuant
      to the Sub-License Agreement, the Company granted to pHarlo IP a royalty-free,
      worldwide exclusive right and license to import, export, make, manufacture,
      use
      and sell any inventions outside the Fields of Use which are disclosed and
      claimed in the Transferred Patents. In addition, pHarlo IP has the right to
      sublicense and assign to third parties all of the rights and licenses granted
      by
      the Company with respect to the Transferred Patents.




To
      the
      extent that pHarlo IP expresses an intent to enter into a transaction with
      an
      unaffiliated third party pursuant to which the third party would acquire rights
      related to the Base Patents outside the Fields of Use, the Company has the
      right
      of first refusal to enter into the transaction with pHarlo IP for the same
      consideration and on the same terms offered to the third party ("Right of First
      Refusal").




Subject
      to certain conditions, the Company will have a 10% equity ownership interest
      in
      Phitex Ltd. LLLP ("Phitex"), the direct one hundred percent owner of pHarlo
      IP,
      the sole and exclusive licensee of the Base Patents. In the event the Company
      elects not to exercise its Right of First Refusal for rights to the Base Patents
      outside the Fields of Use, as an equity owner the Company would share in the
      monetary benefits derived by Phitex from any transaction between pHarlo IP
      and
      an unaffiliated third party pursuant to which that third party acquires rights
      to exploit the Base Patents outside the Fields of Use. Prior to the issuance
      of
      the Phitex equity interests, (i) the prospectus that forms part of the
      registration statement covering the resale of the shares acquired by the Selling
      Companies in the 2005 Acquisition must be amended or supplemented so that the
      Selling Companies can sell such shares for a period of 60 consecutive days;
      (ii)
      the Company must be in compliance with all of its obligations under the Asset
      Purchase Agreement forming part of the transaction documents for the 2005
      Acquisition (subject to certain exceptions); and (iii) the Company must enter
      into a lock-up and repurchase right agreement relating to its Phitex equity
      interests. Under the lock-up and repurchase right agreement, Phitex will retain
      the right to repurchase the Company’s equity interests for a nominal amount upon
      a change of control of the Company.




The
      technology that forms the basis of the pHarlo technology is derived from U.S.
      Patent No. 5,989,595, U.S. Patent No. 6,242,011 and U.S. Patent Application
      Serial No. 10/453,805 (the "Base Patents"). pHarlo IP is the sole and exclusive
      licensee of the Base Patents pursuant to a certain License Agreement by and
      between Mr. Barry Cummins and pHarlo IP, dated July 15, 2005 and effective
      as of
      March 18, 2005 (the "Base License"). Pursuant to the Base License, pHarlo IP
      is
      required to pay to Mr. Cummins royalties ("Base License Royalty Payments").
      Pursuant to the Sub-License Agreement, in the event that pHarlo IP defaults
      in
      its obligations to make the Base License Royalty Payments to Mr. Cummins, pHarlo
      IP is required to assign that portion of the Base License representing all
      of
      the rights sublicensed to the Company under the Sub-License Agreement to the
      Company, and the Company will assume pHarlo IP’s obligation to pay the Base
      License Royalty Payments.




10




Prior
      to
      the 2005 Acquisition, on December 7, 2004, the Company entered into a Settlement
      Agreement and General Release pursuant to which the Company effectively
      purchased the exclusive rights of first refusal to applications of the pHarlo
      technology from Richard J. Kirby, a developer who had previously purchased
      the
      rights on July 19, 2002. Under the terms of the settlement agreement, Mr. Kirby
      assigned and granted all his rights, titles and interests in his license
      agreements with PCTI to the Company for which the Company agreed to pay Mr.
      Kirby one half of one percent (0.5%) of net revenues generated from products
      using the pHarlo technology, in an amount not to exceed $400,000 in any one
      calendar year. The agreement continues until the termination of or expiration
      of
      PCTI’s patent to the licensed technology.




On
      January 26, 2006, the Company entered into a letter agreement with the Selling
      Companies and pHarlo IP that amended certain terms of the transaction documents
      related to the 2005 Acquisition, including the Sub-License Agreement. The
      Sub-License Agreement was amended, in part, to restructure the fees payable
      to
      pHarlo IP. Prior to the amendment, pHarlo IP had agreed to provide to the
      Company technical assistance necessary to implement, refine and exploit the
      base
      patents for the pHarlo technology in the Fields of Use. In consideration for
      the
      technical assistance, the Company had agreed to pay to pHarlo IP, in advance,
      prior to the calendar quarter for which they are payable, certain research
      and
      development fees (“R&D Fees”). The R&D Fees were originally set at a
      fixed amount and although subject to recovery in certain circumstances, were
      not
      dependant on sales of the Company’s products until certain thresholds had been
      met.




The
      amendment restructures the R&D Fees so that they are (i) payable on a
      quarterly basis within 30 days after the end of each calendar quarter and (ii)
      are based on gross sales of the Company (or its affiliates) of products using
      the pHarlo technology. For fiscal year 2006, the R&D Fees must not be less
      than $150,000 and are capped at $500,000. There are no other minimum R&D
      Fees payable after 2006, although R&D Fees for all subsequent years are
      capped at specified rates.




**Research
      and Development**





Research
      and development of new products using the pHarlo technology, as well as other
      products, are continually under development. The Company’s efforts in this area
      are focused on the product applications to which it currently has rights of
      use.
      It is the Company’s intention to develop and market commercially viable
      applications for this technology within its product ranges.





**Number
      of Total Employees and Number of Full-time Employees**





In
      connection with the refocusing effort announced in November 2005, the Company
      has also reduced monthly expenses. Specifically,
      the Company has reduced the number of full time employees by approximately
      41%,
      including a reduction in its corporate staff of approximately 39%, and a
      reduction in its Conroe, TX manufacturing facility staff of approximately 47%.
      The Company has also hired a new management team. See “Description of Our
      Company— Management
      Changes ”.
      The
      Company believes that its reduced staff can provide sufficient product and
      perform the necessary duties to forward the Company’s objectives for the
      foreseeable future. At
      March
      17, 2006, we had 33
      full-time employees, 10 of
      whom
      are in sales & marketing, 8 of whom are in research and development, 8 of
      whom are in warehousing and production and 7
      of whom
      are in finance and administration.  None
      of
      our employees are represented by a labor union. We have not experienced any
      work
      stoppages and believe that employee relationships are good. Our future success
      will depend in part on our ability to attract, retain and motivate highly
      qualified technical and managerial personnel.




11





**RISK
      FACTORS**





**RISKS
      RELATED TO OUR BUSINESS AND COMPANY**




***We
      have a limited operating history in our present market and prospective investors
      have a limited historical basis on which to judge our ability to be successful.***




Our
      Company was originally organized for the purpose of engaging in the acquisition
      and exploration of mineral properties, primarily in the Province of British
      Columbia, Canada. During 2001, our Company allowed the option on our mineral
      property to lapse and began to investigate other business opportunities. In
      late
      2002, we entered into an exclusive license to sell, develop, market and
      distribute consumer deodorant breath products, animal deodorant breath products
      and soft drink products using the pHarlo technology. Since late 2002 we have
      pursued this business plan and have expanded it to include the use of the pHarlo
      technology in the pre-harvest and post-harvest food processing, skin care,
      pet
      products, hangover remedy, alcohol abatement and water purification industries.
      Additionally, we are investigating the applicability of the pHarlo technology
      to
      fishing boats, seafood farms, and commercial and retail seafood processing.




Since
      inception, we have suffered recurring losses and net cash outflows from
      operations. We expect to continue to incur substantial losses to complete the
      development of our business. In addition, we only recently began shipping our
      first product, Close Call TM ,
      in
      February of 2005. We thus have a limited operating history upon which investors
      may base an evaluation of our likely future performance.




***We
      recently completed a significant acquisition of certain assets of pHarlo Citrus
      Technologies, Inc. and other related entities. We cannot guarantee that we
      will
      be able to manage these new assets profitably.***




On
      July
      15, 2005, we purchased certain assets of PCTI, IRL, PCPP and C2C. The purchased
      assets include all of the functional assets of these entities that relate to
      our
      product lines and fields of use, including several utility patent applications
      and provisional patent applications. In addition, we also purchased all of
      the
      working assets of IRL and C2C. As part of the consideration for the acquired
      assets, we issued 18,992,388 shares of our common stock (net of purchase price
      adjustments totaling 677,662 shares) and issued and delivered to IRL a
      promissory note in the principal amount of $1,931,973, paid $1,428,000 in cash
      and cancelled certain promissory notes issued to us by the Selling Companies
      and
      certain equity holders of the Selling Companies totaling approximately
      $2,404,322.




This
      represents a highly significant acquisition for our Company. Prior to the
      acquisition, we licensed the use of these patents applications from the Selling
      Companies and also purchased concentrate (the so-called “pHarlo concentrate”)
      which is made using these patent applications from IRL. As a result of the
      acquisition (and the purchase of all of the working assets of IRL), we now
      control the manufacturing process of the pHarlo concentrate. There can be no
      assurance that we will successfully manage this manufacturing process.




12




***We
      have limited experience in the marketing of our products and may not be able
      to
      market them successfully.***




We
      currently market Close Call TM ,
      an oral
      hygiene breath drink and Unifresh Footbath, a grooming aid that helps clean
      and
      disinfect the hooves of dairy cows. We have also begun clinical testing of
      the
      pHarlo technology in the poultry scalding process and in various seafood
      applications. We are continuing our clinical research and hope to develop future
      products using the pHarlo technology in the pre-harvest and post-harvest food
      processing, oral care, skin care, pet products, hangover remedy, alcohol
      abatement and water treatment industries.




These
      are
      diverse markets and we may not be aware of all the customs, practices and
      competitors in these industries. We believe that we will need to hire
      appropriate consultants and staff to reach all of these markets successfully.
      The consultants that we may retain may not have had sufficient experience to
      enable us to completely understand the characteristics of these diverse
      industries. There can be no assurance that we will properly ascertain or assess
      any and all risks inherent in our proposed markets or that we will successfully
      enter into new markets or grow in our existing markets.




***Our
      ability to reach some of the markets currently set forth in our business plan
      will require regulatory approval. In addition, new products that we may develop
      or acquire may also require regulatory approval.***




The
      ingredients that we use to produce the pHarlo concentrate are acknowledged
      as
“generally recognized as safe” (“GRAS”) by the U.S. Food and Drug Administration
      (the “FDA”). Therefore, we believe that our current line of products that
      utilize the pHarlo concentrate, including the intended uses of these products,
      do not require further approval by the FDA. However, we may develop or acquire
      future products that use ingredients that will need to be approved by the FDA,
      or we may alter the intended uses of our current product, such that those
      products require additional FDA approvals. There can be no assurance that FDA
      approval, if necessary, will be obtained.




In
      addition, the use of our pHarlo concentrate in the meat and poultry processing
      applications requires the approval of the USDA. We have an application for
      the
      use of the pHarlo technology in the scalder process of poultry processing with
      the USDA. In August 2005, the Company began the in-plant commercial verification
      for USDA approval of the pHarlo technology in the scalder process of poultry
      processing. The first in-plant commercial verification test was completed in
      October 2005, and submitted to the USDA shortly thereafter. On February 6,
      2006
      the Company received a Letter of No Objections from the FSIS of the USDA for
      the
      continuation of in-plant trials at the facility in Athens, Georgia, as well
      as
      two additional poultry processors. Upon the successful completion of these
      trials, which are scheduled to begin during the second quarter 2006 and expected
      to be completed during the summer of 2006, a summary of the results will be
      submitted to the FSIS for review and, upon the receipt of a “No Objections”
letter from the FSIS, the Company will begin the commercialization phase of
      the
      specific application. There can be no assurance that we will successfully
      complete the commercial verification process. If we do not successfully complete
      the commercial verification process, this may have a material adverse effect
      on
      our business plan.




In
      addition to the poultry processing industry, the Company also intends to market
      the pHarlo technology for use in seafood processing, and may resume efforts
      to
      introduce the pHarlo technology in skin care and pet care products. If marketed
      in the US, each of these product lines could potentially be subject to a variety
      of federal, state, and regulatory authorities which could require additional
      testing, registration, premarket approval, labeling, manufacturing, safety,
      recordkeeping and other obligations. There can be no assurance that the products
      will obtain the necessary approvals, or, if granted, that the approvals will
      not
      include significant limitations on the indicated use for which the products
      may
      be marketed or other restrictions or requirements that may reduce the value
      of
      the products.




13


Finally,
      the Company also intends to market its products internationally. If marketed
      internationally, each of its products lines could potentially be subject to
      a
      variety of international regulatory authorities which could require additional
      testing, registration, pre-market approval, labeling, manufacturing, safety,
      recordkeeping and other obligations. There can be no assurance that the products
      will obtain the necessary approvals, or, if granted, that the approvals will
      not
      include significant limitations on the indicated use for which the products
      may
      be marketed or other restrictions or requirements that may reduce the value
      of
      the products.





***We
      have lost money in each fiscal quarter since we changed our business model
      to
      the development of products in the oral care, food processing, skin care, water
      purification and pet industries. We expect future losses and we may never become
      profitable.***




We
      have
      incurred losses from operations in each quarter since we changed our business
      direction in late 2002. Our net losses for the years ended December 31, 2005,
      December 31, 2004, December 31, 2003 and December 31, 2002 were $18,268,628,
      $6,071,615, $607,080 and $761,252, respectively. We expect to continue to incur
      losses in the short term. We expect to maintain our level of operating expenses
      in the near term until such time as we begin to generate revenue from our
      various applications, after which we expect to increase operating expenses
      as we
      attempt to build our brands, expand our customer base and develop new products.
      To become profitable, we must increase revenue substantially and achieve and
      maintain positive gross margins. We may not be able to increase revenue and
      gross margins sufficiently to achieve profitability.




***A
      key component of our business strategy is the proprietary nature of the pHarlo
      concentrate, and therefore our inability to protect our intellectual property
      rights could materially harm our business.***




The
      pHarlo concentrate that we produce is based upon both the patent applications
      that we purchased in the 2005 Acquisition, as well as on certain base patents
      and base patent applications that we sub-license. We have entered into an
      exclusive worldwide royalty free sub-license with pHarlo IP, the exclusive
      licensee of the base patents and base patent applications, to exploit these
      base
      patents and applications in certain fields of use. Protecting this intellectual
      property, in addition to protecting the patent applications that we purchased
      in
      the acquisition, is a key component to the success of our business. Although
      we
      have retained the right to enforce our rights as a sub-licensor under the base
      patents and base patent applications if an infringement occurs within the field
      of use specified in our sub-license agreement, there can be no assurance that
      we
      would be successful in any such pursuit, or that we would be successful in
      any
      action to protect our rights under the patent applications that we have
      purchased. In addition, there can be no assurance that the base patent
      applications or the patent applications that we have purchased will ultimately
      be protected by an issued patent.




14




***We
      do not maintain effective disclosure controls and procedures and we have
      consistently had material weaknesses in our internal control over financial
      reporting.***





Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed in our reports filed or
      submitted under the Exchange Act is recorded, processed, summarized and
      reported, within the time periods specified in the SEC’s rules and forms.
      Disclosure controls and procedures include, without limitation, controls and
      procedures designed to ensure that information required to be disclosed in
      our
      reports filed under the Exchange Act is accumulated and communicated to
      management, including our Chief Executive Officer and Chief Financial Officer,
      to allow timely decisions regarding required disclosure. Since 2003, the Company
      has been required to evaluate its disclosure controls and procedures. It is
      the
      current management’s view that our disclosure controls and procedures are
      ineffective and have most likely been ineffective since the Company’s inception.
      Although the Company has repeatedly attempted to remediate the problems leading
      to ineffective disclosure controls and procedures, to date, the Company’s
      remediation efforts have not been sufficient. Without effective disclosure
      controls and procedures, the Company risks filing inadequate, incomplete and
      untimely Exchange Act reports.




In
      addition, in connection with the audit of the Company’s consolidated financial
      statements for the year ended December 31, 2005, the Company’s independent
      registered public accounting firm advised the Board of Directors and management
      that it had two material weaknesses in its internal control over financial
      reporting. The first material weakness related to limitations in the capacity
      of
      the Company’s accounting resources to identify and react in a timely manner to
      non-routine and complex business transactions. This was the same material
      weakness identified by the Company’s independent registered public accounting
      firm during the audit of the Company’s financial statements for the year ended
      December 31, 2004. Despite hiring additional accounting resources in 2005 to
      supplement the internal accounting staff, the Company was unable to remediate
      this material weakness. In 2004, this material weakness led directly to the
      restatement of the financial statements filed with the SEC for the quarters
      ended June 30 and September 2004 (see Note 18 to the Consolidated Financial
      Statements).




The
      second material weakness identified related to an overall lack of internal
      control over sales and revenue recognition as well as inventory calculations
      and
      expenditures. This material weakness led directly to the Company’s announced
      internal investigation into the financial statements filed with the SEC for
      the
      quarter ended September 30, 2005 (see Note 18 to the Consolidated Financial
      Statements). The Company’s internal investigation led to the discovery that
      certain sales recognized as revenues and booked as accounts receivable were
      mischaracterized.




So
      long
      as the Company continues to have material weaknesses in its internal control
      over financial reporting, the Company cannot provide
      reasonable assurance that material misstatements in the Company’s financial
      statements will be prevented or detected on a timely basis.





***Intense
      competition could harm our financial performance and the value of your
      investment.***




The
      industries in which we will be marketing our products are characterized by
      intense competition. Although our oral hygiene product—Close Call TM —is
      swallowed rather than expectorated like mouthwash, our product may compete
      directly with the mouthwash industry. The mouthwash industry is a mature
      industry with several participants, many of which are divisions of large
      corporations, such as Listerine ® (Pfizer), Scope ® (Procter
& Gamble), ACT ® (Johnson
& Johnson), Peroxyl ® (Colgate), and Cepacol ® (Combe).
      These are well established companies with vastly greater resources than our
      Company. We may not be able to successfully compete with these companies.




15




Currently,
      there is little competition for bacterial inhibitors in the scalding process
      of
      poultry processors; however, we intend to expand the use of the pHarlo
      technology into the remaining operations of poultry processing—specifically, the
      on-line reprocessing area and the chill process. We will therefore encounter
      competition in the chill process from manufacturers of sodium hydrochloride.
      If
      we are unable to successfully compete with these industry competitors, it may
      have a material adverse effect on our business plan.




Through
      our new subsidiary, Coast to Coast, the assets of which we acquired from C2C
      in
      the 2005 Acquisition, we are also currently marketing Unifresh TM Footbath
      concentrate, a grooming aid for dairy cows. In addition, our business plan
      includes developing and marketing the pHarlo technology in seafood processing
      and a wider range of poultry processing segments. Competition in these markets
      is intense.




In
      addition, there may be a number of companies, universities and research
      organizations actively engaged in research and development of technology that
      could be similar to our processes. If their products or processes are
      successful, this could result in the creation of competitors that may have
      substantially greater assets, technical staffs, established market shares,
      and
      greater financial and operating resources than we do. There is no assurance
      that
      we can successfully compete with any of our present or future competitors.




**RISKS
      RELATED TO OUR COMMON STOCK**





***Future
      sales of our common stock may cause our stock price to decline.***




Since
      our
      inception, we have funded operations through common stock issuances in order
      to
      meet our strategic objectives. We have completed five private sales of common
      stock and securities convertible into common stock. In addition, on January
      26,
      2006, we issued shares of our common stock in connection with a private
      placement to accredited investors. We may, in the future, issue more shares
      of
      common stock in sales that may or may not be registered under the Securities
      Act
      of 1933, as amended (the “Securities Act”). Our stock price may decline due to
      future sales of our shares or even the perception that such sales may occur.




***Our
      stock price can be extremely volatile.***




Our
      common stock is traded on the Over-The-Counter (“OTC”) Bulletin Board. There can
      be no assurance that an active public market will continue for the common stock,
      or that the market price for the common stock will not decline below its current
      price. The price of our common stock may be influenced by many factors,
      including, but not limited to, investor perception of us and our industry and
      general economic and market conditions. The trading price of our common stock
      could be subject to wide fluctuations in response to announcements of our
      business developments or our competitors, quarterly variations in operating
      results, and other events or factors. In addition, stock markets have
      experienced extreme price volatility in recent years. This volatility has had
      a
      substantial effect on the market prices of companies, at times for reasons
      unrelated to their operating performance. Such broad market fluctuations may
      adversely affect the price of our common stock.




16




***We
      do not expect to pay dividends.***




We
      have
      not paid dividends on our common stock since our inception, and we do not
      contemplate paying dividends in the foreseeable future on our common stock
      in
      order to use all of our earnings, if any, to finance expansion of our business
      plans.




***If
      we fail to remain current on our reporting requirements, we could be removed
      from the OTC Bulletin Board which would limit the ability of broker-dealers
      to
      sell our securities and the ability of stockholders to sell their securities
      in
      the secondary market.***




Companies
      trading on the OTC Bulletin Board, such as us, must be reporting issuers under
      Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”), and must be current in their reports under Section 13, in order to
      maintain price quotation privileges on the OTC Bulletin Board. If we fail to
      remain current on our reporting requirements, we could be removed from the
      OTC
      Bulletin Board. As a result, the market liquidity for our securities could
      be
      severely adversely affected by limiting the ability of broker-dealers to sell
      our securities and the ability of stockholders to sell their securities in
      the
      secondary market.




***Our
      common stock is subject to the “Penny Stock” rules of the SEC and the trading
      market in our securities is limited, which makes transactions in our stock
      cumbersome and may reduce the value of an investment in our stock.***




The
      SEC
      has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for
      the purposes relevant to us, as any equity security that has a market price
      of
      less than $5.00 per share or with an exercise price of less than $5.00 per
      share, subject to certain exceptions. For any transaction involving a penny
      stock, unless exempt, the rules require:




·
              that
                  a broker or dealer approve a person’s account for transactions in penny
                  stocks; and
  ·
              the
                  broker or dealer receive from the investor a written agreement
                  to the
                  transaction, setting forth the identity and quantity of the penny
                  stock to
                  be purchased.





In
      order
      to approve a person’s account for transactions in penny stocks, the broker or
      dealer must:




·
              obtain
                  financial information and investment experience and objectives
                  of the
                  person; and
  ·
              make
                  a reasonable determination that the transactions in penny stocks
                  are
                  suitable for that person and the person has sufficient knowledge
                  and
                  experience in financial matters to be capable of evaluating the
                  risks of
                  transactions in penny stocks.




17




The
      broker or dealer must also deliver, prior to any transaction in a penny stock,
      a
      disclosure schedule prescribed by the SEC relating to the penny stock market,
      which, in highlight form:




·
              sets
                  forth the basis on which the broker or dealer made the suitability
                  determination; and
  ·
              that
                  the broker or dealer received a signed, written agreement from
                  the
                  investor prior to the transaction.




Generally,
      brokers may be less willing to execute transactions in securities subject to
      the
“penny stock” rules. This may make it more difficult for investors to dispose of
      our common stock and cause a decline in the market value of our stock.




Disclosure
      also has to be made about the risks of investing in penny stocks in both public
      offerings and in secondary trading and about the commissions payable to both
      the
      broker-dealer and the registered representative, current quotations for the
      securities and the rights and remedies available to an investor in cases of
      fraud in penny stock transactions. Finally, monthly statements have to be sent
      disclosing recent price information for the penny stock held in the account
      and
      information on the limited market in penny stocks.





**AVAILABLE
      INFORMATION**





**** Tasker
      files annual, quarterly, and current reports, proxy statements, and other
      information with the Securities and Exchange Commission. The public may read
      and
      copy any documents the Company files at the Commission's Public Reference Room
      at 100 First Street, Washington, D.C. 20549. The public may obtain information
      on the operation of the Public Reference Room by calling the Commission at
      1-800-SEC-0330. SEC filings are also available to the public from the SEC's
      Internet website at http://www.sec.gov.




Tasker
      makes available free of charge on or through its Internet website at
      www.taskerproducts.com its annual reports on Form 10- KSB, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments
      to
      those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
      Exchange Act as soon as reasonably practicable after it electronically files
      such material with, or furnishes it to, the Commission. In March 2005 Tasker
      implemented its Code of Business Conduct and Ethics, which is available on Tasker's
      Internet site at www.taskerproducts.com. The Code of Business Conduct and Ethics may
      be obtained, free of charge, by writing to the Secretary, Tasker Capital Corp.,
      39 Old Ridgebury Road, Danbury, CT 0681 0.





**ITEM
      2.** **DESCRIPTION
      OF PROPERTY**





We
      currently lease approximately 9,000 square feet of office space at our corporate
      headquarters in Danbury, Connecticut under a lease that expires in 2010. We
      also
      occupy approximately 27,000 square feet of leased manufacturing, warehouse
      and
      office space in Conroe, Texas that expires in September 2009.







18


**ITEM
      3.** **LEGAL
      PROCEEDINGS**





On
      October 26, 2005, a civil action captioned "The BOC Group, Inc. v. Tasker
      Capital Corp., Randy Cable, and Shaun Porter" was filed in the United States
      District Court for the District of Connecticut.  In the complaint, The BOC
      Group alleges that Mr. Porter and Mr. Cable, employees of Tasker, have breached
      certain restrictive covenants contained in their employment agreements with
      The
      BOC Group, and that the Company tortuously interfered with The BOC Group’s
      agreements with Mr. Porter and Mr. Cable. The BOC Group also claims that the
      Company, Mr. Porter and Mr. Cable violated Connecticut’s statutes governing
      trade secrets and unfair trade practices. The BOC Group seeks unspecified
      monetary damages. The
      Company believes that the complaint is without merit and plans to vigorously
      defend itself against such action.




On
      January 5, 2006, a civil action captioned “Robert L. Mandell, D.M.D., and
      Anthony M. Broschetti, D.M.D v. Tasker Capital Corporation, Arthur P. Bergeron
      and Richard J. Kirby” was filed in the Middlesex Superior Court in
      Massachusetts. In the complaint, the plaintiffs allege that the Company, its
      former President, Mr. Bergeron, and its alleged former agent, Mr. Kirby,
      breached an agreement to pay for a study regarding the Company’s Breath Rephresh
      product. The plaintiffs seek recovery of $100,000 in connection with the breach
      of contract claim. The Company believes that the complaint is without merit
      and
      plans to vigorously defend itself against such action.




On
      January 17, 2006, the Company received correspondence from Provco Ventures
      I, LP
      (“Provco”), an investor in the Company’s September 2005 private placement (the
“September 2005 Private Placement”). Provco alleges potential securities law
      claims in connection with the September 2005 Private Placement. As of March
      27,
      2006, no legal proceeding has been commenced by Provco or any other party
      regarding the September 2005 Private Placement. The Company believes that the
      allegations contained in the letter are without merit and plans to vigorously
      defend itself against any such action.




On
      January 18, 2006, a civil action captioned “Dallas XXIX Corporate Square, L.P.,
      v. Coast to Coast Laboratories and Tasker Capital Corp.” was filed in the
      Circuit Court of Pinellas County, Florida. The plaintiff alleges that Coast
      to
      Coast Laboratories Corp., a wholly owned subsidiary of the Company, has breached
      a lease agreement and that the Company has breached a guaranty. The plaintiff
      seeks recovery of monetary damages of approximately $55,000. The Company intends
      to vigorously defend itself against such action.




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





There
      was
      no matter submitted during the fourth quarter of the fiscal year covered by
      this
      report to a vote of security holders, through the solicitation of proxies or
      otherwise.




19


**PART
      II**





**ITEM
      5.** **MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
      SECURITIES**





**Market
      for Common Stock**





Our
      common stock is quoted on the OTC Bulletin Board under the symbol
      "TKER.OB".





The
      following table sets forth, for the periods indicated, the high and low bids
      for
      our common stock based on inter-dealer prices, without retail mark-up, mark-down
      or commission and may not represent actual transactions.





**Quarter
                Ended**
            **High**
            **Low**First
                Quarter ended March 31, 2004
            $0.29
            $0.09Second
                Quarter ended June 30, 2004
            $0.51
            $0.09Third
                Quarter ended September 30, 2004
            $0.54
            $0.22Fourth
                Quarter ended December 31, 2004
            $2.89
            $0.39First
                Quarter ended March 31, 2005
            $5.15
            $2.31Second
                Quarter ended June 30, 2005
            $4.14
            $2.21Third
                Quarter ended September 30, 2005
            $3.90
            $2.21Fourth
                Quarter ended December 31, 2005
            $2.79
            $0.58




As
      of
      March 17, 2006, we had approximately 104.8 million shares of common stock
      outstanding and approximately 138 stockholders of record.





The
      closing price for our common stock on March 17, 2006 was $0.59. For purposes
      of
      calculating the aggregate market value of the shares of our common stock held
      by
      non-affiliates, as shown on the cover page of this report, it has been assumed
      that all the outstanding shares were held by non-affiliates except for the
      shares beneficially held by our directors and executive officers and stockholder
      beneficially holding 10% or more of our outstanding common stock, as reflected
      in filings such persons are required to make with the Securities and Exchange
      Commission under Sections 13(d) or 13(g) of the Exchange Act. However, there
      may
      be other persons who may be deemed to be affiliates of ours.




We
      have
      never paid dividends on our common stock. We intend to retain our earnings
      for
      use in our business and, therefore, do not anticipate paying any cash dividends
      on our common stock for the foreseeable future.





**Recent
      Unregistered Sales of Securities**





There
      have been no unregistered sales of equity securities by the Company during
      the
      fiscal year 2005 that have not been previously reported in a Quarterly Report
      on
      Form 10-QSB or a Current Report on Form 8-K.





**Purchases
      of Equity Securities**





There
      were no purchases made by or on behalf of the Company or any affiliated
      purchaser of equity securities of the Company during the fourth quarter of
      2005.





**ITEM
      6.** **SELECTED
      FINANCIAL DATA**





The
      following table sets forth the Company’s selected historical consolidated
      financial data as of and for each of the five years ended December 31,
      2005.




20




The
      selected historical consolidated financial data for the years ended
      December 31, 2005, 2004 and 2003 and as of December 31, 2005 and 2004
      have been derived from the financial statements of Tasker Capital Corp.,
      included in this annual report, which have been audited by either Rothstein,
      Kass & Company, P.C. or Morgan and Company, each an independent registered
      public accounting firm. The selected historical consolidated financial data
      as
      of and for the year then ended December 31, 2002 and 2001 have been derived
      from the Company’s consolidated financial statements not included in this annual
      report, which have been audited by Morgan and Company. As a result of the 2005
      Acquisition, financial data for periods prior to the 2005 Acquisition may not
      be
      comparable with financial data for periods following the 2005
      Acquisition.




The
      selected financial data presented below should be read in conjunction with
      “Management’s Discussion and Analysis of Financial Condition and Results of
      Operations” and the consolidated financial statements and the accompanying notes
      included in this Form 10-KSB in order to more fully understand the
      historical consolidated financial data.





**Selected
                  Financial
                  Data****(Stated
                  in US Dollars, except number of
                  shares)****Year
                  Ended December
                  31,****2005**
              
              **2004**
              
              **2003**
              
              **2002**
              
              **2001****Statement
                  of Operations Data:**Revenues
              
              $
              705,467
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —Loss
                  from operations
              
              
              (16,963,821
              )
              
              (3,367,495
              )
              
              (500,716
              )
              
              (744,621
              )
              
              (59,060
              )Other
                  income(expense):
              
              
              (1,304,807
              )
              
              (2,704,120
              )
              
              (106,364
              )
              
              (16,631
              )
              
              7,236Net
                  loss
              
              
              (18,268,628
              )
              
              (6,071,615
              )
              
              (607,080
              )
              
              (761,252
              )
              
              (51,824
              )Net
                  loss per Common Share, basic and diluted
              
              $
              (0.25
              )
              $
              (0.26
              )
              $
              (0.05
              )
              $
              (0.07
              )
              $
              (0.01
              )Weighted
                  average shares used in per share calculation -basic and
                  diluted
              
              
              73,549,000
              
              
              23,597,000
              
              
              13,003,169
              
              
              11,305,489
              
              
              11,262,110**Balance
                  Sheet Data**Total
                  assets
              
              $
              68,854,019
              
              $
              16,766,867
              
              $
              547,909
              
              $
              421,915
              
              $
              529Long-term
                  liabilities
              
              
              1,573,923
              
              
              1,388,652
              
              
              386,161
              
              
              307,525
              
              
              —Stockholders'
                  equity
              
              
              63,288,424
              
              
              14,243,638
              
              
              20,852
              
              
              (89,869
              )
              
              (147,542
              )Number
                of shares outstanding at year end
              
              
              89,167,095
              
              
              48,863,740
              
              
              14,510,800
              
              
              11,786,860
              
              
              11,262,010





**ITEM
      7.** **MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS**





The
      following discussion and analysis of our financial condition and results of
      operations should be read in conjunction with the “Selected Consolidated
      Financial Data” and the consolidated financial statements and notes thereto
      appearing elsewhere in this Annual Report on Form 10-KSB. This discussion
      contains forward-looking statements that involve risks and uncertainties. See
      “Cautionary Statement Regarding Forward-Looking Information” and “Risk Factors”
for a description of the important factors that could cause actual results
      to
      differ materially from those contained in forward-looking statements.





**A.
      OVERVIEW**





Tasker
      is
      a manufacturer, distributor and marketer of products using a patented process,
      which we refer to as the "pHarlo technology," that utilizes a highly charged
      and
      acidified, yet stable and safe, solution that enables copper sulfate, a compound
      with bacteriostatic properties, to remain active throughout a wide range of
      pH
      values. The Company currently markets:





·
            Close
                CallÔ,
                an oral hygiene breath drink, and


·
            UnifreshÔFootbath, a grooming aid for dairy
                cows.




21




The
      Company is also in the process of developing several other products using the
      pHarlo technology. In August 2005, the Company began the in-plant commercial
      verification process for USDA approval to use the pHarlo technology in the
      scalder process of poultry processing. The Company is in the process of
      conducting tests of the pHarlo technology for other pre- and post-harvest food
      processing applications including seafood and water treatment uses. The Company
      is also in various stages of developing future product lines using the pHarlo
      technology in the skin care and pet product industries.





As
      a
      result of the 2005 Acquisition, Tasker now owns the utility patent applications
      and provisional patent applications associated with the pHarlo technology in
      the
      Company's field of use, and has entered into a new sub-license agreement for
      the
      base patents associated with the pHarlo technology.




**B.
      CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGEMENTS AND ESTIMATES**




We
      believe that several accounting policies are important to understanding our
      historical and future performance. We refer to such policies as “critical”
because these specific areas generally require us to make judgments and
      estimates about matters that are uncertain at the time we make the estimate,
      and
      different estimates—which also would have been reasonable—could have been used.
      These critical accounting policies and estimates relate to derivative
      liabilities, valuation of goodwill, intangible assets and inventory. These
      critical policies, and our procedures related to these policies, are discussed
      below. In addition, refer to Note 2 to the accompanying consolidated financial
      statements for a discussion of all of our significant accounting policies.




**Derivative
      Instruments**





**** We
      are a
      development stage company without significant revenues. To date, we have entered
      into several debt and equity transactions to fund our operations. A number
      of
      these transactions involved the issuance of convertible debt and warrants.
      These
      transactions also included registration rights agreements that impose
      significant penalties on us if certain conditions are not met. As a result
      of
      these registration rights agreements we face a number of unique and complex
      accounting issues such as the ones discussed below.




The
      Company has issued and outstanding convertible debt and certain convertible
      equity instruments with embedded derivative features, such as the conversion
      feature of its convertible debt into shares of the Company’s common stock. The
      Company analyzes these financial instruments in accordance with Statement of
      Financial Accounting Standards (“SFAS”) No. 133 and Emerging Issues task Force
      (“EITF”) Issue Nos. 00−19 and 05−02 to determine if these hybrid contracts have
      embedded derivatives that must be bifurcated. In addition, free standing
      warrants are accounted for as either equity or liabilities in accordance with
      the provisions of EITF Issue No. 00−19.




EITF
      Issue No. 05−4 "The Effect of a Liquidated Damages Clause on a Freestanding
      Financial Instrument Subject to EITF Issue No. 00−19, 'Accounting for Derivative
      Financial Instruments Indexed to, and Potentially Settled in, a Company's Own
      Stock'" addresses financial instruments, such as convertible notes and stock
      purchase warrants, which are accounted for under EITF 00−19, that are issued
      with a corresponding right to have these securities registered pursuant to
      a
      registration rights agreement that includes a liquidated damages clause.
      Alternative accounting treatments of registration rights are discussed in EITF
      Issue No. 05-4. One alternative treatment discussed in EITF Issue No. 05-4
      could
      require the warrants, the convertible debt and the registration rights agreement
      to be treated as a single financial instrument. If the EITF implements this
      approach, the convertible debt and the warrants we have issued would need to
      be
      recorded as a liability at fair value and changes in the fair value of the
      liability would need to be recorded in the statement of operations each period.
      Implementation of this approach may have a material non-cash impact to our
      financial statement. Since no consensus on EITF Issue No. 05−4 has been reached,
      we have given only prospective application to this guidance. Further impact
      on
      our consolidated financial statements of adopting the standard, if any, will
      follow the transition guidance when released.




22




In
      April
      and July 2004, we entered into private placement agreements for convertible
      debentures, registration rights agreements and warrants (see Note 6 to the
      consolidated financial statements). Based on the interpretive guidance in EITF
      Issue No. 05−4 due to an uncapped liquidated damages provision in the
      registration rights agreements, we determined that the registration rights
      are
      derivative liabilities that should be bifurcated from the related financial
      instruments. Accordingly, the estimated fair value of the registration rights
      derivative of $244,000 was recorded as a liability as of October 1, 2005, the
      beginning of the first fiscal period after September 15, 2005, the date that
      EITF postponed further deliberations.





Changes
      in the estimated fair value of the registration rights derivative liability
      are
      recorded in the consolidated statement of operations. In the fourth quarter
      of
      2005 we recorded a gain on the reduction of the derivative liability of
      approximately $9,000.




In
      connection with our examination of past transactions for application of EITF
      Issue No. 05-4, we noted that for the period from entering into the April 2004
      Securities Purchase Agreement until we increased our authorized shares in August
      2004, we had insufficient shares to meet all potential obligations to issue
      shares under our convertible notes and exercisable warrants and options. Under
      EITF Issue No. 00-19, a liability should be recognized for those financial
      instruments for that period, with any changes in the fair value of such
      liabilities recognized in our consolidated statement of operations. Based on
      our
      analysis of such liabilities, we determined the effect of any such amounts
      to be
      immaterial.





**Goodwill
      and Intangible Assets**




Since
      the
      adoption of SFAS No. 142 “Goodwill and Other Intangible Assets”, we are required
      to test our goodwill at least annually for impairment and for fiscal year 2005
      we performed this review during our fourth quarter, which, going forward, will
      be the timing of our annual goodwill impairment review. Based on this review,
      we
      concluded that there was no goodwill impairment. Our analysis was performed
      at
      the Company level which represents the “reporting unit” level. Our analysis of
      goodwill impairment required an estimate of the fair value for the reporting
      unit, which is an inherently subjective process. Based on the results of our
      impairment review we concluded that, by a wide margin, the fair value of the
      reporting unit was not impaired. There can be no assurance that there will
      not
      be impairment charges in subsequent periods as a result of our future periodic
      impairment reviews. To the extent that future impairment charges occur, they
      will likely have a material impact on our financial results. At December 31,
      2005, the carrying value of goodwill was approximately $41.7
      million.




In
      addition to our annual goodwill review, we will also perform periodic reviews
      of
      the carrying value of our other intangible assets. These intangible assets
      consist of acquired core technology and customer related intangibles such as
      acquired customer lists and customer contracts. We specifically consider whether
      any indicators of impairment are present, including:




·
            
            whether
                there has been a significant decrease in the market price of an asset;




·
            
            whether
                there has been a significant adverse change in the extent or manner
                in
                which an asset is used; and




·
            
            whether
                there is an expectation that the asset will be sold or disposed of
                before
                the end of its originally estimated useful life.




If
      indicators of impairment are present, an estimate of the undiscounted cash
      flows
      that the specific asset is expected to generate is made to ensure that the
      carrying value of the asset can be recovered. These estimates involve
      significant subjectivity. At December 31, 2005, the carrying value of our
      intangible assets, excluding goodwill, was approximately $21.6 million. None
      of
      these assets were deemed to be impaired.




**Valuation
      of Acquired Intangible Assets**




In
      connection with the 2005 Acquisition we recorded other intangible assets
      relating to acquired utility patents. The valuation process used to calculate
      the value assigned to the acquired intangible asset is complex and involves
      significantly subjective financial projection estimates. The principal component
      of the valuation is the determination of discounted future cash flows expected
      to be derived from the use of these intangible assets, there are a number of
      variables that we considered for purposes of projecting these future cash flows
      including those listed below.





There
      is
      inherent uncertainty involved with this estimation of cash flows from intangible
      assets, and, while our estimates are consistent with our internal planning
      assumptions, the ultimate accuracy of these estimates is only verifiable over
      time. Further, the projections required for the valuation process normally
      utilize a ten-year forecast, which exceeds our normal internal planning and
      forecasting timeline. The particularly sensitive components of these estimates
      include, but are not limited to:




·
            
            the
                selection of an appropriate discount rate;




·
            
            the
                required return on all assets employed by the valued asset to generate
                future income streams;




·
            
            our
                projected overall revenue growth;




·
            
            our
                gross margin estimates;




·
            
            our
                patent technology and its useful life;





·
            
            our
                planned level of operating expenses; and




·
            
            our
                effective tax rate.





23




**Inventory
      Valuation and Classification**





Our
      inventory is valued at the lower of cost or market on an average cost basis.
      We
      regularly review inventory balances to determine whether a write-down is
      necessary. We consider various factors in making this determination, including
      recent sales history and predicted trends, industry market conditions, general
      economic conditions, the age of our inventory and recent quality control data.
      Changes in the factors above or other factors could result in significant
      additional inventory cost reductions and write-offs.





**Recent
      Accounting Pronouncements**





In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
      123(R) “Accounting for Stock-Based Compensation (Revised)”. Under SFAS 123(R),
      companies will be required to recognize as expense the estimated fair value
      of
      all share-based payments to employees, including the fair value of employee
      stock options. Pro forma disclosure of the estimated expense impact of such
      awards is no longer an alternative to expense recognition within the financial
      statements. SFAS No. 123(R) is effective for public companies in the first
      annual reporting period beginning after  June
      15,
      2005. Accordingly, we will adopt the provisions of SFAS No. 123(R) effective
      January 1, 2006, the first quarter of our 2006 calendar year.




There
      are
      two transition alternatives for public companies adopting the statement: the
      modified prospective method and the modified retrospective method. Under the
      modified prospective method, companies are required to recognize compensation
      cost for share-based payments to employees, based on the grant date estimate
      of
      fair value, from the beginning of the fiscal period in which the recognition
      provisions of SFAS No. 123(R) are first applied. Prior period financial
      information would not be restated under this method. Under the modified
      retrospective method, companies would restate prior periods to include the
      recognition of compensation cost based on amounts previously reported in the
      pro
      forma disclosures relating to stock based compensation under the existing
      requirements of SFAS No. 123, “Accounting for Stock-Based Compensation”, such as
      is presented in Note 2 to our audited consolidated financial statements. We
      expect to elect the modified prospective method, upon adoption.




We
      expect
      the adoption of SFAS No. 123(R) to have a material effect on our financial
      statements, in the form of additional compensation expense, on a quarterly
      and
      annual basis. We are still in the process of evaluating the impact of SFAS
      No.
      123(R), and have not yet quantified the expense impact of this accounting
      pronouncement on future financial periods.





In
      December 2004, the FASB issued SFAS No. 151, “Inventory Costs-an amendment of
      ARB No. 43, Chapter 4”. SFAS No. 151 has been issued to clarify the accounting
      for abnormal amounts of idle facility expense, freight, handling costs, and
      wasted material (spoilage), which requires that those items be recognized as
      current-period charges regardless of whether they meet the criterion of “so
      abnormal.” In addition, SFAS No. 151 requires the Company to allocate fixed
      production overheads to the costs of conversion based on the normal capacity
      of
      the production facilities. Management of the Company does not believe the
      effects of SFAS No. 151 will have a material impact on the consolidated
      financial statements, as the Company has not incurred any inventory costs that
      meet the definition of “so abnormal.”




24




In
      May
      2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections,”
which replaces APB Opinion No. 20, “Accounting Changes,” and supersedes FASB
      Statement No. 3, “Reporting Accounting Changes in Interim Financial
      Statements--an amendment of APB Opinion No. 28.” SFAS No. 154 requires
      retrospective application to prior period financial statements of changes in
      accounting principle, unless it is impracticable to determine either the
      period-specific effects or the cumulative effect of the change. When it is
      impracticable to determine the period-specific effects of an accounting change
      on one or more individual prior periods presented, SFAS No. 154 requires that
      the new accounting principle be applied to the balances of assets and
      liabilities as of the beginning of the earliest period for which retrospective
      application is practicable and that a corresponding adjustment be made to the
      opening balance of retained earnings for that period rather than being reported
      in an income statement. When it is impracticable to determine the cumulative
      effect of applying a change in accounting principle to all prior periods, SFAS
      No. 154 requires that the new accounting principle be applied as if it were
      adopted prospectively from the earliest date practicable. SFAS No. 154 is
      effective for accounting changes and corrections of errors made in fiscal years
      beginning after December 15, 2005.  We do not expect the implementation of
      SFAS No. 154 to have a significant impact on our results of
      operations.





**Reclassifications**




Certain
      prior year amounts have been reclassified to conform to the current year
      presentation in our consolidated financial statements.








**C.
      RESULTS OF OPERATIONS**





**Overview**





During
      the calendar year 2005 the
      Company substantially completed the integration of the assets acquired in the
      2005 Acquisition. The audited financial statements as of and for the period
      ending December 31, 2005 contained herein reflect the operations of Tasker
      on a
      consolidated basis, which includes the assets acquired. As the 2005 Acquisition
      was completed in the year end 2005, the assets acquired are included in the
      financial statements for the period ending December 31, 2005 but are not
      included in prior periods contained in this annual report. In 2005, the Company
      also began selling Close
      Call Ô . As
      a
      result of these changes, our operating results for the year ended December
      31,
      2005, include several material changes as compared to the same periods in 2004
      and 2003. Below is a brief summary of these material changes.





**Year
      Ended December 31, 2005 Compared to Year Ended December 31,
      2004**





**Revenues**





Revenues
      for the year ended December 31, 2005 were approximately $705,000 compared with
      no revenue for the corresponding period in 2004. This increase in revenue was
      due primarily to revenue associated with sales of Close Call Ô ,
      which
      contributed approximately $503,000 for the year ended December 31, 2005 and
      the
      sales of Unifresh® Footbath, a product we acquired in the 2005 Acquisition,
      which contributed approximately $202,000 in revenue for the year ended December
      31, 2005, net of approximately $890,000 of credit memos. These credit memos
      were
      issued to customers for which the Company promised to take back the Unifresh®
Footbath that was not as effective due to abnormally high alkaline content
      in
      the customers’ water sources. The Company has now reformulated its Unifresh®
Footbath product with the addition of a compound that neutralizes alkali. The
      Company expects that its revenue will increase in fiscal year 2006 upon the
      successful marketing of existing products and the securing of regulatory
      approvals for certain applications that it intends to market. While waiting
      for
      regulatory approvals, the Company is aggressively marketing its existing
      products, is building its network of distributors and is identifying prospective
      customers.




25




**Gross
      Margin**





During
      the year ended December 31, 2005, the Company wrote-off approximately $741,000
      of Close Call Ô finished
      goods inventory that it estimated would not be sold prior to its shelf
      expiration date. **** This
      write-off resulted in negative gross margin of approximately $(603,000) for
      the
      year ended December 31, 2005, compared to zero gross margin for the year ended
      December 31, 2004. As a result of anticipated increased sales in fiscal year
      2006, gross margin, in absolute dollars and as percentage of revenue is expected
      to increase.





**Product
      Development**





Product
      development consists primarily of personnel costs to support product development
      and clinical trials, which continued to be the focus of the Company during
      2005.
      Product development and research costs for the year ended December 31, 2005
      increased by approximately $2.0 million or 143% to $3.4 million from $1.4
      million for the year ended December 31, 2004. The increase was primarily due
      to
      an increase in salary expense of approximately $740,000 from $170,000 for the
      year ended December 31, 2004, to $910,000 for the year ended December 31, 2005,
      and an increase in consulting costs of approximately $600,000 from $900,000
      for
      the year ended December 31, 2004 to $1.5 million for the year ended December
      31,
      2005. The increase in consulting costs was due to research and development
      in
      the areas of food processing and the Unifresh ® Footbath
      product. Production supply expense increased by approximately $100,000 from
      $200,000 for the year ended December 31, 2004 to approximately $300,000 for
      the
      year ended December 31, 2005. Also,
      clinical trials expense increased approximately $520,000 from $105,000 in 2004
      to $625,000 in 2005, due to increased testing and development of new product
      lines. The
      Company anticipates that product development will decrease, as a percentage
      of
      revenues, in fiscal year 2006.





**Selling,
      General and Administrative**





Selling,
      General, and Administrative (“SGA”) expenses are primarily comprised of sales
      and marketing costs, compensation, professional fees, and general administrative
      costs. SGA costs for the year ended December 31, 2005 increased by approximately
      $9.9 million from $2.0 million for the year ended December 31, 2004, to $11.9
      million for the year ended December 31, 2005. The Company anticipates that
      SGA
      costs will decrease, as a percentage of revenues, in fiscal year 2006.





Sales
      and
      marketing expenses consist primarily of salaries and other related costs for
      sales and marketing personnel, sales commissions, promotional expenses,
      advertising, public relations and trade shows. Sales and marketing costs
      increased by approximately $820,000 from $160,000 for the year ended December
      31, 2004 to approximately $980,000 for the year ended December 31, 2005. This
      increase is due
      to
      marketing research, branding and promotion for the Company’s Close
      Call Ô and Unifresh ® Footbath
      product line roll-outs.






26




Compensation
      expense consists primarily of salaries and other related costs for executives,
      senior management, finance and administrative employees of the Company.
      Compensation expense increased by approximately $4.2 million from approximately
      $700,000 for the year ended December 31, 2004, to approximately $4.9 million
      for
      the year ended December 31, 2005. This increase is primarily due to the addition
      of executive management and management to oversee the development of the
      Company’s oral care, food processing, skin care, and pet products and to a
      lesser extent due to salaries for personnel added in the 2005
      Acquisition.





Professional
      fees consist primarily of legal, accounting, investor relation fees.
      Professional fees for the year ended December 31, 2005 increased by $3.5 million
      from $600,000 in 2004 to **** $4.1
      million in 2005, primarily due
      to
      non-cash charges of approximately $2.8 million for stock options issued to
      an
      investor relations consultant for services rendered. The remaining increase
      in
      2005 over 2004 of $700,000 is primarily due to increased legal and accounting
      fees necessary to complete the Company’s various SEC filings during
      2005.





General
      and administrative expenses consist primarily of rent, insurance, stock
      based compensation and t ravel
      and
      entertainment expenses .
      General
      administrative costs for the year ended December 31, 2005 increased by $1.4
      million from $500,000 in 2004 to $1.9 million in 2005. This increase is
      attributable to an increase in travel expenses of approximately $500,000, due
      to
      the increased sales efforts to promote the Company’s products, increased
      insurance costs of approximately $327,000, an increase in rent expense of
      approximately $283,000, an increase in utility and equipment charges of
      approximately $200,000 and an increase of approximately $111,000 in stock based
      compensation as a result of “in the money” stock options issued to employees
      during the year ended December 31, 2005. In 2006, we expect a significant
      increase in stock compensation expense based on our adoption of SFAS 123R on
      July 1, 2005.





**Depreciation
      and Amortization Expense**





Depreciation
      and amortization expense, which includes the amortization of identifiable
      intangible assets, increased by approximately $1.1 million from approximately
      $29,000 in the year ended December 31, 2004, to approximately $1.1 million
      for
      the year ended December 31, 2005, due in large part to the Company’s 2005
      acquisition whereby the Company acquired fixed assets and intellectual property.
      The intellectual property, predominately patent applications, has a current
      estimated value of approximately $21.5 million and is being amortized over
      11.5
      years. See Note 12 to the consolidated financial statements.





**Interest
      Expense, Net**





Interest
      expense, net decreased by approximately $2.6 million from $2.7 million for
      the
      year ended December 31, 2004 to approximately $85,000 for the year ended
      December 31, 2005.  The
      decrease is principally due to the one-time write off in September 2004 of
      approximately $1.7 million of debt discount caused by our default of certain
      covenants of the July 2004 convertible debentures private placement and the
      one-time write off in June 2004 of approximately $800,000 of debt discount
      caused by our default of certain covenants of the April 2004 convertible
      debentures private placement. Interest income increased by approximately
      $112,000 from $23,000 for the year ended December 31, 2004 to approximately
      $135,000 for the year ended December 31, 2005, primarily due to an increased
      average cash balance throughout 2005.






27




**Other**





The
      Company incurred other expenses of approximately $1.2 million for the year
      ended
      December 31, 2005 related primarily to a reserve recorded for certain notes
      receivable in the amount of $890,000, and an additional accrued expense for
      potential liquidating damages in the amount of $286,000.





**Net
      Loss**





As
      a
      result of the above, the Company had a net loss of $18.3 million for the year
      ended December 31, 2005, as compared to a net loss of $6.1 million for the
      year
      ended December 31, 2004





**Year
      Ended December 31, 2004 Compared to Year Ended December 31,
      2003**





**Product
      development**





Product
      development and research costs for the year ended December 31, 2004 increased
      by
      approximately $1.3 million from approximately $89,000 for the year ended
      December 31, 2003 primarily due to consultant fees associated with gaining
      regulatory approval for its poultry processing product, and additional
      development costs associated with Close CallTM.





**Selling,
      General and Administrative**





Selling,
      General, and Administrative (“SGA”) expenses are primarily comprised of sales
      and marketing costs, compensation, professional fees, and general administrative
      costs . SGA
      costs
      for the year ended December 31, 2004 increased by approximately $1.6 million
      from $398,000 for the year ended December 31, 2003, to $2.0 million for the
      year
      ended December 31, 2004.





Sales
      and
      marketing costs increased by approximately $141,000 for the year ended December
      31, 2004. This increase is primarily attributable to an increase in advertising
      and marketing expense as well as increased compensation for additional sales
      employees.





Compensation
      expense increased by approximately $620,000 from $50,000 in the year ended
      December 31, 2003 to approximately $670,000 for the year ended December 31,
      2004. This increase reflects the addition of executive and senior management,
      as
      well as management to oversee the development of the Company’s products such as
      oral care, food processing, skin care, and pet products.





Professional
      fees for the year ended December 31, 2004 increased by approximately $500,000
      from $100,000 in 2003 to **** $600,000
      in 2004, primarily due to legal fees for intellectual property reviews and
      due
      diligence support in the Company's effort to consummate the 2005 Acquisition.





General
      and administrative costs for the year ended December 31, 2004 increased by
      approximately $290,000 from $260,000 for the year ended December 31, 2003 to
      $550,000 for the year ended December 31, 2004. This increase is primarily due
      to an
      expense of $373,000 for stock based compensation as a result of “in the money”
stock options issued to employees during the year ended December 31, 2004,
      as
      compared to no stock based compensation expense for the year ended December
      31,
      2003, and a decrease of approximately $100,000 in miscellaneous fees associated
      with filing and stock transfer fees.





28




**Interest
      Expense, net**





Interest
      expense, net increased by approximately $2.6 million from $113,000 for the
      year
      ended December 31, 2003 to approximately $2.7 million for the year ended
      December 31, 2004 primarily as a result of the amortization of loan discounts
      from  the
      convertible debentures issued by the Company during 2004 and from notes
      payable.





**Net
      Loss**





As
      a
      result of the above, the Company had a net loss of $6.1 million for the year
      ended December 31, 2004, as compared to a net loss of $607,000 for the year
      ended December 31, 2003.




**LIQUIDITY
      AND CAPITAL RESOURCES**





**Overview**





Since
      its
      inception, the Company has funded operations and investing activities through
      the issuance of common stock and other financing activities under several
      private placements. Requirements for liquidated damages under some of our
      private placements may have an impact on our future liquidity. To date we have
      satisfied and/or received waivers for the provisions of a majority the
      agreements that would have otherwise required us to pay liquidated damages.
      We
      do not expect, although the conditions that may result in liquidated damages
      are
      not in our control, that any liquidated damage amounts we may be required to
      pay
      will be material.





**Operating
      Activities**





The
      Company's cash balances were approximately $1.0 million at December 31, 2005,
      $14.2 million at December 31, 2004, and $33,000 at December 31, 2003. Net
      cash
      used in operating activities for the year ended December 31, 2005 was
      approximately $11.8 million, compared to net cash used in operating activities
      of approximately $2.4 million in 2004 and net cash used in operating activities
      of approximately $471,000 in 2003.





The
      Company's accounts receivable, less allowance for doubtful accounts, at December
      31, 2005 and December 31, 2004 were approximately $155,000 and $0 respectively.
      Also the Company has fully reserved a certain note receivable in the amount
      of
      $890,000 as there are no assurances that this note is collectible.





The
      Company has significantly increased its inventory level to approximately $1.4
      million for the year ended December 31, 2005, from approximately $100,000 for
      the year ended December 31, 2004, in anticipation of future sales.





**Investing
      Activities**





Net
      cash
      used in investing
      activities for the year ended December 31, 2005 was approximately
      $7.7 million, net cash used in investing activities was approximately $530,000,
      and $133,000 for the years ended December 31, 2004, and 2003
      respectively.




29




As
      a
      result of the 2005 Acquisition the Company recorded $2.6 million in cash
      payments to PCTI, PCPP, IRL, C2C and principals of **** PCTI **** and **** IRL)
      representing approximately $1.4 million in cash consideration, and approximately
      $1.2 million in acquisition costs related to the 2005 Acquisition. ****





Net
      cash
      used for the purchase of property and equipment for the year ended December
      31,
      2005 was approximately $825,000. A major portion of this expense was directly
      related to the 2005 Acquisition in which the Company added a production
      facility, and warehouse to facilitate the Company’s anticipated growth and
      revenue stream.




During
      the year ended December 31, 2005, pursuant to a series of promissory notes,
      the
      Company loaned approximately $2.6 million (including $136,000 paid to a vendor
      on behalf of PCTI) to PCTI, PCPP. IRL C2C and principals of PCTI and IRL. All
      of
      the loans granted to PCTI, PCPP, IRL, C2C and principals of PCTI and IRL during
      the year ended December 31, 2005 were cancelled on July 15, 2005 upon the
      completion of the 2005 Acquisition, with the exception of a loan granted on
      March 28, 2005 to David Creasey, a principal of PCTI and IRL, in the amount
      of
      $625,000. This loan is evidenced by a promissory note and secured by options
      and
      stock that Mr. Creasey holds in the Company.





In
      April
      2005, the Company purchased from Electric Aquagenics Unlimited, Inc. 359,000
      common shares of Biofilm Strategies Corporation (“Biofilm”), representing 27% of
      Biofilm’s outstanding common stock, for cash consideration of $718,000. Further,
      the Company advanced a total of $890,000 to the owners of the remaining 73%
      of
      Biofilm’s common stock. Biofilm’s proprietary technology is designed to
      eradicate biofilms, a protective coating that forms on listeria and other
      pathogens making them resistant to traditional remedies of eradicating bacteria.
      The Company understands that Biofilm is in the process of obtaining certain
      regulatory approvals for the use of its product in specified applications.
      After
      several months of unsuccessful negotiations, the Company has decided that it
      will not seek to acquire the remaining 73% of Biofilm’s common stock. The
      Company originally anticipated that if the acquisition did not close, the
      Company would seek repayment of the funds advanced. The
      Company is now negotiating an alternative arrangement with Biofilm, whereby
      Biofilm would license its technology to the Company, and the $890,000 advanced
      would be used as a credit against royalty fees due under the license agreement.
      There can be no assurance that the license agreement will be entered into,
      or if
      entered into, that Biofilm would agree to credit the $890,000 advanced toward
      the royalty fees of such license. The Company believes that recovery of these
      advances is uncertain, and has set up an allowance for uncollectible accounts
      for the entire $890,000.





**Financing
      Activities**





The
      Company’s net cash provided by financing activities during the year ended
      December 31, 2005 was approximately $6.3 million, as compared to approximately
      $17.1 million, and $545,000 for the years ended 2004, and 2003
      respectively.





The
      net
      cash provided by financing activities for the year ended December 31, 2005
      principally represents proceeds from the sale of common stock and warrants.
      In
      September 2005, the Company completed a private placement in
      which
      it raised gross proceeds of $6,485,000 through the sale of 2,947,545 shares
      of
      its common stock at a purchase price of $2.20 per share, which were sold
      together with warrants to purchase an additional 1,473,769 shares of its common
      stock at an exercise price of $3.00. In
      conjunction with the January 2006 private placement the exercise
      price of the warrants was reduced from $3.00 to $1.00. The
      Company also recorded payment for the IRL promissory note of approximately
      $409,000.




30




As
      of
      December 31, 2005, the Company had approximately $1.0 million in cash and cash
      equivalents. **** However,
      as a result of the January
      2006 Private Placement, the Company increased its cash and cash equivalent
      balance by $8.7 million.




During
      the year ended December 31, 2005 the Company continued to be in violation of
      certain representations of its convertible debentures issued on April 30, 2004
      and July 22, 2004. As a result of this violation, principal and accrued interest
      on outstanding debentures became immediately due and payable at the option
      of
      holders and, as a result, as of December 31, 2005, the Company has classified
      the entire remaining principal balance in the amount of approximately $194,000
      and interest of approximately $119,000 as a
      current liability and has amortized
      the debt discount associated with the remaining principal balance. In
      addition, during the year ended December 31, 2005, the Company was in default
      of
      certain of its obligations under two separate registration rights agreements.
      As
      a result of these violations, contractual payments became immediately due and
      payable to certain holders of the Company’s common stock. As of December 31,
      2005, the Company accrued a $286,000 liability associated with these defaults.







**Contractual
      Obligations** ****




The
      Company has entered into various license, consulting, and employment agreements
      throughout the year. Estimated future minimum annual contractual payments under
      these agreements including agreements executed in 2005, is as
      follows:




**Total**
              
              
              **Less
                  than one year**
              
              
              **1—3****years**
              
              
              **3—5****Years**
              
              
              **More
                  than****5
                  years**R&D
                  fees (1)
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —Consulting
                  agreements
              
              
              24,000
              
              
              24,000
              
              
              —
              
              
              —
              
              
              —Employment
                  agreements (2)
              
              
              1,995,000
              
              
              990,000
              
              
              1,005,000
              
              
              —
              
              
              —Notes
                  Payable Shareholders
              
              
              475,000
              
              
              —
              
              
              475,000
              
              
              —
              
              
              —Note
                  Payable - IRL
              
              
              1,523,000
              
              
              966,000
              
              
              557,000
              
              
              —
              
              
              —Vendor
                  agreements
              
              
              300,000
              
              
              300,000
              
              
              —
              
              
              —
              
              
              —Operating
                  leases
              
              
              1,437,000
              
              
              387,000
              
              
              988,000
              
              
              62,000
              
              
              —Convertible
                  Debentures
              
              
              194,000
              
              
              —
              
              
              194,000
              
              
              —
              
              
              —Other
              
              
              53,000
              
              
              11,000
              
              
              34,000
              
              
              8,000
              
              
              —R&D
                  Fees (1)
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —Total
              
              $
              6,001,000
              
              $
              2,678,000
              
              $
              3,253,000
              
              $
              70,000
              
              $
              —




(1)
      On
      January 26, 2006, R&D fees payable under the Sub-License Agreement with
      pHarlo IP were amended so that they are (i) payable on a quarterly basis within
      30 days after the end of each calendar quarter (ii) are based on gross sales
      of
      the Company (or its affiliates) of products using the pHarlo technology. For
      fiscal year 2006, the R&D Fees must not be less than $150,000 and are capped
      at $500,000. The
      R&D Fees have no minimum amounts payable
      after 2006, however, they are capped at $2,000,000 for 2007, $4,000,000 for
      2008, $8,000,000 for 2009 and $10,000,000 for 2010 and beyond.






31




(2)
      Subsequent to December 31, 2005, the Company terminated several of its existing
      employment agreements with some of its senior management and entered into new
      employment agreements with its current executive management. The revised
      estimated future minimum annual compensation under these employment agreements,
      including the new and terminated agreements for 2006, 2007, 2008 and 2009 is
      approximately $1,346,000, $1,128,000, $718,000 and $59,000, respectively.




**OFF-BALANCE
      SHEET ARRANGEMENTS**




During
      the twelve months ended December 31, 2005, we did not engage in material
      off-balance sheet activities, including the use of structured finance, special
      purpose entities; material trading activities in non-exchange traded commodity
      contracts; or transactions with persons or entities that benefit from their
      non-independent relationship with us.





In
      April
      2005, the Company purchased from Electric Aquagenies Unlimited, Inc. 359,000
      common shares of Biofilm , representing 27% of Biofilm’s outstanding common
      stock, for cash consideration of $718,000. The
      Company believes that its 27% equity interest in Biofilm is a significant
      variable interest, as defined by FIN 46(R) “ *Consolidation
      of Variable Interest Entities* ”,
      however it believe that it is currently not the primary beneficiary of Biofilm
      and thus it would not be required to consolidate the accounts of Biofilm. The
      Company believes that its maximum exposure to loss as a result of our
      involvement with Biofilm is limited to our initial investment of
      $718,000.





**ITEM
      7A. QUANTITATIVE AND
      QUALITATIVE DISCLOSURES ABOUT MARKET RISK**





**Interest
      Rate Risk**




Our
      exposure to market risk, including changes in interest rates, relates primarily
      to cash and cash equivalents. These investments bear interest at a variable
      interest rate, which is subject to market changes. We have not entered into
      any
      interest rate swap agreements, or other instruments to minimize our exposure
      to
      interest rate fluctuations. We have not had any derivative instruments in the
      past and do not presently plan to in the future. Our investment portfolio
      consists of demand deposits and money market mutual funds. Due to the highly
      liquid nature of our investment, a sudden sharp change in interest rates would
      not have a material adverse effect on the value of the portfolio.





**ITEM
      8.** **FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA**





Index
      to
      the Consolidated Financial Statements, Financial Statements and Supplementary
      Data appear on pages 40 to 81 of this Annual Report on Form 10-KSB.




**ITEM
      9.** **CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE**


None.





**ITEM
      9A.** **CONTROLS
      AND PROCEDURES**





As
      required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange
      Act”), the Company carried out an evaluation of the effectiveness of the design
      and operation of our disclosure controls and procedures as of the end of the
      period covered by this report. This evaluation was carried out under the
      supervision and with the participation of our newly appointed Chief Executive
      Officer, Richard Falcone and newly appointed Chief Financial Officer, Stathis
      Kouninis.




32





Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed in our reports filed or
      submitted under the Exchange Act is recorded, processed, summarized and
      reported, within the time periods specified in the Securities and Exchange
      Commission’s rules and forms. Disclosure controls and procedures include,
      without limitation, controls and procedures designed to ensure that information
      required to be disclosed in our reports filed under the Exchange Act is
      accumulated and communicated to management, including our Chief Executive
      Officer and Chief Financial Officer, to allow timely decisions regarding
      required disclosure.





Based
      upon that evaluation, our Chief Executive Officer and Chief Financial Officer
      concluded that our disclosure controls and procedures as of the end of the
      period covered by this report were ineffective in timely alerting management
      to
      material information relating to us required to be included in our periodic
      SEC
      filings. As described in the Company’s Quarterly Reports throughout 2005, the
      Company has already instituted and is continuing to implement, corrective
      actions with respect to the deficiencies in our disclosure controls and
      procedures.





In
      connection with the audit of the Company’s consolidated financial statements for
      the year ended December 31, 2005, the Company’s independent registered public
      accounting firm advised the Board of Directors and management that it had two
      independent material weaknesses in its internal control over financial
      reporting. The first material weakness related to limitations in the capacity
      of
      the Company’s accounting resources to identify and react in a timely manner to
      non-routine and complex business transactions. This was the same material
      weakness identified by the Company’s independent registered public accounting
      firm during the audit of the Company’s financial statements for the year ended
      December 31, 2004. Despite hiring additional accounting resources in 2005 to
      supplement the internal accounting staff, the Company was unable to remediate
      this material weakness. The Company has attempted to remediate this material
      weakness by the hiring, in the first quarter of 2006, of a new financial
      management team, including a new Chief Financial Officer and a new Controller.





The
      second material weakness identified related to an overall lack of internal
      control over sales and revenue recognition as well as inventory calculations
      and
      expenditures. This material weakness led directly to the Company’s announced
      internal investigation into the financial statements filed with the SEC for
      the
      quarter ended September 30, 2005 (see Note 18 to the Consolidated Financial
      Statements). Company’s management implemented several new internal controls in
      response to its internal investigation, including the following:






•
              Company
                  management has had several training sessions with the sales force
                  of its
                  subsidiary, Coast to Coast.
 
 •
              The
                  Company’s finance department has disseminated written procedures and
                  policies to all of the Company’s salespersons, including procedures that
                  require, in certain circumstances, that sales made by Coast to
                  Coast
                  salespersons be reconfirmed by the Company’s Director of
                  Logistics.
  •
              The
                    Company’s finance department has instituted a policy regarding the
                    provision of samples to the Company’s
                    customers




Other
      than noted above, there were no changes to the Company’s internal control over
      financial reporting that occurred during the Company’s last fiscal quarter that
      have materially affected, or are reasonably likely to materially affect, the
      Company’s internal control over financial reporting.





The
      Company notes however, that the
      identification of the material weaknesses described above resulted from
      management’s continuing assessment of internal control over financial reporting
      required by Section 404 of the Sarbanes-Oxley Act of 2002. While every effort
      will be made to ensure the financial reporting system will adhere to the
      Company’s internal controls, we cannot be certain that additional material
      weaknesses will not be identified prior to the filing of management’s annual
      report on internal control over financial reporting.








**ITEM
      9B.** **OTHER
      INFORMATION.**





In
      December 2005, Robert Appleby and the Company entered into a Separation
      Agreement and General Release in connection with Mr. Appleby’s resignation as
      the Company’s Chief Executive Officer. Pursuant to the Separation Agreement and
      General Release, the Company has agreed to pay Mr. Appleby a severance package
      of approximately $50,000. In addition, the Company agreed that the exercise
      period for Mr. Appleby’s vested options to purchase 1,611,111 shares of the
      Company’s common stock would be reduced from 10 years from the grant date to 5
      years from the grant date.





**PART
      III**





**ITEM
      10.** **DIRECTORS
      AND EXECUTIVE OFFICERS OF THE REGISTRANT**





The
      information required by Item 401 and 405 of Regulation S-K is incorporated
      herein by reference to the information contained under the captions “Proposal
      I—Election of Class I Directors”, “Section 16(a) Beneficial Ownership Reporting
      Compliance”, “Board and Committee Meetings” and “Corporate Governance” of the
      Proxy Statement. We will furnish to the Securities and Exchange Commission
      a
      definitive Proxy Statement (the Proxy Statement) not later than 120 days after
      the close of the fiscal year ended December 31, 2005.




Effective
      March 2005 we adopted a Code of Business Conduct and Ethics that applies to
      our
      principal executive officer, principal financial officer, principal accounting
      officer or controller, or persons performing similar functions. The text of
      our
      Code of Business Conduct and Ethics is posted in the “Corporate Governance”
section of our website, ww.taskerproducts.com. We intend to disclose on our
      website any amendments to, or waivers from, our Code of Business Conduct and
      Ethics that are required to be disclosed pursuant to the disclosure requirements
      of Item 5.05 of Form 8-K.





**ITEM
      11. EXECUTIVE
      COMPENSATION**




33




The
      information required by this item is incorporated herein by reference to the
      information that will be contained under the captions “Executive Compensation,”
“Director Compensation,” “Compensation Committee Interlocks and Insider
      Participation” and “Employment and Other Agreements” of the Proxy Statement.





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





The
      information required by this item is incorporated herein by reference to the
      information contained under the captions “Security Ownership of Certain
      Beneficial Owners and Management” and “Equity Compensation Plan Information” of
      the Proxy Statement.




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





The
      information required by this item is incorporated herein by reference to the
      information that will be contained under the captions “Employment and Other
      Agreements” and “Certain Relationships and Related Transactions” of the Proxy
      Statement.





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





The
      information required to be disclosed by this item is incorporated herein by
      reference to the information that will be contained under the caption “Principal
      Accountant Fees and Services” of the Proxy Statement.




**PART
      IV**





**ITEM
      15.  EXHIBITS AND
      FINANCIAL STATEMENT SCHEDULES.**





(a)
                    *Financial
                    Statements, Financial Statement Schedule and Exhibits*Page(1) Financial
                    Statement
                    Schedule for the Years Ended December 31, 2005, 2004and
                    2003: Schedule II - Valuation and Qualifying Accounts
                35Financial
                    statement schedules not included have been omitted because of
                    the
                    absence
                      of conditions under which they are required or because the
                      required(2)Financial
                    Statements - see “Index to Financial Statements”
                36(3)Exhibits
                    submitted with the Annual Report on Form 10-KSB as filed with
                    the
                    U.S.
                      Securities and Exchange Commission and those incorporated by
                      reference to
                      other
                        filings are listed on the Exhibit Index, which is incorporated
                        herein by
                        reference.
                77





34





**SCHEDULE
      II—VALUATION AND QUALIFYING ACCOUNTS**




**ALLOWANCE
      FOR DOUBTFUL ACCOUNTS AND RETURNS**


**Years
      Ended, 2005, 2004 and 2003**




**Additions****Year
                Ended**
            
            **Balance at**
              **Beginning**
              **of
                Year**
            
            **(Charged to**
              **Costs
                and**
              **Expenses)**
            
            **Recoveries**
            
            **Deductions**
            
            **Balance at**
              **End
                of**
              **Year****(in
                thousands)**December
                31, 2005
            
            $
            —
            
            
            80
            
            
            —
            
            
            —
            
            $
            80December
                31, 2004
            
            $
            —
            
            
            —
            
            
            —
            
            
            —
            
            $
            —December
                31, 2003
            
            $
            —
            
            
            —
            
            
            —
            
            
            —
            
            $
            —





35








**INDEX
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**Page**Report
                of Independent Registered Public Accounting Firm (Rothstein, Kass
&
                Company, P.C.)
            37Report
                of Independent Registered Public Accounting Firm (Morgan and
                Company)
            38Consolidated
                Balance Sheets as of December 31, 2005 and 2004
            39Consolidated
                Statements of Operations for the years ended December 31, 2005,
                2004
                  and 2003
            40Consolidated
                Statements of Stockholders’ Equity (Deficit) for the years ended December
                31, 2005,
                2004
                  and 2003
            41Consolidated
                Statements of Cash Flow for the years ended December 31, 2005,
                2004
                  and 2003
            42Notes
                to Consolidated Financial Statements
            43




36




**Report
      of Independent Registered Public Accounting Firm**








To
      the
      Board of Directors and Stockholders of


Tasker
      Capital Corp. and Subsidiaries





We
      have
      audited the accompanying consolidated balance sheets of Tasker Capital Corp.
      and
      Subsidiaries (a development stage company) as of December 31, 2005 and 2004,
      and
      the related consolidated statements of operations, stockholders’ equity, and
      cash flows for each of the years then ended. These consolidated financial
      statements are the responsibility of the Company’s management. Our
      responsibility is to express an opinion on these consolidated financial
      statements based on our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audits to obtain reasonable assurance about whether the
      financial statements are free of material misstatement. The Company is not
      required to have, nor were we engaged to perform, an audit of its internal
      control over financial reporting. Our audits included consideration of internal
      control over financial reporting as a basis for designing audit procedures
      that
      are appropriate in the circumstances, but not for the purpose of expressing
      an
      opinion on the effectiveness of the Company’s internal control over financial
      reporting. Accordingly, we express no such opinion. An audit also includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements, assessing the accounting principles used and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audits provide a
      reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of Tasker Capital Corp. and
      Subsidiaries (a development stage company) as of December 31, 2005 and 2004,
      and
      the results of their operations and their cash flows for each of the years
      then
      ended, in conformity with accounting principles generally accepted in the United
      States of America.








/s/
                Rothstein, Kass & Company, P.C.Roseland, New
              JerseyMarch
              9, 2006







37





**REPORT** **OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**








To
      the
      Stockholders and Directors of


Tasker
      Capital Corp.


(A
      Development Stage Company)








We
      have
      audited the accompanying consolidated balance sheet of Tasker Capital Corp.
      (a
      development stage company) as at December 31, 2003 and the related consolidated
      statements of operations, stockholders’ equity, and cash flows for the year then
      ended, and for the period from inception, May 13, 1996, to December 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 audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform an audit to obtain reasonable assurance 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 financial statement presentation. We believe that
      our
      audit provides a reasonable basis for our opinion.





In
      our
      opinion, these consolidated financial statements present fairly, in all material
      respects, the financial position of the Company as at December 31, 2003 and
      the
      results of its operations and its cash flows for the year ended December 31,
      2003 and for the period from inception, May 13, 1996, to December 31, 2003,
      in
      conformity with United States 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 1 to the
      consolidated financial statements, the Company has suffered recurring losses
      and
      net cash outflows from operations since inception. 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 discussed in Note 1.
      These consolidated financial statements do not include any adjustments that
      might result from the outcome of this uncertainty.





/s/
                Morgan and CompanyVancouver,
              CanadaMarch
              24, 2004





38







**TASKER
                  CAPITAL CORP. AND SUBSIDIARIES****(A
                  Development Stage Company)****CONSOLIDATED
                  BALANCE SHEETS**
   **December
                  31,****ASSETS**
              **2005**
              
              **2004**Current
                  assets:Cash
                  and cash equivalents
              
              $
              1,037,250
              
              $
              14,225,305Accounts
                  receivable, net of allowance for doubtful accounts of  $79,500
                  and $0 as of December 31, 2005 and 2004,
                  respectively
              
              
              155,189
              
              
              —Notes
                  receivable
              
              
              653,958
              
              
              575,961Inventories,
                  net of reserve of $74,675 and $0 as of December 31,2005
                  and 2004, respectively
              
              
              1,350,963
              
              
              99,798Prepaid
                  expenses
              
              
              27,377
              
              
              442,332Prepaid
                  commissions
              
              
              163,850
              
              
              125,000Total
                  current assets
              
              
              3,388,587
              
              
              15,468,396Property
                  and equipment, net
              
              
              1,525,142
              
              
              101,377Prepaid
                  royalties and license costs
              
              
              —
              
              
              1,179,862Investment
                  in equity investee
              
              
              664,737
              
              
              —Intangible
                  assets, net
              
              
              21,562,292
              
              
              —Goodwill
              
              
              41,677,180
              
              
              —Deposit,
                  net
              
              
              36,081
              
              
              17,232Total
                  assets
              
              $
              68,854,019
              
              $
              16,766,867**LIABILITIES
                  AND STOCKHOLDERS' EQUITY**Current
                  liabilities:Convertible
                  debentures
              
              $
              194,000
              
              $
              436,980Accounts
                  payable
              
              
              1,740,245
              
              
              148,651Notes
                  payable — acquisition of IRL
              
              
              445,840
              
              
              —Other
                  accrued liabilities
              
              
              1,377,007
              
              
              548,946Other
                  current liabilities
              
              
              234,580
              
              
              —Total
                  current liabilities
              
              
              3,991,672
              
              
              1,134,577Long—term
                  liabilities:Notes
                  payable — shareholders
              
              
              443,790
              
              
              458,652Notes
                  payable — acquisition of IRL
              
              
              1,077,447
              
              
              —Other
                  long term liabilities
              
              
              52,686
              
              
              —Accrued
                  royalties
              
              
              —
              
              
              930,000Total
                  long—term liabilities
              
              
              1,573,923
              
              
              1,388,652Stockholders'
                  equity:Common
                  stock, $0.001 par value; 300,000,000 shares authorized;89,167,095
                  and
                  48,863,740 shares issued and outstanding as ofDecember 31, 2005 and 2004, respectively
              
              
              89,167
              
              
              48,864Additional
                  paid—in capital
              
              
              89,265,154
              
              
              8,115,298Common
                  stock subscribed
              
              
              —
              
              
              13,876,745Deficit
                  accumulated during the development stage
              
              
              (26,065,897
              )
              
              (7,797,269
              )Total
                  stockholders' equity
              
              
              63,288,424
              
              
              14,243,638Total
                  liabilities and stockholders' equity
              
              $
              68,854,019
              
              $
              16,766,867
  The
                  accompanying notes are an integral part of these consolidated financial
                  statements.


39








**TASKER
                CAPITAL CORP. AND SUBSIDIARIES****(A
                Development Stage Company)****CONSOLIDATED
                STATEMENTS OF OPERATIONS**






**December
                31,**
            
            
            **INCEPTION**
              **May
                  13,1996 to****2005**
            
            
            **2004**
            
            
            **2003**
            
            
            **December
                  31,**
              **2005****Revenues**
            
            $
            705,467
            
            $
            —
            
            $
            —
            
            $
            705,467**Cost
                of goods sold**
            
            
            1,308,111
            
            
            —
            
            
            —
            
            $
            1,308,111**Gross
                margin**
            
            
            (602,644
            )
            
            —
            
            
            —
            
            
            (602,644
            )**Expenses**Selling,
                general & administrative
            
            
            11,905,205
            
            
            1,963,867
            
            
            397,954
            
            
            12,104,870Product
                development
            
            
            3,356,113
            
            
            1,374,780
            
            
            89,124
            
            
            3,685,662Depreciation
                and amortization
            
            
            1,099,859
            
            
            28,848
            
            
            13,638
            
            
            1,366,066**Total
                Expenses**
            
            
            **16,361,177**
            
            
            **3,367,495**
            
            
            **500,716**
            
            
            **21,331,332****Loss
                From Operations**
            
            
            (16,963,821
            )
            
            (3,367,495
            )
            
            (500,716
            )
            
            (21,933,976
            )Other
                income (expense):Interest
                expense,net
            
            
            (85,333
            )
            
            (2,729,890
            )
            
            (113,252
            )
            
            (85,333
            )Loss
                on equity investee
            
            
            (53,263
            )
            
            —
            
            
            —
            
            
            (53,263
            )Liquidated
                damages
            
            
            (285,706
            )
            
            —
            
            
            —
            
            
            (3,151,197
            )Other
            
            
            (880,505
            )
            
            25,770
            
            
            6,888
            
            
            (842,128
            )**Total
                other expense, net**
            
            
            (1,304,807
            )
            
            (2,704,120
            )
            
            (106,364
            )
            
            (4,131,921
            )**Net
                loss**
            
            $
            (18,268,628
            )
            $
            (6,071,615
            )
            **$**
            (607,080
            )
            $
            (26,065,897
            )**Net
                loss per common share, basic and diluted**
            
            $
            (0.25
            )
            $
            (0.26
            )
            **$**
            (0.05
            )
            $
            (1.42
            )**Weighted
                average common shares outstanding, basic and
                diluted**
            
            
            **73,549,000**
            
            
            **23,597,000**
            
            
            **13,003,000**
            
            
            **18,329,000**





40




**TASKER
        CAPITAL CORP. AND SUBSIDIARY**
 **(A
        Development Stage Company)**
 **CONSOLIDATED
        STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)**


**COMMON
                    STOCK****NUMBER
                    OF
                    SHARES**
                
                
                **AMOUNT**
                
                
                **ADDITIONAL
                    PAID—IN
                    CAPITAL**
                
                
                **ACCUMULATED
                    OTHER COMPREHENSIVE 
                    INCOME (LOSS)**
                
                
                **COMMON
                    STOCK** 
                    **SUBSCRIBED**
                
                
                **DEFICIT
                    ACCUMULATED DURING THE
                    DEVELOPMENT STAGE**
                
                
                **TOTAL**Issuance
                    of common stock
                
                
                10
                
                $
                —
                
                $
                1
                
                $
                —
                
                $
                —
                
                $
                —
                
                $
                1Net
                    loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (14,237
                )
                
                (14,237
                )Balance,
                    December 31, 1996
                
                
                10
                
                
                
                
                
                1
                
                
                
                
                
                
                
                
                (14,237
                )
                
                (14,236
                )Issuance
                    of common stock
                
                
                17,500,000
                
                
                17,500
                
                
                168,407
                
                
                
                
                
                
                
                
                
                
                
                185,907Translation
                    adjustment
                
                
                
                
                
                
                
                
                
                
                
                (743
                )
                
                
                
                
                
                
                
                (743
                )Net
                    loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (143,437
                )
                
                (143,437
                )Balance,
                    December 31, 1997
                
                
                17,500,010
                
                
                17,500
                
                
                168,408
                
                
                (743
                )
                
                
                
                
                (157,674
                )
                
                27,491Cancellation
                    of common stock
                
                
                (7,500,000
                )
                
                (7,500
                )
                
                7,500
                
                
                
                
                
                
                
                
                
                
                
                —Translation
                    adjustment
                
                
                
                
                
                
                
                
                
                
                
                (579
                )
                
                
                
                
                
                
                
                (579
                )Net
                    loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (45,387
                )
                
                (45,387
                )Balance,
                    December 31, 1998
                
                
                10,000,010
                
                
                10,000
                
                
                175,908
                
                
                (1,322
                )
                
                
                
                
                (203,061
                )
                
                (18,475
                )Issuance
                    of common stock
                
                
                1,000,000
                
                
                1,000
                
                
                15,844
                
                
                
                
                
                
                
                
                
                
                
                16,844Reverse
                    merger transaction
                
                
                262,000
                
                
                262
                
                
                (262
                )
                
                
                
                
                
                
                
                (295
                )
                
                (295
                )Translation
                    adjustment
                
                
                
                
                
                
                
                
                
                
                
                (1,116
                )
                
                
                
                
                
                
                
                (1,116
                )Net
                    loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (34,518
                )
                
                (34,518
                )Balance,
                    December 31, 1999
                
                
                11,262,010
                
                
                11,262
                
                
                191,490
                
                
                (2,438
                )
                
                
                
                
                (237,874
                )
                
                (37,560
                )Translation
                    adjustment
                
                
                
                
                
                
                
                
                
                
                
                2,230
                
                
                
                
                
                
                
                
                2,230Net
                    loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (60,388
                )
                
                (60,388
                )Balance,
                    December 31, 2000
                
                
                11,262,010
                
                
                11,262
                
                
                191,490
                
                
                (208
                )
                
                
                
                
                (298,262
                )
                
                (95,718
                )Translation
                    adjustment
                
                
                
                
                
                
                
                
                
                
                
                7,236
                
                
                
                
                
                
                
                
                7,236Net
                    loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (59,060
                )
                
                (59,060
                )Balance,
                    December 31, 2001
                
                
                11,262,010
                
                
                11,262
                
                
                191,490
                
                
                7,028
                
                
                
                
                
                (357,322
                )
                
                (147,542
                )Issuance
                    of common stock
                
                
                524,850
                
                
                525
                
                
                210,193
                
                
                
                
                
                
                
                
                
                
                
                210,718Warrants
                    issued for license
                
                
                —
                
                
                
                
                
                42,344
                
                
                
                
                
                
                
                
                
                
                
                42,344Warrants
                    issued for services
                
                
                —
                
                
                
                
                
                558,935
                
                
                
                
                
                
                
                
                
                
                
                558,935Warrants
                    issued
                
                
                —
                
                
                
                
                
                13,956
                
                
                
                
                
                
                
                
                
                
                
                13,956Translation
                    adjustment
                
                
                —
                
                
                
                
                
                
                
                
                (7,028
                )
                
                
                
                
                
                
                
                (7,028
                )Net
                    loss
                
                
                —
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (761,252
                )
                
                (761,252
                )Balance,
                    December 31, 2002
                
                
                11,786,860
                
                
                11,787
                
                
                1,016,918
                
                
                
                
                
                
                
                
                (1,118,574
                )
                
                (89,869
                )Issuance
                    of common stock
                
                
                660,000
                
                
                660
                
                
                164,340
                
                
                
                
                
                
                
                
                
                
                
                165,000Issuance
                    of common stock
                
                
                1,408,940
                
                
                1,409
                
                
                350,826
                
                
                
                
                
                
                
                
                
                
                
                352,235Shares
                    issued for debt
                
                
                655,000
                
                
                655
                
                
                171,931
                
                
                
                
                
                
                
                
                
                
                
                172,586Share
                    subscriptions
                
                
                —
                
                
                —
                
                
                —
                
                
                
                
                
                27,980
                
                
                
                
                
                27,980Net
                    loss
                
                
                —
                
                
                —
                
                
                —
                
                
                
                
                
                
                
                
                (607,080
                )
                
                (607,080
                )Balance,
                    December 31, 2003
                
                
                14,510,800
                
                
                14,511
                
                
                1,704,015
                
                
                
                
                
                27,980
                
                
                (1,725,654
                )
                
                20,852Private
                    placement, net of costs
                
                
                —
                
                
                —
                
                
                
                
                
                
                
                
                13,867,370
                
                
                
                
                
                13,867,370Warrants
                    and embedded conversion option associated with debentures
                
                
                —
                
                
                —
                
                
                2,184,600
                
                
                
                
                
                
                
                
                
                
                
                2,184,600Debentures
                    and accrued interest converted to common stock
                
                
                18,161,937
                
                
                18,162
                
                
                1,998,205
                
                
                
                
                
                
                
                
                
                
                
                2,016,367Exercise
                    of warrants
                
                
                14,491,003
                
                
                14,491
                
                
                1,153,059
                
                
                
                
                
                
                
                
                
                
                
                1,167,550Stock
                    based compensation
                
                
                —
                
                
                —
                
                
                373,000
                
                
                
                
                
                
                
                
                
                
                
                373,000Common
                    stock, warrants and options issued for services
                
                
                1,700,000
                
                
                1,700
                
                
                702,419
                
                
                
                
                
                (18,605
                )
                
                
                
                
                685,514Net
                    loss
                
                
                —
                
                
                —
                
                
                —
                
                
                
                
                
                
                
                
                (6,071,615
                )
                
                (6,071,615
                )Balance,
                    December 31, 2004
                
                
                48,863,740
                
                
                48,864
                
                
                8,115,298
                
                
                —
                
                
                13,876,745
                
                
                (7,797,269
                )
                
                14,243,638Shares
                    issued for prior year private placement
                
                
                9,406,250
                
                
                9,406
                
                
                13,918,113
                
                
                
                
                
                (13,876,745
                )
                
                
                
                
                50,774Private
                    placement, net of costs
                
                
                2,947,545
                
                
                2,948
                
                
                6,431,652
                
                
                
                
                
                
                
                
                
                
                
                6,434,600Debentures
                    and accrued interest converted to common stock
                
                
                4,089,900
                
                
                4,090
                
                
                238,890
                
                
                
                
                
                
                
                
                
                
                
                242,980Note
                    payable and accrued interest converted to common stock
                
                
                32,272
                
                
                32
                
                
                32,240
                
                
                
                
                
                
                
                
                
                
                
                32,272Exercise
                    of warrants & stock options
                
                
                4,835,000
                
                
                4,835
                
                
                229,915
                
                
                
                
                
                
                
                
                
                
                
                234,750Stock
                    based compensation
                
                
                —
                
                
                —
                
                
                484,000
                
                
                
                
                
                
                
                
                
                
                
                484,000Common
                    stock, warrants and options issued for services
                
                
                —
                
                
                —
                
                
                3,100,950
                
                
                
                
                
                
                
                
                
                
                
                3,100,950Shares
                    issued as part consideration for assets acquired
                
                
                18,992,388
                
                
                18,992
                
                
                56,958,171
                
                
                
                
                
                
                
                
                
                
                
                56,977,163Registration
                    rights derivative liabilty
                
                
                —
                
                
                —
                
                
                (244,075
                )
                
                
                
                
                
                
                
                
                
                
                (244,075
                )Net
                    loss
                
                
                —
                
                
                —
                
                
                —
                
                
                
                
                
                
                
                
                (18,268,628
                )
                
                (18,268,628
                )Balance,
                    December 31, 2005
                
                
                89,167,095
                
                $
                89,167
                
                
                89,265,154
                
                $
                —
                
                $
                —
                
                $
                (26,065,897
                )
                $
                63,288,424
  The
                      accompanying notes are an integral part of these consolidated
                      financial
                      statements.
 41




TASKER
      CAPITAL CORP. AND
      SUBSIDIARIES


**(A
      Development Stage Company)**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**




**December
                31,**
            **INCEPTION**
              **May
                  13, 1996 to****Cash
                flows from operating activities:**
            
            **2005**
            
            **2004**
            
            **2003**
            
            **December
                31,**
              **2005**Net
                loss
            
            $
            (18,268,628
            )
            $
            (6,071,615
            )
            $
            (607,080
            )
            $
            (26,065,897
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
                and amortization
            
            
            1,099,859
            
            
            28,848
            
            
            13,638
            
            
            1,142,345Noncash
                interest
            
            
            84,987
            
            
            2,661,210
            
            
            78,636
            
            
            2,832,182Stock
                based compensation
            
            
            484,000
            
            
            373,000
            
            
            
            
            
            1,415,935Allowance
                for uncollectible accounts receivable
            
            
            80,000
            
            
            
            
            
            
            
            
            80,000Allowance
                for uncollectible note receivable
            
            
            890,000
            
            
            
            
            
            
            
            
            890,000Loss
                on equity investee
            
            
            53,263
            
            
            
            
            
            
            
            
            53,263Fair
                value adjustment for registration rights derivative
                liability
            
            
            (9,495
            )
            
            
            
            
            
            
            
            (9,495
            )Common
                stock, warrants and options for services
            
            
            3,079,973
            
            
            685,514
            
            
            
            
            
            3,765,487Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            (227,211
            )
            
            
            
            
            
            
            
            (227,211
            )Inventories
            
            
            (1,210,119
            )
            
            (99,798
            )
            
            
            
            
            (1,309,917
            )Prepaid
                expenses
            
            
            (236,763
            )
            
            (382,191
            )
            
            (60,140
            )
            
            (679,095
            )Prepaid
                commissions
            
            
            (38,850
            )
            
            (125,000
            )
            
            
            
            
            (163,850
            )Prepaid
                royalties
            
            
            —
            
            
            65,000
            
            
            (5,000
            )
            
            —Accounts
                payable
            
            
            1,591,594
            
            
            62,755
            
            
            54,223
            
            
            1,863,667Accrued
                royalties
            
            
            —
            
            
            (70,000
            )
            
            
            
            
            (70,000
            )Other
                accrued liabilities
            
            
            781,461
            
            
            493,945
            
            
            55,000
            
            
            1,330,407Net
                cash used in operating activities
            
            
            (11,845,929
            )
            
            (2,378,332
            )
            
            (470,723
            )
            
            (15,152,179
            )**Cash
                flows from investing activities:**Cash
                payments made as part consideration for assets acquired
            
            
            (2,581,808
            )
            
            
            
            
            
            
            
            (2,581,808
            )Purchases
                of property and equipment
            
            
            (824,278
            )
            
            (112,074
            )
            
            (2,819
            )
            
            (939,171
            )Advances
                pursuant to notes
            
            
            (3,510,628
            )
            
            (400,000
            )
            
            (127,265
            )
            
            (4,102,893
            )Purchase
                of license
            
            
            —
            
            
            
            
            
            
            
            
            (160,000
            )Investment
                in equity investee
            
            
            (718,000
            )
            
            
            
            
            
            
            
            (718,000
            )Payments
                for deposits and other
            
            
            (18,849
            )
            
            (18,220
            )
            
            (2,750
            )
            
            (42,569
            )Net
                cash used in investing activities
            
            
            (7,653,563
            )
            
            (530,294
            )
            
            (132,834
            )
            
            (8,544,441
            )**Cash
                flows from financing activities:**Proceeds
                from private placements, net
            
            
            6,434,599
            
            
            13,867,370
            
            
            545,215
            
            
            21,049,936Proceeds
                from convertible debentures, net
            
            
            —
            
            
            2,065,532
            
            
            
            
            
            2,065,532Proceeds
                from other notes payable, net
            
            
            —
            
            
            
            
            
            
            
            
            524,850Exercise
                of warrants/options
            
            
            285,750
            
            
            1,167,550
            
            
            
            
            
            1,453,300Repayments
                on note payable — IRL
            
            
            (408,686
            )
            
            
            
            
            
            
            
            (408,686
            )Other
            
            
            (226
            )
            
            
            
            
            
            
            
            48,938Net
                cash provided by financing activities
            
            
            6,311,437
            
            
            17,100,452
            
            
            545,215
            
            
            24,733,870**Net
                increase (decrease) in cash and cash equivalents**
            
            
            (13,188,055
            )
            
            14,191,826
            
            
            (58,342
            )
            
            1,037,250**Cash
                and cash equivalents, beginning of period**
            
            
            14,225,305
            
            
            33,479
            
            
            91,821**Cash
                and cash equivalents, end of period**
            
            $
            1,037,250
            
            $
            14,225,305
            
            $
            33,479
            
            
            1,037,250—


**Supplemental
                disclosures of cash flow
                information:**Interest
                paid
            
            $
            185,783
            
            $
            27,242
            
            $
            —
            
            $
            185,783**Supplemental
                disclosures of noncash investing and financing **activities:****Conversion
                of debt and accrued interest into common stock
            
            $
            291,930
            
            $
            2,016,367
            
            $
            172,586
            
            
            2,480,883Warrants
                issued and embedded conversion feature associatedwith
                debt financing
            
            $
            —
            
            $
            2,184,600
            
            $
            —
            
            $
            2,184,600Vehicle
                purchased via note payable
            
            $
            56,916
            
            $
            —
            
            $
            —
            
            $
            56,916Warrants
                issued for license
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            42,344


The
                  following schedule summarizes the acquisition of the certain assets
                  of the
                  Selling Companies included in the condensed consolidated statement
                  of cash flows as cash paid for acquisition of the assets of the
                  Selling
                  Companies:
  Fair
                  value of assets acquired
              
              $
              64,929,000Cash
                  paid
              
              
              (1,428,000
              )Common
                  stock issued
              
              
              (56,977,164
              )Note
                  issued
              
              
              (1,931,973
              )Notes
                  cancelled
              
              
              (2,542,631
              )Acquisition
                  costs
              
              
              (1,420,840
              )Liabilities
                  assumed
              
              $
              629,000
  The
                  accompanying notes are an integral part of these consolidated financial
                  statements.






42


**TASKER
        CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**




**1.**
            **NATURE
                OF OPERATIONS**





Tasker
      Capital Corp. and its subsidiaries (collectively, “the Company” or “Tasker”)
      manufactures, distributes and markets products using a patented process (the
      “pHarlo technology”) that utilizes a solution that enables copper sulfate, a
      compound with bacteriostatic properties, to remain active throughout a wide
      range of pH values. The Company currently markets Close CallTM, an oral hygiene
      breath drink, Unifresh® Footbath, a grooming aid for dairy cows, and Tasker
      Pacific BlueTM Seafood Wash. The Company has begun the in-plant commercial
      verification process for United States Department of Agriculture approval to
      use
      the pHarlo technology in the scalder process of poultry processing. The Company
      is in the process of conducting tests of the pHarlo technology in other pre-
      and
      post-harvest food processing applications including seafood and poultry farming.
      The Company is also in various stages of developing future product lines using
      the pHarlo technology in the skin care and pet product industries. On December
      7, 2005 the Company announced that it intended to concentrate its efforts on
      the
      development of its poultry processing products, its seafood processing products
      and its Unifresh® Footbath and Unifresh® Pen Spray products. The Company also
      announced that it intended to seek to license and/or sell the Close
      Call Ô brand
      and derivative applications. As a result of this refocusing effort, the Company
      has suspended its development efforts in other areas.





As
      a
      result of the acquisition (the “2005 Acquisition”) by the Company of certain
      assets of pHarlo Citrus Technologies, Inc. (“PCTI”), Indian River Labs, LLC
      (“IRL”), pHarlo Citrus Properties Partnership, LLLP (“PCPP”), and Coast to Coast
      Laboratories, LLC (“C2C”, and together with PCTI, PCPP and IRL, the “Selling
      Companies”) in July 2005 (see Note 12), the Company now owns the utility patent
      applications and provisional patent applications associated with the pHarlo
      technology in the Company’s field of use, and has entered into a new sub-license
      agreement for the base patents associated with the pHarlo
      technology.





The
      Company is in the development stage; therefore, recovery of its assets is
      dependent upon future events, the outcome of which is indeterminable.




**2.**  **SIGNIFICANT
      ACCOUNTING POLICIES**





**Basis
      of Presentation:**





In
      March
      1999, Tasker, organized as a Nevada corporation in February 1999, and Tanuta
      Ventures Corp. (“Tanuta”), incorporated under the laws of the Province of
      British Columbia, Canada in May 1996, entered into a share exchange agreement
      whereby Tasker agreed to purchase all of the 11,000,010 outstanding common
      shares of Tanuta in exchange for 11,000,010 common shares of Tasker. Since
      the
      former shareholders of Tanuta controlled Tasker after the transaction, the
      merger was accounted for as reverse acquisition under which, for accounting
      purposes, Tanuta was deemed the accounting acquirer and Tasker was deemed to
      be
      the acquired entity. Under these accounting principles, the post-merger company
      financial statements represented Tanuta on a historical basis consolidated
      with
      the results of operations of Tasker from the March 1999 effective date of the
      merger.





43


**TASKER
        CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**




**Principles
      of Consolidation:**





The
      consolidated financial statements include the accounts of Tanuta from May 13,
      1996 (date of Tanuta’s inception) to December 31, 2005. The consolidated
      financial statements also include the accounts of Tasker from March 31, 1999
      (the effective date of the reverse merger) to December 31, 2005. All significant
      intercompany balances and transactions have been eliminated in
      consolidation.





**Development
      Stage Company:**





The
      Company is a development stage company as defined in the Statements of Financial
      Accounting Standards (“SFAS”) No. 7. The Company is devoting substantially all
      of its present efforts to establish a new business and with the exceptions
      of
      its brands Close CallTM, and Unifresh® Footbath, none of its planned principal
      operations have commenced as of December 31, 2005. All losses accumulated since
      inception have been considered as part of the Company's development stage
      activities.





**Use
      of Estimates:**





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





**Fair
      Value of Financial instruments:**





The
      fair
      values of the Company’s asset and liabilities that qualify as financial
      instruments under SFAS No. 107, “Disclosures about Fair Value of Financial
      Instruments”, approximate their carrying amounts presented in the accompanying
      consolidated balance sheet at December 31, 2005.





**Cash
      and Cash Equivalents:**





The
      Company considers all highly liquid investments with an original maturity of
      three months or less to be cash equivalents. The Company maintains its cash
      primarily in one financial institution which, at times, exceeds Federal Deposit
      Insurance Corporation (“FDIC”) insured limits. The Company has not incurred any
      losses in such accounts and believes it is not exposed to any significant credit
      risk on cash. A s
      of
      December 31, 2005 and 2004, the Company had approximately $1.0 million and
      $14.2
      million in cash and cash equivalents, respectively.




**Liquidity:**





The
      Company has continued to sustain losses from operations and for the years ended
      December 31, 2005, 2004 and 2003 it has incurred a loss of approximately
      $18,269,000, $6,072,000 and $607,000, respectively. In addition, the Company
      has
      not generated positive cash flows from operations for the years ended December
      31, 2005, 2004 and 2003.




44
 
 **TASKER
          CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
          DEVELOPMENT STAGE COMPANY)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**


Based
      upon management’s current twelve month forecast of future revenues from its
      product lines in conjunction with the January 2006 Private Placement, in which
      the Company received proceeds of $8.7 million, net of placement agent fees,
      as
      described in Note 19(b), the Company believes that cash on hand, cash
      expected to be generated from operations, and the currently ongoing reductions
      in administrative costs will provide adequate flexibility for funding the
      Company’s working capital over the next twelve months.  As with all
      business forecasts, management’s current assessment of future revenues is based
      upon its assumptions and expectations.  Future market trends for its
      products may not develop as management has predicted, and regulatory approvals
      required to market products as the Company currently plans may not be obtained,
      and, in the future, the Company may find that its cash on hand and cash from
      operations is not sufficient to fund existing operations or new opportunities
      may present themselves over the course of the next twelve months, in which
      case
      the Company may find that its cash on hand and cash from operations is not
      sufficient. Such changes may, or may not, require it to seek additional outside
      funding and, if required, there can be no assurance that suitable outside
      financing will be available to the Company.





**Accounts
      Receivable:**





Accounts
      receivable represent payments due to the Company for previously recognized
      net
      sales, reduced by an allowance for doubtful accounts for balances, which are
      estimated to be uncollectible at December 31, 2005 and 2004. The Company grants
      credit terms in the normal course of business to its customers. Trade credit
      is
      extended based upon periodically updated evaluations of each customer's ability
      to perform its obligations. The Company does not normally require collateral
      or
      other security to support credit sales. The allowance for doubtful accounts
      is
      determined based on historical experience and ongoing evaluations of the
      Company's receivables and evaluations of the risks of payment. Accounts
      receivable balances are recorded against the allowance for doubtful accounts
      when they are deemed uncollectible. Our allowance for doubtful accounts at
      December 31, 2005 and 2004 was $79,500 and $0, respectively.





**Inventories:**





Inventories
      are stated at the lower of cost or market. Cost is determined using the
      first-in, first-out (FIFO) method.





**Property
      and Equipment and Other Assets:**





Property
      and equipment has been recorded at cost, net of accumulated depreciation.
      Improvements are capitalized and maintenance, repairs and minor replacements
      are
      expensed as incurred. Depreciation is determined using the straight-line method
      over estimated lives of such assets as follows: machinery & equipment, 3 to
      10 years; office furniture and fixtures and capitalized software, 5 to 7 years;
      vehicles, 5 years; and intangible assets, 11.5 years.





**Goodwill
      and Other Intangible Assets**




The
      Company accounts for goodwill and other intangible assets at their estimated
      fair values in accordance with SFAS No. 142, “Goodwill and Other Intangible
      Assets,” which the Company adopted effective July 1, 2002. In connection with
      prior business and asset acquisitions, the Company recorded goodwill based
      on
      the excess of the purchase price over the identifiable tangible and intangible
      assets acquired and liabilities assumed. Upon adoption of SFAS 142, the Company
      ceased recognizing recurring amortization of goodwill, and goodwill is now
      tested at least annually for impairment.




45
 
 **TASKER
          CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
          DEVELOPMENT STAGE COMPANY)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**


The
      Company’s specifically identifiable intangible assets, which consist of acquired
      core technology and customer related intangible assets, are reported at cost,
      net of accumulated amortization. These intangible assets are being amortized
      over their estimated useful lives, which is 11.5 years, at amortization rates
      that are proportional to each asset’s estimated economic benefit to the Company.
      The carrying value of these intangible assets is reviewed annually by the
      Company, or more frequently when indicators of impairment are present, in
      accordance with the provisions of SFAS No. 144, “Accounting for the Impairment
      or Disposal of Long-Lived Assets” which requires impairment losses to be
      recorded on long-lived assets used in operations when indicators of impairment
      are present and undiscounted cash flows estimated to be generated by these
      assets are less than the assets’ carrying amount.




In
      performing its review of the recoverability of goodwill and other intangible
      assets, the Company considers several factors. These factors include the
      expected cash flows that an asset is expected to generate over its estimated
      economic life. The Company also considers whether there have been significant
      changes in legal factors or the overall business climate that could affect
      the
      underlying value of an asset or whether there is an expectation that the asset
      will be sold or disposed of before the end of its originally estimated useful
      life. In the case of goodwill, the Company must also consider, and estimate,
      the
      fair value of the reporting unit to which the goodwill is assigned. If, as
      a
      result of examining any of these factors, the Company concludes that the
      carrying value of its goodwill or other intangible assets exceeds its estimated
      fair value, the Company will record an impairment charge and reduce the carrying
      value of the asset to its estimated fair value.




**Income
      Taxes:**





The
      Company complies with SFAS No. 109 "Accounting for Income Taxes". This standard
      requires the use of an asset and liability approach for financial accounting
      and
      reporting on income taxes. Deferred income tax assets and liabilities are
      computed for differences between the financial statement and tax bases of assets
      and liabilities that will result in future taxable or deductible amounts, based
      on enacted tax laws and rates applicable to the periods in which the differences
      are expected to affect taxable income. If it is more likely than not that some
      portion or all of a deferred tax asset will not be realized, a valuation
      allowance is recognized.





**Stock
      Based Compensation:**





As
      allowed by SFAS No. 123. “Accounting for Stock-Based Compensation” (amended by
      SFAS No. 148), the Company has elected to measure stock-based compensation
      expense using the intrinsic value method prescribed by Accounting Principles
      Board (“APB”) No. 25 and provide disclosure-only provisions of SFAS No. 123.
      Accordingly, compensation expense for stock options is measured as the excess,
      if any, of the quoted market price of the Company’s common stock at the date of
      the grant over the exercise price an employee or director must pay to acquire
      stock. If the Company had determined compensation expense based on the fair
      value using the Black-Scholes option pricing model at the grant dates consistent
      with SFAS Nos. 123 and 148, the pro forma effect on the Company’s net loss and
      net loss per common share would have been the following for the years ended
      December 31, 2005, 2004 and 2003 and the period of inception, May 13, 1996
      to
      December 31, 2005:




46


**TASKER
        CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**


**2005**
            
            **2004**
            
            **2003**
            
            **Since
                Inception**Net
                loss, as reported
            
            $
            (18,268,628
            )
            $
            (6,071,615
            )
            $
            (607,080
            )
            $
            (26,065,897
            )Add:
                Stock based compensationincluded
                in net loss, as reported
            
            
            484,000
            
            
            373,000
            
            
            
            
            
            1,415,935Less:
                Stock based compensationexpense
                determined under the fair value method
            
            
            (6,252,300
            )
            
            (2,670,799
            )
            
            (115,702
            )
            
            (9,154,050
            )Net
                loss, pro-forma
            
            $
            (24,036,928
            )
            $
            (8,369,414
            )
            $
            (722,782
            )
            $
            (33,804,012
            )Basic
                and diluted loss per share, as reported
            
            $
            (0.25
            )
            $
            (0.26
            )
            $
            (0.05
            )
            $
            (1.42
            )Basic
                and diluted loss per share, pro-forma
            
            $
            (0.33
            )
            $
            (0.35
            )
            $
            (0.06
            )
            $
            (1.84
            )





The
      following assumptions were applied in determining stock based compensation
      expense under the fair value method:





**2005**
            
            **2004**
            
            **2003**Risk-free
                interest rate
            
            
            2.10
                - 3.80
            %
            
            2.10
                - 3.18
            %
            
            3.25
            %Expected
                option term
            
            
            2.5
                - 5 years
            
            
            2.5
                - 3 years
            
            
            2.5
                - 3 yearsExpected
                price volatility
            
            
            140
            %
            
            197
            %
            
            122
            %Dividend
                yield
            
            
            —
            
            
            —
            
            
            —





**Derivative
      Instruments**





We
      are a
      development stage company without significant revenues. To date, we have entered
      into several debt and equity transactions to fund our operations. A number
      of
      these transactions involved the issuance of convertible debt and warrants.
      These
      transactions also included registration rights agreements that impose
      significant penalties on us if certain conditions are not met. As a result
      of
      these registration rights agreements, we face a number of unique and complex
      accounting issues such as the ones discussed below.





The
      Company has issued and outstanding convertible debt and certain convertible
      equity instruments with embedded derivative features such as the conversion
      feature of our convertible debt into the Company’s common stock. The Company
      analyzes these financial instruments in accordance with Statement of Financial
      Accounting Standards (“SFAS”) No. 133 and Emerging Issues task Force (“EITF”)
      Issue Nos. 00−19 and 05−02 to determine if these hybrid contracts have embedded
      derivatives that must be bifurcated. In addition, free standing warrants are
      accounted for as either equity or liabilities in accordance with the provisions
      of EITF Issue No. 00−19.





47
 
 **TASKER
          CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
          DEVELOPMENT STAGE COMPANY)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**


EITF
      Issue No. 05−4 "The Effect of a Liquidated Damages Clause on a Freestanding
      Financial Instrument Subject to EITF Issue No. 00−19, 'Accounting for Derivative
      Financial Instruments Indexed to, and Potentially Settled in, a Company's Own
      Stock'" addresses financial instruments, such as convertible notes and stock
      purchase warrants, which are accounted for under EITF 00−19, that are issued
      with a corresponding right to have these securities registered pursuant to
      a
      registration rights agreement that includes a liquidated damages clause.
      Alternative accounting treatments of registration rights are discussed in EITF
      Issue No. 05-4. One alternative treatment discussed in EITF Issue No. 05-4
      could
      require the warrants, the convertible debt and the registration rights agreement
      to be treated as a single financial instrument. If the EITF implements this
      approach, the convertible debt and the warrants we have issued would need to
      be
      recorded as a liability at fair value and changes in the fair value of the
      liability would need to be recorded in the statement of operations each period.
      Implementation of this approach may have a material non-cash impact to our
      consolidated financial statement. Since no consensus on EITF Issue No. 05−4 has
      been reached, we have given only prospective application to this guidance.
      Further impact on our consolidated financial statements of adopting the
      standard, if any, will follow the transition guidance when released.





In
      April
      and July 2004, we entered into private placement agreements for convertible
      debentures, registration rights agreements and warrants (see Note 6). Based
      on
      the interpretive guidance in EITF Issue No. 05−4 due to an uncapped liquidated
      damages provision in the registration rights agreements, we determined that
      the
      registration rights are derivative liabilities that should be bifurcated from
      the related financial instruments. Accordingly, the estimated fair value of
      the
      registration rights derivative of approximately $244,000 was recorded as a
      liability as of October 1, 2005, the beginning of the first fiscal period after
      September 15, 2005, the date that EITF postponed further deliberations.





Changes
      in the estimated fair value of the registration rights derivative liability
      are
      recorded in the consolidated statement of operations. In the fourth quarter
      of
      2005 we recorded a gain on the reduction of the derivative liability of
      approximately $9,000.





In
      connection with our examination of past transactions for application of EITF
      Issue No. 05-4, we noted that for the period from entering into the April 2004
      Securities Purchase Agreement until we increased our authorized shares in August
      2004, we had insufficient shares to meet all potential obligations to issue
      shares under our convertible notes and exercisable warrants and options. Under
      EITF Issue No. 00-19, a liability should be recognized for those financial
      instruments for that period, with any changes in the fair value of such
      liabilities recognized in our consolidated statement of operations. Based on
      our
      analysis of such liabilities, we determined the effect of any such amounts
      to be
      immaterial.





**Revenue
      Recognition:**





The
      Company recognizes revenues from the sale of its products based on the
      provisions of SEC Staff Accounting Bulletin No. 104, *“* Revenue
      Recognition”. The Company recognizes revenue when all of the following
      conditions are met:




48


**TASKER
        CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**


•
                There
                    is persuasive evidence of an
                    arrangement;
 
 •
                Therisk
                    of loss and title to the product transfers to the customer;
 
 •
                The
                    collection of the fees is reasonably assured;
                    and
 
 •
                The
                    amount of fees to be paid by the customer is fixed or
                    determinable.




The
      Company’s arrangements do not contain general rights of return. However,
      in the fourth quarter of 2005, the Company issued approximately $890,000 in
      credit memos These credit memos were issued to customers for which the Company
      promised to take back the Unifresh® Footbath that was not as effective due to
      abnormally high alkaline content in the customers’ water sources. The Company
      has now reformulated its Unifresh® Footbath product with the addition of a
      compound that neutralizes alkali.





Cost
      of
      sales includes all of the costs to manufacture the Company's products including
      raw materials and supplies, direct labor and factory overhead. Cost of sales
      also includes the write-off of obsolete inventory and inventory that is not
      expected to be sold before its shelf expiration date. Additionally, cost of
      sales reflects the costs associated with free sample products. These costs
      are
      recognized on the date on which the Company ships the free sample
      product.





**Advertising
      Costs:**





Advertising
      costs are charged to operations as incurred and were $177,000 for the year
      ended
      December 31, 2005 and $0 for the years ended December 31, 2004 and
      2003.





**Research
      and Development:**





Research
      and development expenditures are expensed as incurred. The amounts charged
      against earnings in 2005, 2004 and 2003 for research and development
      expenditures were $3.4 million, $1.4 million and $89,000,
      respectively.





**Basic
      and Diluted Loss Per Common Share:**





The
      Company complies with SFAS No. 128, “Earnings Per Share”, which states that
      basic loss per common share is computed by dividing net loss available to common
      stockholders by the weighted average number of common shares outstanding.
      Diluted loss per common share is computed similar to basic loss per common
      share
      except that the denominator is increased to include common stock equivalents.
      The Company’s common stock equivalents currently include stock options,
      convertible debentures and warrants. Unexercised stock options and warrants
      to
      purchase common stock and debentures convertible into common stock as of
      December 31, 2005, 2004 and 2003 are as follows:





49




**TASKER
        CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
                31,****2005**
            
            **2004**
            
            **2003**Options
            
            
            16,540,777
            
            
            15,650,000
            
            
            2,400,000Warrants
            
            
            7,361,120
            
            
            10,242,350
            
            
            4,284,850Convertible
                Debentures
            
            
            2,095,000
            
            
            6,189,90025,996,897
            
            
            32,082,250
            
            
            6,684,850





The
      foregoing common stock equivalents were excluded from the calculation of net
      loss per common share since the inclusion of any additional shares would be
      antidilutive.





**Intangible
      Assets Related to Businesses Acquired:**





Identifiable
      intangible assets, primarily utility patent applications, are being amortized
      over the remaining useful life of the patents of approximately 11.5 years.
      For
      the year ended December 31, 2005, the Company has amortized approximately
      $942,000 related to the utility patent applications. Estimated amortization
      expense for each of the succeeding five years is approximately $2.0 million
      per
      annum.





In
      connection with the 2005 Acquisition, the Company recognized goodwill in the
      amount of $41.7 million, which represents the excess purchase price over the
      fair value of assets acquired. The Company accounts for its goodwill and
      intangible assets in accordance with SFAS No. 142, ‘‘Goodwill and Other
      Intangible Assets’’, and does not amortize its goodwill. However, goodwill will
      be amortized over 15 years for tax purposes. The total amount is expected to
      be
      deductible for tax purposes. The Company reviews its goodwill for impairment
      at
      least annually, or whenever events or changes in circumstances would indicate
      possible impairment. The Company performs its annual impairment test of goodwill
      as of December 31 and performed the annual test as of December 31, 2005 and
      concluded that no impairment existed. The Company operates in one reportable
      segment, which is also the only reporting unit for purposes of SFAS No. 142.
      Since the Company currently only has one reporting unit, all of the goodwill
      has
      been assigned to the enterprise as a whole. The Company compared its estimated
      fair value as measured by, among other factors, its projected discounted cash
      flow to its net book value and since the fair value was substantially greater
      than the book value, the Company concluded that as of December 31, 2005 there
      was no impairment of goodwill.





In
      accordance with SFAS No. 142, the Company’s intangible assets with finite useful
      lives are amortized over their respective estimated useful lives to their
      estimated residual values, and reviewed for impairment whenever events or
      changes in circumstances would indicate possible impairment in accordance with
      SFAS No. 144, ‘‘Accounting for the Impairment or Disposal of Long-Lived
      Assets.’’





**Reclassifications:**





Certain
      prior period amounts have been reclassified to conform to the 2005
      presentation.





**Recent
      Accounting Pronouncements:**





In
      May
      2005, the FASB issued SFAS No. 154, ‘‘Accounting Changes and Error
      Corrections.’’ SFAS No. 154 requires retroactive application of a voluntary
      change in accounting principle to prior period financial statements unless
      it is
      impracticable. SFAS No. 154 also requires that a change in method of
      depreciation, amortization or depletion for long-lived, non-financial assets
      be
      accounted for as a change in accounting estimate that is affected by a change
      in
      accounting principle. SFAS No. 154 replaces APB Opinion No. 20, ‘‘Accounting
      Changes’’ and SFAS No. 3, ‘‘Reporting Accounting Changes in Interim Financial
      Statements.’’ SFAS No. 154 is effective for fiscal years beginning after
      December 15, 2005. The Company will adopt the provisions of SFAS No. 154 as
      of
      January 1, 2006 and does not expect that its adoption will have a material
      impact on its consolidated results of operations or financial
      condition.





50
 
 **TASKER
          CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
          DEVELOPMENT STAGE COMPANY)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**


In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
      123(R), “Accounting for Stock-Based Compensation (Revised).” SFAS No. 123(R)
      supersedes APB No. 25 and its related implementation guidance. SFAS No. 123(R)
      establishes standards for the accounting for transactions in which an entity
      exchanges its equity instruments for goods or services. It also addresses
      transactions in which an entity incurs liabilities in exchange for goods or
      services that are based on the fair value of the entity’s equity instruments or
      that may be settled by the issuance of those equity instruments. SFAS No. 123(R)
      focuses primarily on accounting for transactions in which an entity obtains
      employee services in share-based payment transactions. SFAS No. 123(R) requires
      a public entity to measure the cost of employee services received in exchange
      for an award of equity instruments based on the grant-date fair value of the
      award (with limited exceptions). That cost will be recognized over the period
      during which an employee is required to provide service (usually the vesting
      period). No compensation costs are recognized for equity instruments for which
      employees do not render the requisite service. The grant-date fair value of
      employee share options and similar instruments will be estimated using
      option-pricing models adjusted for the unique characteristics of those
      instruments (unless observable market prices for the same or similar instruments
      are available). If an equity award is modified after the grant date, incremental
      compensation cost will be recognized in an amount equal to the excess of the
      fair value of the modified award over the fair value of the original award
      immediately before the modification.





The
      Company currently utilizes the Black-Scholes option pricing model to measure
      the
      fair value of stock options granted to employees. While SFAS No. 123® permits
      entities to continue to use such a model, it also permits the use of a “lattice”
model. The Company expects to continue using the Black-Scholes option pricing
      model upon adoption of SFAS No. 123® to measure the fair value of stock options.




The
      adoption of this statement will have the effect of reducing net income and
      income per share as compared to what would be reported under the current
      requirements. These future amounts cannot be precisely estimated because they
      depend on, among other things, the number of options issued in the future,
      and
      accordingly, the Company has not determined the impact of adoption of this
      statement on its results of operations. However, the Company believes that
      the
      adoption of SFAS No. 123(R) will have a material effect on the Company’s
      consolidated financial statements, in the form of additional compensation
      expense.




In
      December 2004, the FASB issued SFAS No. 151, “Inventory Costs-an amendment of
      ARB No. 43, Chapter 4”. SFAS No. 151 has been issued to clarify the accounting
      for abnormal amounts of idle facility expense, freight, handling costs, and
      wasted material (spoilage), which requires that those items be recognized as
      current-period charges regardless of whether they meet the criterion of “so
      abnormal.” In addition, SFAS No. 151 requires the Company to allocate fixed
      production overheads to the costs of conversion based on the normal capacity
      of
      the production facilities. Management of the Company does not believe the
      effects of SFAS No. 151 will have a material impact on the consolidated
      financial statements, as the Company has not incurred any inventory costs that
      meet the definition of “so abnormal.”




51


**TASKER
        CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**


**3.**  **INVENTORIES**




**December
                31,****2005**
            
            **2004**Raw
                Materials
            
            $
            955,701
            
            $
            99,798Finished
                Goods
            
            
            469,936
            
            
            -1,425,637
            
            
            99,798Less:
                Inventory Reserve
            
            
            (74,675
            )
            
            -$
            1,350,963
            
            $
            99,798








**4.**  **PROPERTY
      AND EQUIPMENT, NET**





**December
                31,****2005**
            
            **2004**Machinery
                & Equipment
            
            $
            1,062,065
            
            $
            —Office
                furniture, fixtures and capitalized software
            
            
            466,137
            
            
            38,664Vehicles
            
            
            164,688
            
            
            73,4101,692,890
            
            
            112,074Less:
                Accumulated Depreciation
            
            
            (167,748
            )
            
            (10,697
            )$
            1,525,142
            
            $
            101,377





Depreciation
      expense for the years ended December 31, 2005, 2004 and 2003 was approximately
      $157,000, $29,000 and $14,000, respectively.








**5.**  **OTHER
      ACCRUED LIABILITIES**





**December
                31,****2005**
            
            **2004**Accrued
                wages
            
            $
            161,758
            
            $
            151,752Accrued
                interest
            
            
            119,147
            
            
            73,685Liquidated
                damages
            
            
            285,706
            
            
            —Accrued
                legal and accounting fees
            
            
            322,391
            
            
            172,118Accrued
                consulting
            
            
            172,500
            
            
            51,102Other
            
            
            315,505
            
            
            100,289$
            1,377,007
            
            $
            548,946





52


**TASKER
        CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**


**6.**
            **STOCKHOLDERS’
                EQUITY (DEFICIT):**





**Reverse
      merger transaction and prior:**





The
      consolidated statements of stockholders’ equity have been presented to reflect
      the number of shares received by the stockholders of Tanuta in the business
      combination (see Note 2 - Basis of Presentation). The 262,000 shares issued
      in
      connection with the reverse merger transaction represent the outstanding shares
      of Tasker prior to the effectuation of the reverse merger
      transaction.





The
      historical stockholders’ equity of Tanuta (the accounting acquirer) consisted of
      approximately 10 common shares (after giving effect to a 10 for 1 stock split)
      of no par value common stock issued to incorporators. Prior to the March 1999
      reverse merger transaction, Tanuta issued 11 million common shares (after giving
      effect to a 10 for 1 stock split), net of cancellations, in private placements
      that raised approximately $203,000.





**Post
      reverse merger transaction through December 31, 2005:**





In
      November 2002, the Company closed a private equity financing in which the
      Company raised approximately $525,000 from several investors. In connection
      with
      the private placement, the Company issued 524,850 shares of the Company's common
      stock and conditional secured promissory notes. Additionally, the Company issued
      warrants to purchase 524,850 shares of the Company's common stock at a price
      of
      $2.00 per share up to November 2007. The fair value attributed to the common
      stock and warrants was approximately $211,000 and $14,000,
      respectively.





Also
      during the year ended December 31, 2002, the Company issued warrants (i) to
      purchase 300,000 shares of the Company’s common stock for a license and (ii) to
      purchase 3,460,000 shares of the Company’s common stock for services. The values
      ascribed to these warrants were approximately $42,000 and $559,000,
      respectively.




In
      June
      2003, the Company closed a private equity financing in which the Company raised
      an aggregate of $165,000 from several investors in exchange for 660,000 shares
      of the Company's common stock.





In
      July
      2003, the Company closed a private equity financing in which the Company raised
      an aggregate of $352,235 from several investors in exchange for 1,408,940 shares
      of the Company's common stock.





During
      the year ended December 31, 2003, the Company issued 655,000 shares of the
      Company's common stock in full satisfaction of certain debts totaling
      $172,586.





In
      December 2004, the Company completed the private placement of 9,406,250 shares
      of its common stock with several accredited investors for an aggregate purchase
      price of $15,050,000 or $1.60 per share. Emerging Growth Equities LTD. acted
      as
      placement agent and received a cash payment of 6% and a warrant to purchase
      562,500 shares exercisable at $2.00 per common share, exercisable for three
      years.





In
      connection with this private placement, the Company also entered into a
      Registration Rights Agreement under which the Company is obligated to file
      a
      registration statement with the Securities and Exchange Commission (“SEC”) to
      register for resale, within a specified time period, the shares and the shares
      underlying the placement agent warrants. The terms of the Registration Rights
      Agreement provide that, in the event that the registration statement is not
      filed within 30 days of entering into the private placement, the Company is
      required to pay to the investors, as partial liquidated damages, 1% additional
      shares per month until the registration statement is filed based on the number
      acquired in the private placement. The registration statement was filed within
      the specified time period.





53
 
 **TASKER
          CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
          DEVELOPMENT STAGE COMPANY)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**


Since
      the
      common shares related to this private placement were not issued until 2005,
      the
      Company has classified the proceeds of this offering of approximately $13.9
      million, net of amounts paid to the placement agent and other closing costs
      aggregating approximately $1.1 million, as common stock subscribed.





During
      the year ended December 31, 2004, stockholders' equity was also increased as
      a
      primary result of (i) the allocation of value to the approximate 19.5 million
      warrants and embedded conversion features associated with the issuance of
      convertible debentures , (ii) the conversion of approximately $2 million of
      debentures into approximately 18.2 million shares of common stock (iii) the
      exercise of approximately 14.5 million warrants generating cash proceeds of
      approximately $1.2 million, (iv) stock based compensation of approximately
      $373,000 and (vi) the issuance of common stock, warrants and options for
      services of approximately $685,000 (See Note 11).





In
      February 2005, a secured promissory note holder exchanged his note in the amount
      of $49,950, plus interest and services rendered over the past two years for
      32,272 restricted common shares at $1.65, or $2.30 less than the market value
      of
      the stock on the date of the exchange. In connection with the exchange, the
      Company recognized approximately $74,000 of consulting fees during the year
      ended December 31, 2005.





In
      July
      2005, the Company executed an Asset Purchase Agreement whereby the Company
      issued 18,992,388 shares of its common stock valued at $56,977,164 (see Note
      12).





In
      September 2005, the Company completed the private placement of 2,947,545 shares
      of its common stock with several accredited investors for an aggregate purchase
      price of approximately $6,485,000 or $2.20 per share. As part of the private
      placement, the Company also issued 1,473,769 warrants to purchase the Company’s
      common stock at $3.00 per share. In connection with the private placement,
      the
      Company also entered into a Registration Rights Agreement under which the
      Company is obligated to file, and make effective, a registration statement
      with
      the United States Securities and Exchange Commission (“SEC”) to register for
      resale, within a specified time period, the shares and the shares underlying
      the
      warrants. The terms of the Registration Rights Agreement provide that, in the
      event that the registration statement is not declared effective within 120
      days
      of entering into the private placement, and if the Company is found to not
      have
      used its “best efforts”, the Company is required to pay to the investors, as
      partial liquidated damages, 1% of the cash value of the shares and underlying
      shares per month for as long as such requirements are not met. The registration
      statement was not declared effective within the specified time periods. In
      January 2006 the investors agreed to waive any liquidated damages under this
      agreement related to the failure to have the first registration statement
      declared effective within 120 days. The waiver set a new effectiveness deadline
      at 245 days after the entry into the private placement. In exchange for this
      waiver the exercise price of the warrants was reduced to $1.00 per share (see
      Note 18 (b)).






54


**TASKER
        CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**


During
      the year ended December 31, 2005, stockholders' equity was also increased as
      a
      result of (i) the issuance of options for vendor services of approximately
      $3.1
      million, (ii) employee stock-based compensation of approximately $484,000,
      (iii)
      the conversion of approximately $243,000 of convertible debentures and accrued
      interest into approximately 4,090,000 shares of common stock and (iv) the
      exercise of approximately 4.8 million options and warrants generating cash
      proceeds of approximately $285,000.





**7.**  **WARRANTS
      AND STOCK OPTIONS**





**Warrants:**





During
      the year ended December 31, 2002, the Company issued (i) 524,850 warrants in
      connection with notes payable, (ii) 300,000 warrants to pHarlo in connection
      with its license agreement (see Note 4) and (iii) 3,460,000 warrants to
      consultants for services rendered (see Note 6).





During
      the year ended December 31, 2004, the Company issued (i) 19,461,500 warrants
      in
      connection with the Convertible Debentures, of which 16,000,000 and 3,461,500
      warrants were issued in connection with the April 2004 and July 2004 Private
      Placements, respectively, (ii) 562,500 warrants to the placement agent in
      connection with the Company’s December 2004 private placement and (iii) 400,000
      warrants issued to a consultant for services rendered. Of the 19,461,500
      warrants issued in connection with the Convertible Debentures, 3,995,000 and
      14,491,003 warrants were exercised during 2005 and 2004, respectively,
      generating proceeds of approximately $200,000 and $1.2 million, respectively
      to
      the Company.





During
      the year ended December 31, 2005, the Company issued 1,473,769 warrants in
      connection with the Company’s September 2005 Private Placement. The warrants had
      an exercise price of $3.00 per share.





The
      following table summarizes the Company’s warrant activity:





**Number
                of**
              **shares**
            
            **Exercise
                price**
              **per
                share**
            
            **Weighted**
              **average
                exercise price per share**Outstanding,
                January 1, 2002
            
            
            -0-
            
            $
            —
            
            $
            —Granted
            
            
            4,284,850
            
            $
            0.25
                - $2.00
            
            $
            0.46Outstanding,
                December 31, 2002
            
            
            4,284,850
            
            $
            0.25
                - $2.00
            
            $
            0.46Granted
            
            
            -0-
            
            $
            -0-
            
            $
            -0-Outstanding,
                December 31, 2003
            
            
            4,284,850
            
            $
            0.25
                - $2.00
            
            $
            0.46Granted
            
            
            20,424,000
            
            $
            0.10
                - $2.00
            
            $
            0.22Exercised
            
            
            (14,466,500
            )
            $
            0.05
                - $0.25
            
            $
            0.08Outstanding,
                December 31, 2004
            
            
            10,242,350
            
            $
            0.05
                - $2.00
            
            $
            0.37Granted
            
            
            1,473,770
            
            $
            1.00
            
            $
            1.00Exercised
            
            
            (4,355,000
            )
            $
            0.05
                - $0.25
            
            $
            0.07Outstanding,
                December 31, 2005
            
            
            7,361,120
            
            $
            0.05
                - $2.00
            
            $
            0.63





55
 
 **TASKER
          CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
          DEVELOPMENT STAGE COMPANY)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**


The
      Warrants granted pursuant to the April 2004 Private Placement originally had
      exercise prices of $0.10 and $0.20. However, the exercise price of all warrants
      issued in this placement were modified to $0.05 per share in September 2004
      and
      further modified to $0.01 per share in May 2005.





The
      Warrants granted pursuant to the July 2004 Private Placement originally had
      an
      exercise price of $0.25. However, the exercise price of all warrants issued
      in
      this placement were modified to $0.05 per share in September 2004 and further
      modified to $0.01 per share in May 2005.





The
      Warrants granted pursuant to the September 2005 Private Placement originally
      had
      an exercise price of $3.00. In January 2006, the exercise price of the warrants
      was reduced from $3.00 to $1.00 per share.





As
      of
      December 31, 2005, the weighted average contractual life of warrants is
      approximately 2.9 years.




**Stock
      Options:**





Stock
      options issued are as follows:





**Number
                of shares**
            
            **Exercise
                price per share**
            
            **Weighted
                average exercise price per share**Outstanding,
                January 1, 2002
            
            
            -0-
            
            $
            —
            
            $
            —Granted
            
            
            1,500,000
            
            $
            0.25
            
            $
            0.25Outstanding,
                December 31, 2002
            
            
            1,500,000
            
            $
            0.25
            
            $
            0.25Granted
            
            
            900,000
            
            $
            0.25
            
            $
            0.25Outstanding,
                December 31, 2003
            
            
            2,400,000
            
            $
            0.25
            
            $
            0.25Granted
            
            
            13,250,000
            
            $
            0.25
                - $2.05
            
            $
            0.58Outstanding,
                December 31, 2004
            
            
            15,650,000
            
            $
            0.25
                - $2.05
            
            $
            0.53Granted
            
            
            4,084,999
            
            $
            1.50
                - $4.70
            
            $
            2.30Exercised
            
            
            (480,000
            )
            $
            0.25
            
            $
            0.25Cancelled
            
            
            (2,714,222
            )
            $
            0.25
                - $4.00
            
            $
            0.97Outstanding,
                December 31, 2005
            
            
            16,540,777
            
            $
            0.25
                - $4.70
            
            $
            0.91Options
                exercisable at December 31, 2003
            
            
            2,400,000
            
            $
            0.25
            
            $
            0.25Options
                exercisable at December 31, 2004
            
            
            9,244,438
            
            $
            0.25
                - $2.05
            
            $
            0.37Options
                exercisable at December 31, 2005
            
            
            13,774,886
            
            $
            0.25
                - $4.70
            
            $
            0.82





56
 
  **TASKER
          CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
          DEVELOPMENT STAGE COMPANY)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**


The
      following table summarizes additional information about stock options
      outstanding at December 31, 2005:





**Options
                    Outstanding****Exercise
                    Prices**
                
                **Number**
                  **Outstanding**
                  **at
                    December 31, 2005**
                
                **Weighted-Average**
                  **Remaining**
                  **Contractual
                    Life**
                
                **Weighted-Average**
                  **Exercise
                    Price**$
                    0.25
                
                9,497,778
                
                8.25
                
                $
                    0.25$
                    0.67
                
                1,000,000
                
                8.84
                
                $
                    0.67$
                    1.45 - 1.75
                
                3,533,333
                
                9.07
                
                $
                    1.52$
                    2.01 - 2.47
                
                1,316,666
                
                9.15
                
                $
                    2.26$
                    2.70 - 3.14
                
                1,115,000
                
                9.38
                
                $
                    2.97$
                    3.32 - 4.70
                
                78,000
                
                9.22
                
                $
                    3.9616,540,777


**Options
                Exercisable****Exercise
                Prices**
            
            **Number**
              **Exercisable
                at**
              **December
                31, 2005**
            
            **Weighted-Average**
              **Exercise
                Price**$
                0.25
            
            8,442,220
            
            $
                0.25$
                0.67
            
            666,667
            
            $
                0.67$
                1.45 - 1.75
            
            3,133,333
            
            $
                1.52$
                2.01 - 2.47
            
            949,999
            
            $
                2.26$
                2.70 - 3.14
            
            504,667
            
            $
                2.93$
                3.32 - 4.70
            
            78,000
            
            $
                3.9613,774,886








57
 
  **TASKER
          CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
          DEVELOPMENT STAGE COMPANY)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**


**8.**  **INVESTMENT
      IN EQUITY INVESTEE**





In
      April
      2005, the Company purchased from Electric Aquagenics Unlimited, Inc. 359,000
      common shares of Biofilm, representing 27% of Biofilm’s outstanding common
      stock, for cash consideration of $718,000. Further, the Company advanced a
      total
      of $890,000 to the owners of the remaining 73% of Biofilm’s common stock.
      Biofilm’s proprietary technology is designed to eradicate biofilms, a protective
      coating that forms on listeria and other pathogens making them resistant to
      traditional remedies of eradicating bacteria. The Company understands that
      Biofilm is in the process of obtaining certain regulatory approvals for the
      use
      of its product in specified applications. After several months of unsuccessful
      negotiations, the Company has decided that it will not seek to acquire the
      remaining 73% of Biofilm’s common stock. The Company originally anticipated that
      if the acquisition did not close, the Company would seek repayment of the funds
      advanced. The
      Company is now negotiating an alternative arrangement with Biofilm, whereby
      Biofilm would license its technology to the Company, and the $890,000 advanced
      would be used as a credit against royalty fees due under the license agreement.
      There can be no assurance that the license agreement will be entered into,
      or if
      entered into, that Biofilm would agree to credit the $890,000 advanced toward
      the royalty fees of such license. The Company believes that recovery of these
      advances is uncertain, and has set up an allowance for uncollectible accounts
      for the entire $890,000.





Tasker
      believes that its 27% equity interest in Biofilm is a significant variable
      interest, as defined by FIN 46(R) “ *Consolidation
      of Variable Interest Entities* ”,
      however Tasker believes that it is currently not the primary beneficiary of
      Biofilm and thus would not be required to consolidate the accounts of Biofilm.
      Tasker’s management believes that Tasker’s maximum exposure to loss as a result
      of its involvement with Biofilm is limited to its initial investment of
      $718,000.





**9.**  **LICENSE**





In
      late
      2002, the Company entered into an exclusive license agreement with PCTI to
      sell,
      develop, market and distribute consumer deodorant breath products, animal breath
      products and soft drink products using the patented pHarlo technology. In
      conjunction with this license agreement, the Company entered into a production
      agreement with IRL, a privately held manufacturing company affiliated with
      PCTI,
      to manufacture and sell to the Company the concentrate for the products licensed
      by PCTI. Pursuant to the license agreements, the Company agreed to make royalty
      payments based on 1.5% of product sales and issued warrants to purchase up
      to
      300,000 common shares. Under the terms of the license agreement, the Company
      is
      required to prepay $1,000,000 in royalty payments. In September 2004, the
      Company cancelled the previous license agreement and entered into two separate
      Exclusive Field of Use License Agreements with PCTI. One of these new license
      agreements granted the Company the right to use, sell, develop, market and
      distribute products using the pHarlo technology for consumer deodorant breath
      product, animal breath products and soft drink products. The second of these
      new
      license agreements granted the Company the right to use, sell, develop, market
      and distribute products using the pHarlo technology as a post-harvesting
      processing aid in the poultry industry in the United States and Canada.





The
      financial terms of the exclusive license covering consumer deodorant products,
      animal breath products and soft drink products were the same as the 2002 license
      agreement, with the addition of minimum annual payments of $300,000 beginning
      in
      2006 (adjusted annually). Commencing July 1, 2003, an interest payment of 7%
      per
      annum on the unpaid balance of the prepaid royalty balance was due. The term
      of
      the agreement extends to the life of the patent.





Under
      the
      terms of the license covering post-harvesting poultry processing aids, the
      Company agreed to pay a 5.0% royalty on net sales. In addition, beginning in
      2006, a minimum annual payment of $3,750,000 (adjusted annually) was due. PCTI
      was also granted a right to profit share. The term of the agreement extends
      to
      the life of the patent.





Costs
      to
      secure the license covering consumer deodorant breath product, animal breath
      products and soft drink products totaling approximately $202,000 are being
      amortized over the eighteen year term of the license on a straight-line basis.
      At December 31, 2004, the carrying amount of the license was approximately
      $180,000, net of approximately $22,000 of accumulated amortization. Amortization
      expense for the years ended December 31, 2005, 2004 and 2003 and the period
      of
      inception, May 13, 1996, to December 31, 2005 was approximately $6,000, $11,000,
      $11,000 and $28,000, respectively.





As
      part
      of the 2005 Acquisition of the Pharlo assets (see Note 12), both license
      agreements mentioned above were acquired by Tasker and cancelled. Accordingly,
      all costs to secure the licenses as well as the prepaid and accrued royalties
      balances were included as components to the purchase price.





**10.**  **NOTES
      RECEIVABLE**





**Advances
      to PCTI, PCTI-related entities**





During
      2002, the Company agreed to loan to PCTI and PCTI-related entities, pursuant
      to
      a loan agreement and note, up to $200,000 to finance a production facility
      to
      produce the products licensed pursuant to the 2002 license agreement with PCTI
      (See Note 9). The note bore an interest rate at 7% per annum, with principal
      and
      interest on the notes evidencing the loan to be repaid in equal monthly
      installments commencing July 1, 2003, with the last payment due October 1,
      2012.





During
      2004, pursuant to a series of additional promissory notes, the Company loaned
      an
      additional $200,000 to PCTI and $200,000 to PCPP. The notes bore an interest
      rate at 7% per annum (0% until June 1, 2005) and had terms of 1
      year.





58
 
 **TASKER
          CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
          DEVELOPMENT STAGE COMPANY)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**


During
      the year ended December 31, 2005, pursuant to a series of promissory notes,
      the
      Company loaned an additional $2,600,703 (including $136,000 paid to a vendor
      on
      behalf of PCTI) to the Selling Companies and principals of the Selling
      Companies. The loans bore an interest rate at 7% per annum (0% for approximately
      the first six months) and had terms of 1 year. Certain of these loans
      represented cash advances against bonus payments to the principals of the
      Selling Companies (see Note 12). The notes issued by principals of the Selling
      Companies are as follows: January 10, 2005 note with Barry Cummins-$250,000;
      January 3, 2005 note with David Creasey-$100,000; March 1, 2005 note with David
      Creasey-$150,000; January 10, 2005 note with David Dickinson-$100,000; March
      4,
      2005 note with David Dickinson-$150,000; and March 28, 2005 note with David
      Creasey-$625,000. Certain of these loans represented working capital to the
      PCPP
      to build out and fund the Selling Companies’ manufacturing facilities. The notes
      issued by PCPP are as follows: January 20, 2005-$100,000; February 15,
      2005-$75,000; March 7, 2005-$100,000; March 31, 2005-$100,000; April 20,
      2005-$100,000; May 19, 2005-$50,000; June 14, 2005-$50,000; and July 6,
      2005-$12,500. Certain of these loans represented working capital to C2C. The
      notes issued by C2C are as follows: March 3, 2005-$100,000; May 25,
      2005-$25,000; June 29, 2005-$15,000. Certain of these loans represented working
      capital to PCTI. The notes issued by PCTI are as follows: May 11, 2005-$62,114;
      May 27, 2005-$100,000; June 2, 2005-$20,000; June 14, 2005-$52,816; June 27,
      2005-$52,006; and July 12, 2005-$55,269. The Company also advanced $20,000
      to
      IRL for working capital and received a promissory note dated June 29, 2005.
      All
      of the above loans issued during 2005 were cancelled on July 15, 2005 upon
      the
      completion of the 2005 Acquisition, with the exception of the March 28, 2005
      note with David Creasey in the amount of $625,000, which remains due and bears
      interest at 6% per annum.





**11.**  **CONVERTIBLE
      DEBENTURES AND NOTES PAYABLE**





**Convertible
      Debentures:**





In
      April
      2004, the Company entered into a Securities Purchase Agreement with several
      investors by which the Company issued and sold (i) $800,000 of convertible
      debentures (the “April 2004 Debentures”); (ii) warrants to purchase 8,000,000
      shares of common stock at $0.10 per share and (iii) warrants to purchase
      8,000,000 shares of common stock at $0.20 per share. The warrants expire in
      five
      years from the date of issuance. In September 2004, as a result of the Company
      not meeting certain conditions prescribed in the agreement, the exercise price
      of all the warrants issued in connection with the April 2004 Debentures was
      modified to $0.05 per share. On April 30, 2005, as a result of failure to
      properly maintain the registration statement covering these shares, the exercise
      price of all these warrants was further reduced to $0.01 per share. As of
      December 31, 2005, 15,250,000 of these warrants were exercised. The April 2004
      Debentures are due on the third anniversary of the issuance, bear interest
      at 7%
      per annum and are convertible into shares of common stock at a price of $0.05
      per share, including interest, for an aggregate of at least 16,000,000 common
      shares.





In
      connection with the April 2004 Securities Purchase Agreement, the Company also
      entered into a Registration Rights Agreement under which the Company is
      obligated to file, and make effective, a registration statement with the SEC
      to
      register for resale, within specified time periods, the shares underlying the
      Warrants and the shares issuable on conversion of the Convertible Notes, and
      to
      keep the registration for such shares effective, and properly maintain such
      registration statement, until such shares have been issued to, and sold by,
      the
      investors. The terms of the Registration Rights Agreement provide that, in
      the
      event that the registration statement is not filed within 45 days, or does
      not
      become effective within 150 days of entering into the Securities Purchase
      Agreement, or if the registration statement is not properly maintained, the
      Company is required to pay to the investors, as partial liquidated damages,
      an
      amount equal to 1% of the principal amount of the April 2004 Debentures, then
      1.5% per month of the principal amount for as long as such requirements are
      not
      met (see Note 2, Derivative Liabilities). The registration statement was filed
      and declared effective within the specified time periods, but the Company did
      not properly maintain the registration statement, thus triggering liquidated
      damages.





59


In
      July
      2004, the Company entered into another Securities Purchase Agreement with
      several investors under which the Company issued and sold in a private placement
      (i) $1,647,674 of convertible debentures, at a discount of $263,074, for a
      net
      amount of $1,384,600 (the “July 2004 Debentures”) and (ii) warrants to purchase
      3,461,500 shares of common stock at a price of $0.20 per share. In September
      2004, as a result of the Company not meeting certain conditions prescribed
      in
      the agreement, the exercise price of all the warrants issued in connection
      with
      the July 2004 Debentures was modified to $0.05 per share. On April 30, 2005,
      as
      a result of a failure to properly maintain the registration statement covering
      these shares, the exercise price of all these warrants was further reduced
      to
      $0.01 per share. As of December 31, 2005, 3,211,500 of these warrants were
      exercised. The July 2004 Debentures are due on the second anniversary of the
      issue date and are convertible into shares of common stock at a price of $0.20
      per share for an aggregate of 8,238,370 common shares.





In
      connection with the July 2004 Securities Purchase Agreement, the Company also
      entered into a Registration Rights Agreement under which the Company is
      obligated to file, and make effective, a registration statement with the SEC
      to
      register for resale, within specified time periods, the shares underlying the
      Warrants and the shares issuable on conversion of the Convertible Notes, and
      to
      keep the registration for such shares effective, and properly maintain such
      registration statement, until such shares have been issued to, and sold by,
      the
      investors. The terms of the Registration Rights Agreement provide that, in
      the
      event that the registration statement is not filed within 5 days, or does not
      become effective within 90 days of entering into the Securities Purchase
      Agreement, the Company is required to pay to the investors, as partial
      liquidated damages, an amount equal to 1% of the principal amount of the July
      2004 Debentures, then 1.5% per month of the principal amount for as long as
      such
      requirements are not met (see Note 2, Derivative Liabilities). The registration
      statement was filed and declared effective within the specified time periods,
      but the Company did not properly maintain the registration statement, thus
      triggering liquidated damages.





Included
      in the other accrued liabilities at December 31, 2005 is approximately $119,000
      of interest and fees associated with the April 2004 Debentures and the July
      2004
      Debentures.





The
      following tables summarize 2005 and 2004 conversion activity and principal
      outstanding at December 31, 2005 (all of which is classified in current
      liabilities as a result of the Company being in violation of certain
      covenants):





**April
                2004**
            
            **July
                2004****Debentures**
            
            **Debentures**
            
            **Total**Principal
                amount
            
            $
            800,000
            
            $
            1,647,674
            
            $
            2,447,6742004
                Conversions (excludes accrued interest of $5,673)
            
            
            (533,000
            )
            
            (1,477,694
            )
            
            (2,010,694
            )Principal
                outstanding at December 31, 2004
            
            
            267,000
            
            
            169,980
            
            
            436,9802005
                Conversions
            
            
            (192,000
            )
            
            (50,980
            )
            
            (242,980
            )Principal
                outstanding at December 31, 2005
            
            $
            75,000
            
            $
            119,000
            
            $
            194,000Total
                common shares resulting from conversion of principal
            
            
            14,500,000
            
            
            7,643,370
            
            
            22,143,370Total
                common shares resulting from conversion of interest
            
            
            113,467
            
            
            -
            
            
            113,46714,613,467
            
            
            7,643,370
            
            
            22,256,837




60


**TASKER
        CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**





The
      Company determined the initial carrying value of the April 2004 Debentures
      and
      the July 2004 Debentures (together, the “Convertible Debentures”) by a two-step
      allocation process: first to the associated warrants and second, to an embedded
      conversion option. First, the Company allocated the proceeds from the sale
      of
      the of the Convertible Debentures between the Convertible Debentures and the
      warrants based upon their relative fair values, which resulted in recording
      a
      discount on the Convertible Debentures. The value of the warrants was computed
      using the Black-Scholes option pricing model. Second, in accordance with
      Emerging Issues Task Force No. 00-27, “Application of Issue 98-5 to Certain
      Convertible Instruments”, after allocating the Convertible Debenture proceeds as
      described above, the Company calculated the embedded conversion price and used
      it to measure the intrinsic value of the embedded conversion option. Since
      the
      conversion prices were less than the fair values of the Company’s stock at the
      closing dates, an embedded conversion option was recorded as additional paid
      in
      capital.





As
      a
      result of the Company’s allocations above, the entire principal amounts of the
      Convertible Debentures have allocated to the warrants and embedded conversion
      options. This amount was to be amortized as additional (non cash) interest
      expense with a corresponding increase to the Convertible Debentures over the
      life of the respective notes using the effective interest method until such
      notes are repaid or converted to common stock. However, as a result of being
      in
      violation of certain covenants of the Convertible Debentures, the entire amount
      was amortized during the year ended December 31, 2004.





On
      April
      30, 2005, the prospectuses relating to resale of the Company’s stock by
      h olders
      of
      securities who purchased in the April 2004 and July 2004 private placements
      became stale. As a result, certain stockholders could not sell their shares
      pursuant to these registration statements.


This
      caused the Company to be in default of its obligations under the Registration
      Rights Agreements entered into as part of the April 2004 and July 2004 private
      placements. This default caused contractual payments to become immediately
      due
      and payable to certain stockholders. As of December 31, 2005, the Company
      accrued a $286,000 liability associated with this event. The Company filed
      an
      amendment to these registration statements during the third quarter of 2005.
      The
      Securities and Exchange Commission declared the Registration Statements
      effective on November 2, 2005. However, as a result of a voluntary internal
      investigation performed by the Company with respect to its quarterly financial
      statements filed for the period ended September 30, 2005, the Company suspended
      the use of these registration statements. Upon completion of the investigation,
      the Company lifted the suspension of use and stockholders were advised that
      they
      could sell pursuant to the registration statements on March 10, 2006.





61
 
 **TASKER
          CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
          DEVELOPMENT STAGE COMPANY)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**


**Notes
      Payable to Shareholders:**





During
      the year ended December 31, 2002, the Company completed a private placement
      offering for cash proceeds of $524,850. The Company issued 524,850 shares of
      common stock, issued share purchase warrants to purchase 524,850 shares of
      common stock at a price of $2.00 per share up to November 26, 2007, and issued
      5% promissory notes, with a face value of $524,325, to the investors. The
      principal amount and interest on the notes is due no later than November 26,
      2007.





**December
                31,****2005**
            
            **2004**Notes
                payable, with interest at 5%, fair value
            
            $
            524,325
            
            $
            524,325Less:
                Discount to record note at fair value
            
            
            (224,149
            )
            
            (224,149
            )300,176
            
            
            300,176Less:
                Note converted into equity
            
            
            (49,950
            )
            
            -Amortization
                of discount to December 31, 2005
            
            
            193,564
            
            
            158,476$
            443,790
            
            $
            458,652





The
      fair
      value attributed to the notes is based upon the fair value of the underlying
      financial instruments.





The
      discount resulting from recording the notes at fair value will be amortized
      on
      the interest rate method over a term of five years.




**Note
      Payable IRL:**





As
      partial consideration for the purchase of the pHarlo assets (see Note 12),
      Tasker issued a promissory note in the amount of $1,931,973 to IRL. The
      promissory note bears interest of 3.4% per annum and is payable in equal
      bi-weekly principal installments of $37,153, plus interest, through July 2007.
      The following schedule outlines the activity for this note during 2005 and
      2004:





**December
                31,****2005**
            
            **2004**Notes
                payable, with interest at 3.4%, fair value
            
            $
            1,931,973
            
            $
            —Principal
                repayments
            
            
            (408,686
            )
            
            —1,523,287
            
            
            —Current
                portion -Note payable - acquisition of IRL
            
            
            445,840
            
            
            —Non
                current portion -Note payable - acquisition of IRL
            
            
            1,077,447
            
            
            —$
            1,523,287
            
            $
            —




62


**TASKER
        CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**





**12.**  **ACQUISITION
      OF PHARLO ASSETS**





On
      July
      15, 2005, the Company executed an Asset Purchase Agreement with the Selling
      Companies (the “Asset Purchase Agreement”) whereby the Company purchased all of
      the assets of the Selling Companies that relate to the Company’s product
      applications and fields of use, including, but not limited to, utility patent
      applications, equipment, inventories and existing contracts. The purchase price
      of approximately $64.3 million includes (i) 18,992,388 shares of the
      Company’s common stock valued at approximately $56.98 million (or approximately
      $3.00 per share which is based upon the average closing market price of the
      Company’s common stock for the seven day period following the announcement of
      the completed acquisition), (ii) a promissory note in the amount of
      $1,931,973 (bearing interest at 3.4% and payable in equal bi-weekly principal
      installments of $37,153, plus interest, through July 2007), (iii) cash of
      $1,428,000, (iv) estimated acquisition costs of $1,420,840 and (v) cancelled
      promissory notes totaling $2,542,631 issued to the Company by the Selling
      Companies and by certain equity holders of the Selling Companies.





In
      addition to the sale of the acquired assets, and subject to certain conditions,
      the Selling Companies also agreed to cause Phitex Ltd. LLLP ("Phitex") (the
      direct one hundred percent owner of the sole and exclusive licensee of the
      base
      patents) to issue to the Company 19.9% of the then total outstanding equity
      interests of Phitex on a fully diluted basis. This would allow the Company
      to
      share in the monetary benefits derived by Phitex from any transaction between
      the sole and exclusive licensee of the base patents and an unaffiliated third
      party pursuant to which that third party acquires rights to exploit the base
      patents outside the Company’s fields of use. On November 22, 2005 the Board
      approved the termination of Robert P. Appleby as the Company’s Chief Executive
      Officer and President. Upon the termination of Mr. Appleby, the Company also
      became ineligible to receive the 19.9% interest in Phitex, as described above.
      In the first quarter of 2006, the Company negotiated an amendment with the
      Selling Companies such that, subject to the satisfaction of certain conditions,
      the Company will be eligible to receive a 10% interest in Phitex. No effect,
      if
      any, related to this potential acquisition has been included in the allocation
      of the purchase price.





The
      acquisition was accounted for as a business combination in accordance with
      SFAS
      No. 141 "Business Combinations" and accordingly, the tangible and intangible
      assets acquired have been recorded at their estimated fair values as of the
      date
      of the acquisition. The final allocation of the purchase price, including the
      value and classification of intangible assets and their respective amortization
      periods, is based upon a retrospective valuation of the assets acquired. This
      valuation resulted in the adjustment to the fair value of the intangible asset
      and goodwill that was initially recorded at approximately $57,636,000 and
      $6,404,000, respectively.





63
 
 **TASKER
          CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
          DEVELOPMENT STAGE COMPANY)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**


Components
      of the purchase price and the estimated allocation thereof are approximately
      as
      follows:





Property
                and equipment
            
            $
            703,000Other
                assets
            
            
            49,000Other
                liabilities
            
            
            (629,000
            )Net
                assets acquired
            
            
            123,000Identifiable
                intangible assets acquired
            
            
            22,500,000Goodwill
            
            
            41,677,000Total
                cost of acquisition
            
            $
            64,300,000





The
      results of operations of the Selling Companies have been included in the
      Company’s Consolidated Statements of Operations since July 15, 2005, the
      acquisition date.





The
      following unaudited proforma information gives effect to the acquisition as
      if
      it had occurred on the first day of each of the periods ended:





**December
                31,****2005**
            
            **2004**Total
                revenues
            
            $
            842,149
            
            $
            —Net
                loss
            
            
            (18,513,642
            )
            
            (7,713,589
            )Loss
                per share, basic and diluted
            
            $
            (0.25
            )
            $
            (0.33
            )








**13.**  **INCOME
      TAXES**





A
      reconciliation of income tax expense to the benefit computed at the statutory
      rate of 34% for the years ended December 31, 2005, 2004 and 2003 is
      approximately as follows:





**2005**
            
            **2004**
            
            **2003**Benefit
                at statutory rate
            
            $
            (6,211,000
            )
            $
            (2,064,000
            )
            $
            (206,000
            )Noncash
                interest on Convertible Debentures
            
            
            —
            
            
            832,000Stock
                based compensation
            
            
            165,000
            
            
            188,000Other
            
            
            36,000
            
            
            (100,000
            )Losses
                for which no benefit is recorded
            
            
            6,010,000
            
            
            1,144,000
            
            
            206,000$
            —
            
            $
            —
            
            $
            —





Significant
      components of the Company’s deferred income tax assets and liabilities at
      December 31, 2005 and 2004 are approximately as follows:





**2005**
            
            **2004**Deferred
                tax assets:Net
                operating losses
            
            $
            7,215,000
            
            $
            1,674,000Stock
                based compensation
            
            
            1,464,000
            
            
            188,000Reserves
            
            
            553,000
            
            
            —Valuation
                allowance
            
            
            (8,637,000
            )
            
            (1,862,000
            )Net
                deferred tax assets
            
            
            595,000
            
            
            —Deferred
                tax liabilities:Depreciation
                & Amortization
            
            
            (595,000
            )
            
            —Total
                deferred tax liabilities
            
            
            (595,000
            )Net
                deferred tax assets
            
            $
            —
            
            $
            —




64


**TASKER
        CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**


As
      of
      December 31, 2005, the Company has a U.S. Federal net operating loss carry
      forward of approximately $17.8 million which will expire commencing 2019 through
      2025, if not utilized. Under Internal Revenue Code Section 382, the amounts
      of
      and benefits from net operating loss carryforwards may be impaired or limited
      in
      certain circumstances. Events which cause limitations in the amount of net
      operating losses that the Company may utilize in any one year include, but
      are
      not limited to, a cumulative ownership change of more than 50%, as defined,
      over
      a three year period. The amount of such limitation, if any, has not been
      determined.





Management
      of the Company has decided to fully reserve for its deferred tax asset, as
      it is
      more likely than not that the Company will not be able to utilize these deferred
      tax assets against future income, coupled with the possible limitations of
      the
      net operating losses due to various changes in ownership over the past
      year.





**14.**  **COMMITMENTS
      AND CONTINGENCIES**





In
      connection with the 2005 Acquisition, the Company entered into a Patent and
      Technology Sub-License Agreement dated as of July 15, 2005 (the “Sub-License
      Agreement”) with pHarlo IP, LLC (“pHarlo IP”), in which pHarlo IP has agreed to
      provide to the Company technical assistance necessary to implement, refine
      and
      exploit the base patents to the pHarlo technology in the Company’s fields of
      use. pHarlo IP is the sole and exclusive licensee of the base patents to the
      pHarlo technology. In consideration for the technical assistance, the Company
      agreed to pay to pHarlo IP certain research and development fees ("R&D
      Fees"). The R&D Fees may be subject to recovery by the Company in certain
      circumstances described below.





On
      January 26, 2006, the Company entered into a letter agreement with pHarlo IP
      that amended (i) the Sub-License Agreement and (ii) the Asset Purchase
      Agreement.





The
      Sub-License Agreement was amended to restructure the R&D Fees payable to
      pHarlo IP. Prior to the amendment, the Company had agreed to pay to pHarlo
      IP,
      the R&D Fees in advance, prior to the calendar quarter for which they were
      earned. The R&D Fees were originally set at a fixed amount, and although
      subject to recovery in certain circumstances, were not dependant on sales of
      the
      Company’s products until certain thresholds had been met.





The
      amendment restructured the R&D Fees so that they are (i) payable on a
      quarterly basis within 30 days after the end of each calendar quarter and (ii)
      are based on gross sales of the Company (or its affiliates) of products using
      the pHarlo technology. For fiscal year 2006, the R&D Fees must not be less
      than $150,000 and are capped at $500,000. There are no other minimum R&D
      Fees payable after 2006, although R&D Fees for all subsequent years are
      capped at specified rates.




The
      Company, Wynn Starr Special Products, LLC. ("Wynn Starr"), PCTI, IRL and pHarlo
      IP are parties to an Exclusive Field of Use License Agreement and Product Sale
      Agreement made effective as of September 15, 2004, as amended (the "Wynn Starr
      Agreement"). Under the terms of this agreement, including amendments, the
      Company has granted Wynn Starr the exclusive, worldwide right to market and
      distribute products used as post-harvesting processing aids for the poultry
      industry based on the pHarlo technology. Wynn Starr is also responsible for
      taking the pHarlo concentrate provided by the Company and blending it with
      liquids to create the finished product that is ultimately distributed by Wynn
      Starr. In return for this license, Wynn Starr has agreed to pay the Company
      a
      royalty of $70.00 per gallon on all net sales (as defined in the Wynn Starr
      Agreement) sold by Wynn Starr for which payment is received from customers.
      The
      Company is currently renegotiating the royalty payments associated with the
      Wynn
      Starr Agreement. Under the Wynn Starr Agreement, if the price for the pHarlo
      concentrate exceeds a certain threshold amount per gallon, then Wynn Starr
      was
      obligated to make certain royalty payments to pHarlo IP. Steven Zavagli, one
      of
      the Company’s directors, is the founder, Chairman and the Chief Executive
      Officer of Wynn Starr and Wynn Starr’s ultimate parent company, Wynn Starr
      Flavors.





65
 
 **TASKER
          CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
          DEVELOPMENT STAGE COMPANY)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**


Pursuant
      to the Sub-License Agreement, commencing within thirty days after December
      31,
      2005 and within thirty days of each calendar quarter thereafter, pHarlo IP
      has
      agreed to pay to the Company that amount of any royalties that are actually
      received by pHarlo IP from Wynn Starr during the preceding calendar quarter
      in
      an amount up to and not to exceed the amount of any R&D Fees actually paid
      by the Company to pHarlo IP during the same preceding calendar quarter.





Additionally,
      to the extent that the amount of any royalties actually paid to pHarlo IP by
      Wynn Starr under the Wynn Starr Agreement exceeds the R&D fees paid by the
      Company to pHarlo IP, pHarlo IP has agreed to pay over to the Company one-third
      of the amount by which such royalties exceed the R&D fees. In the event that
      pHarlo IP ceases to receive royalty payments in respect of sales by Wynn Starr
      of certain products based on technology licensed by pHarlo IP to the Company,
      the Company is obligated to make cash payments to pHarlo IP equal to the
      royalties pHarlo IP is entitled to receive under the Wynn Starr Agreement with
      respect to such sales that are not subject to repayment to the Company.





On
      December 7, 2004, the Company entered into an agreement to purchase exclusive
      rights of first refusal to applications of the pHarlo technology from Richard
      J.
      Kirby, a developer who had previous purchased the rights on July 19, 2002.
      Under
      the terms of the consulting agreement, Mr. Kirby assigned and granted all his
      rights, titles and interests in his license agreements with pHarlo to Tasker
      for
      which Tasker agree to pay Mr. Kirby one half of one percent (0.5%) of net
      revenues, generated from products using the pHarlo technology, in an amount
      not
      to exceed $400,000 in any one calendar year. The agreement continues until
      the
      termination of or expiration of pHarlo Citrus’ patent to the licensed
      technology. The Company recorded prepaid expenses towards this agreement in
      the
      amounts of $45,000 and $45,000 for 2005 and 2004, respectively.





In
      January 2005, the Company entered into a three year employment agreement with
      Mr. Appleby to serve as our Chief Executive Officer. Under the terms of this
      agreement, as amended in May and August of 2005, Mr. Appleby (a) will earn
      a
      base salary of $25,000 per month, modified annually, and increased to $27,083
      per month after certain Company growth objectives are met, (b) at the discretion
      of the Board, upon the recommendation of the Compensation Committee, will be
      awarded an annual bonus, (c) was granted in August 2004, a non-qualified stock
      option to purchase up to 1,000,000 shares of our common stock at an exercise
      price of $0.25 per share, subject to certain vesting provisions, and (d)
      receives other benefits.





66
 
 **TASKER
          CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
          DEVELOPMENT STAGE COMPANY)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**


In
      December 2005, Robert Appleby and the Company entered into a Separation
      Agreement and General Release in connection with Mr. Appleby’s resignation as
      the Company’s Chief Executive Officer. Pursuant to the Separation Agreement and
      General Release, the Company has agreed to pay Mr. Appleby a severance package
      of approximately $50,000. In addition, the Company agreed that the exercise
      period for Mr. Appleby’s vested options to purchase 1,611,111 shares of the
      Company’s common stock would be reduced from 10 years from the grant date to 5
      years from the grant date.





In
      January 2005, the Company entered into a three year employment agreement with
      Mr. Burns to serve as our Chief Operating Officer and Executive Vice President.
      Under the terms of this agreement, as amended in May and August of 2005, Mr.
      Burns (a) will earn a base salary of $25,000 per month, modified annually,
      and
      increased to $27,083 per month after certain Company growth objectives are
      met,
      (b) at the discretion of the Board, upon the recommendation of the Compensation
      Committee, will be awarded an annual bonus, (c) was granted in August 2004,
      a
      non-qualified stock option to purchase up to 1,000,000 shares of our common
      stock at an exercise price of $0.25 per share, subject to certain vesting
      provisions, and (d) receives other benefits. On December 19, 2005, Mr. James
      Burns and the Company agreed to reduce his base annual salary from $325,000
      per
      year (as provided for in his employment agreement) to $200,000 per year. Mr.
      Burns’s title has also changed from Chief Operating Officer to Executive Vice
      President—Business Development. He remains a member of the Company’s Board of
      Directors.





On
      November 14, 2004, the Company entered into a three year employment agreement
      with Robert D. Jenkins to serve as our Chief Financial Officer. Under the terms
      of this agreement, as amended in May 2005, Mr. Jenkins (a) is paid a monthly
      salary of $16,667, modified annually and increased to $20,833 per month after
      our Company achieves a certain level of annual sales, (b) is eligible to
      participate in our Company’s Management Incentive Program, (c) was granted a
      non-qualified stock option to purchase up to 1,000,000 shares of our common
      stock at an exercise price of $1.45 per share, subject to certain vesting
      provisions, and (d) receives other benefits.





On
      February 8, 2006, Robert D. Jenkins and the Company entered into a Separation
      Agreement and General Release in connection with Mr. Jenkins’s resignation as
      the Company’s Chief Financial Officer. Pursuant to the Separation Agreement and
      General Release, the Company has agreed to continue to pay Mr. Jenkins at his
      current annual base salary rate of $200,000 through June 28, 2006. Mr. Jenkins
      will also continue to be eligible to participate in the Company’s medical and
      dental plans until August 31, 2006, with the Company continuing to pay eighty
      percent (80%) of the premium for such coverage. In addition, the Company agreed
      that the exercise period for Mr. Jenkins’s options to purchase 1,000,000 shares
      of the Company’s common stock would be reduced from 10 years from the grant date
      to 5 years from the grant date.





On
      October 26, 2005, a civil action captioned "The BOC Group, Inc. v. Tasker
      Capital Corp., Randy Cable, and Shaun Porter" was filed in the United States
      District Court for the District of Connecticut.  In the complaint, The BOC
      Group alleges that Mr. Porter and Mr. Cable, employees of the Company, have
      breached certain restrictive covenants contained in their employment agreements
      with The BOC Group, and that the Company tortuously interfered with The BOC
      Group’s agreements with Mr. Porter and Mr. Cable. The BOC Group also claims that
      the Company, Mr. Porter and Mr. Cable violated Connecticut’s statutes governing
      trade secrets and unfair trade practices. The BOC Group seeks unspecified
      monetary damages. The Company believes that the complaint is without merit
      and
      plans to vigorously defend itself against such action. In the opinion of the
      Company’s management, based, in part, upon advice from its counsel handling the
      litigation and proceedings, adverse outcomes, if any, will not have a material
      effect on the Company’s consolidated financial condition or results of
      operations.




67


**TASKER
        CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**




On
      January 5, 2006, a civil action captioned “Robert L. Mandell, D.M.D., and
      Anthony M. Broschetti, D.M.D v. Tasker Capital Corporation, Arthur P. Bergeron
      and Richard J. Kirby” was filed in the Middlesex Superior Court in
      Massachusetts. In the complaint, the plaintiffs allege that the Company, its
      former President, Mr. Bergeron, and its alleged former agent, Mr. Kirby,
      breached an agreement to pay for a study regarding the Company’s Breath Rephresh
      product. The plaintiffs seek recovery of $100,000 in connection with the breach
      of contract claim. The Company believes that the complaint is without merit
      and
      plans to vigorously defend itself against such action. In the opinion of the
      Company’s management, based, in part, upon advice from its counsel handling the
      litigation and proceedings, adverse outcomes, if any, will not have a material
      effect on the Company’s consolidated financial condition or results of
      operations.





On
      January 17, 2006, the Company received correspondence from Provco Ventures
      I, LP
      (“Provco”), an investor in the Company’s September 2005 private placement (the
“September 2005 Private Placement”). Provco alleges potential securities law
      claims in connection with the September 2005 Private Placement. As of March
      27,
      2006, no legal proceeding has been commenced by Provco or any other party
      regarding the September 2005 Private Placement. The Company believes that the
      allegations contained in the letter are without merit and plans to vigorously
      defend itself against any such action. In the opinion of the Company’s
      management, based, in part, upon advice from its counsel handling this matter,
      adverse outcomes, if any, will not have a material effect on the Company’s
      consolidated financial condition or results of operations.





On
      January 18, 2006, a civil action captioned “Dallas XXIX Corporate Square, L.P.,
      v. Coast to Coast Laboratories and Tasker Capital Corp.” was filed in the
      Circuit Court of Pinellas County, Florida. The plaintiff alleges that Coast
      to
      Coast Laboratories Corp., a wholly owned subsidiary of the Company, has breached
      a lease agreement and that the Company has breached a guaranty. The plaintiff
      seeks recovery of monetary damages of approximately $55,000. The Company intends
      to vigorously defend itself against such action. In the opinion of the Company’s
      management, based, in part, upon advice from its counsel handling the litigation
      and proceedings, adverse outcomes, if any, will not have a material effect
      on
      the Company’s consolidated financial condition or results of
      operations.




**15.**  **EMPLOYMENT
      AGREEMENTS**





The
      Company has entered into employment agreements with certain of its executives,
      which provide for annual compensation plus, in most cases, stock options,
      participation in future benefit programs and other benefits. As of December
      31,
      2005, approximate future minimum annual compensation under these employment
      agreements, is as follows:





2006
            
            $
            990,0002007
            
            
            882,5002008
            
            
            112,500




68


**TASKER
      CAPITAL CORP.** **AND SUBSIDIARIES**


**(A
      DEVELOPMENT STAGE COMPANY)**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





Subsequent
      to December 31, 2005, the Company terminated employment agreements with some
      of
      its executives and entered into new employment agreements with its current
      executive management (Note 19a). The revised approximate future minimum annual
      compensation under these employment agreements, including the new and terminated
      agreements for 2006, 2007, 2008 and 2009 is $1,346,000, $1,128,000, $718,000
      and
      $59,000, respectively.





**16.**  **OPERATING
      LEASE**





On
      April
      19, 2005, the Company entered into a five year lease effective May 1, 2005
      to
      lease executive office space at Corporate Center, 39 Old Ridgebury Road-Suite
      14, Danbury, CT 06817 at an annual base rent of $173,660, subject to modest
      annual increases thereafter. On May 1, 2005, the Company relocated to this
      address.





As
      part
      of the 2005 Acquisition, the Company assumed a 5 year lease for manufacturing,
      warehousing and office space in Conroe, Texas at an annual base rent of
      $114,000.





Future
      aggregate minimum annual rental payments under these lease for the next five
      years is shown in the schedule below. The schedule below also includes lease
      expenses for several leased vehicles. The annual lease expense for these
      vehicles is approximately $66,000, $63,000, $13,000 and $2,000 for the years
      ended December 31, 2006, 2007, 2008 and 2009, respectively.





Future
      Minimum Lease payments





2006
            
            $
            387,1142007
            
            
            384,9532008
            
            
            328,1342009
            
            
            274,5402010
            
            
            62,228Total
            
            $
            1,436,969





Rent
      expense for the years ended December 31, 2005, 2004 and 2003 was $340,034,
      $56,927 and $30,000, respectively.








**17.**  **RELATED
      PARTY TRANSACTIONS**





During
      the year ended December 31, 2005, the Company incurred approximately $353,000
      in
      expenses to certain members of the Company’s Board of Directors excluding fees
      payable for board service. One Board member received approximately $151,000
      for
      the production of inventory for the Company, $125,000 in consulting and $35,000
      as rent for a laboratory facility (also see Note 14 for further discussion
      on
      related parties). The Company also incurred consulting expenses of approximately
      $42,000 from another Board member.




69


**TASKER
        CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**


The
      following table summarizes related party transactions during the years ended
      December 31, 2005 and 2003 and the period of inception, May 13, 1996, to
      December 31, 2005. There were no payments to related parties in
      2004:





**2005**
            
            **2003**
            
            **Since
                Inception**Remuneration
                paid and payable to a director
            
            $
            318,000
            
            $
            39,040
            
            $
            380,550Management
                fees paid to directors
            
            $
            -
            
            $
            -
            
            $
            123,892Rent
                reimbursed to a director
            
            $
            35,000
            
            $
            30,000
            
            $
            80,343








**18.**  **QUARTERLY
      RESULTS OF OPERATIONS (UNAUDITED)**





The
      following is a summary of the unaudited quarterly results of
      operations:




**Quarter
                  Ended***(in
                  thousands, except per share amounts)*
              
              **March
                  31, 2005**
              
              **June
                  30, 2005**
              
              **September
                  30, 2005 (1)**
              
              **December
                  31, 2005**Revenues
              
              $
              61
              
              $
              244
              
              $
              1,128
              
              $
              (728
              )Gross
                  profit
              
              
              36
              
              
              160
              
              
              800
              
              
              (1,598
              )Net
                  (loss)
              
              
              (3,284
              )
              
              (3,713
              )
              
              (4,208
              )
              
              (7,063
              )Net
                  (loss) per share-basicand
                  dilutive
              
              $
              (0.06
              )
              $
              (0.06
              )
              $
              (0.05
              )
              $
              (0.08
              )
  **Quarter
                  Ended****March
                  31, 2004**
              
              **June
                  30, 2004 (2)**
              
              **September
                  30, 2004 (2)**
              
              **December
                  31, 2004**Revenues
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -Gross
                  profit
              
              
              -
              
              
              -
              
              
              -
              
              
              -Net
                  (loss)
              
              
              (258
              )
              
              (1,763
              )
              
              (2,553
              )
              
              (1,497
              )Net
                  (loss) per share-basicand
                  dilutive
              
              $
              (0.02
              )
              $
              (0.11
              )
              $
              (0.11
              )
              $
              (0.06
              )




(1)
      As
      reported on Form 8-K/A on January 20, 2006, the Company announced on December
      7,
      2005, that it had initiated an internal investigation of its accounts receivable
      and revenues for the quarter ended September 30, 2005. The Company originally
      reported revenues for the three month and nine month periods ended September
      30,
      2005 of $1,446,285 and $1,751,553, respectively in its quarterly report on
      Form
      10-QSB for the quarter ended September 30, 2005, filed with the SEC on November
      14, 2005 (the “Form 10-QSB”). The Company also reported accounts receivable, net
      as of September 30, 2005 of $1,469,723. As a result of the investigation, the
      Company discovered that certain sales recognized as revenues and booked as
      accounts receivable were mischaracterized. The accounting issues relate solely
      to sales of the Company’s Unifresh® Footbath product, a product the Company
      acquired in the 2005 Acquisition. The Company’s investigation found no
      accounting issues associated with the revenues reported with respect to sales
      of
      its Close CallTM product.





During
      its investigation, the Company discovered that revenues for the three and nine
      months ended September 30, 2005, and the period from inception to September
      30,
      2005 should have been $1,128,125, $1,433,393, and $1,433,393, respectively,
      a
      reduction of $318,160 for each such period as compared to the numbers as
      reported in the Form 10-QSB.




70


**TASKER
        CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**


Net
      loss
      for the three and nine months ended September 30, 2005 should have been
      $4,208,198 and $11,205,184, respectively, an increase of $258,341, respectively
      to the numbers as reported in the Form 10-QSB. Net Loss for the period from
      inception to September 30, 2005 should have been $19,002,453, also an increase
      of $258,341 to the numbers as reported in the Form 10-QSB.





Net
      loss
      per Common Share for the three and nine months ended September 30, 2005 remained
      the same as the numbers reported in the Form 10-QSB at $0.05 and $0.16,
      respectively. Net loss per Common Share for the period since inception to
      September 30, 2005 should have been $1.13, an increase of $0.02.





Accounts
      receivable, net, total current assets and total assets at September 30, 2005
      should have been $1,126,563, $10,983,997 and $76,139,252, respectively, a
      reduction of $343,160, $258,341 and $258,341, respectively to the numbers as
      reported in the Form 10-QSB. The amounts included in the table above reflect
      the
      amounts that should have been reported in the Form 10-QSB.





(2)
      The
      Quarterly Reports on Form 10-QSB for the periods ended June 30, 2004 and
      September 30, 2004 were restated to reflect the following adjustments to income:
      (1) a stock based compensation charge for “in the money” options issued to
      employees, (2) the recognition of value allocated to warrants and an
      embedded conversion feature associated with convertible debentures issued in
      April 2004 and July 2004 (an increase of the debt discount) and the immediate
      amortization of such discount as a result of the Company’s violation of certain
      covenants of the April 2004 and July 2004 convertible debentures and (3) a
      compensation charge to reflect the market value of common stock issued to
      consultants for services rendered. A full description of the restatement can
      be
      found in the Notes to the Unaudited Consolidated Financial Statements for the
      periods ended June 30, 2004 and September 30, 2004 filed on Form 10-QSB/A on
      September 30, 2005. The aggregate effect of this restatement had no impact
      on
      the December 31, 2004 Audited Consolidated Financial Statements of the
      Company as reported in its Form 10-KSB filed April 16, 2005. The amounts
      included in the table above reflect the restated amounts.




71


**TASKER
        CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**




**19.**  **SUBSEQUENT
      EVENTS**





**(a)
      Employment agreements:**





On
      January 26, 2006, effective on the closing of the January 2006 private
      placement, the Board of Directors of the Company appointed Richard D. Falcone
      as
      President and Chief Executive Officer of the Company. On February 9, 2006,
      the
      Company entered into an employment agreement with Mr. Falcone. The principal
      terms of the employment agreement are as follows: (i) Mr. Falcone’s base salary
      is $275,000 per year; (ii) any bonus payments made to Mr. Falcone will be at
      the
      discretion of the Board; (iii) Mr. Falcone is eligible to participate in the
      Company’s existing benefit plans; and (iv) Mr. Falcone has use of a Company car.
      In addition, the Company has agreed to provide Mr. Falcone with disability
      benefits, and has agreed to reimburse Mr. Falcone for health insurance coverage
      if the Company terminates its group health insurance plan. The employment
      agreement has a term of three years, with provision for automatic renewal for
      successive three year terms. If Mr. Falcone is terminated by the Company for
      any
      reason other than cause, as defined in his employment agreement, if he should
      resign for a good reason, as defined in his employment agreement and which
      includes a change in control of the Company, or if the Company should not renew
      his employment agreement after the expiration of the term, Mr. Falcone is
      entitled to severance. The severance payable to Mr. Falcone is dependant on
      how
      long he has been employed at the Company, beginning with twenty-four months
      of
      base salary (and any bonus to which he would have been entitled during such
      period) payable upon termination immediately after execution of his employment
      agreement, decreasing by one month for each month he remains employed at the
      Company, but subject to a minimum severance of twelve months of base salary.
      The
      obligation to pay severance is conditioned upon Mr. Falcone’s execution of a
      mutually agreeable release of claims against the Company. The Board also granted
      Mr. Falcone 2,200,000 stock options with an exercise price of $1.00 per share.
      The options have a ten year term, less one day. Twenty-five percent (25%) of
      the
      options vested immediately, and the remainder vest in equal monthly installments
      over the two-year period from the date of grant. If Mr. Falcone is terminated
      by
      the Company other than for cause, if Mr. Falcone resigns for good reason, or
      if
      termination is caused by Mr. Falcone’s death, the options will continue to vest;
      otherwise, vesting of the options ceases upon Mr. Falcone’s termination. In
      addition, if the Company undergoes a change in control, as defined in his
      employment agreement, the stock options granted above will fully vest upon
      the
      change in control.




On
      January 26, 2006, the Company approved a new consulting arrangement with Mr.
      Gordon Davis, the Company’s Chairman of the Board of Directors. On February 9,
      2006, the Company entered into a consulting agreement with Mr. Davis with an
      effective date of February 2, 2006. The principal terms of the consulting
      agreement are as follows: (i) Mr. Davis’s consulting fee is $120,000 per year;
      and (ii) Mr. Davis has use of a company car for company business. The consulting
      agreement has a term of three years, with provision for automatic renewal for
      successive one year terms. If Mr. Davis is terminated for any reason other
      than
      by the Company for cause, as defined in his consulting agreement, including
      if
      the consulting agreement is not renewed by the Company, he will be entitled
      to
      termination payments. If Mr. Davis’s termination is caused by his death or
      disability, then the termination fee is equal to $120,000. If the Company
      terminates Mr. Davis for any reason other than for cause, if Mr. Davis
      terminates the agreement for good reason, or if the Company does not renew
      the
      consulting agreement, then Mr. Davis’s termination fee is dependant on when the
      termination takes place. If the termination occurs prior to the one year
      anniversary of the effective date, then Mr. Davis is entitled to the $120,000
      annual consulting fee for the remainder of the term of the consulting agreement.
      If the termination occurs after the one year anniversary of the effective date,
      Mr. Davis is entitled to the consulting fee then in effect for a period of
      one
      year following termination. The obligation to pay the termination fee is
      conditioned upon Mr. Davis’s execution of a release of claims against the
      Company. Mr. Davis will continue to receive remuneration for service on the
      Board of Directors. The Board also granted Mr. Davis 1,750,000 stock options
      with an exercise price of $1.00 per share. The options have a ten year term,
      less one day. Twenty-five percent (25%) of the options vested immediately,
      and
      the remainder vest in equal monthly installments over the two-year period from
      the date of grant. If Mr. Davis is terminated by the Company other than for
      cause, if Mr. Davis terminates for good reason, or if termination is caused
      by
      Mr. Davis’s death or disability, or non-renewal of the agreement by the Company,
      the options will continue to vest, otherwise, vesting of the options ceases
      upon
      Mr. Davis’s termination as a consultant. In addition, if the Company undergoes a
      change in control, as defined in the consulting agreement, the stock options
      granted above will fully vest upon the change in control.





72
 
 **TASKER
        CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**


On
      February 8, 2006, the Company appointed Stathis Kouninis as Chief Financial
      Officer. On February 13, 2006 the Company entered into an employment agreement
      with Mr. Kouninis. The principal terms of the employment agreement are as
      follows: (i) Mr. Kouninis will be paid a base salary of $165,000 per year;
      (ii)
      any bonus payment made to Mr. Kouninis will be at the discretion of the Board;
      and (iii) Mr. Kouninis will be eligible to participate in the Company’s existing
      benefit plans. In addition, the employment agreement will have a term of three
      years with provision for automatic renewal for successive one year terms. If
      Mr.
      Kouninis is terminated by the Company for any reason other than cause, as
      defined in his employment agreement, or if he should resign for good reason,
      as
      defined in his employment agreement, Mr. Kouninis will be entitled to receive,
      for a period of six months following termination, his base salary at the rate
      in
      effect on the date of termination. The obligation to pay severance is
      conditioned upon Mr. Kouninis’ execution of a mutually agreeable release of
      claims against the Company. The Company also granted Mr. Kouninis stock options
      to purchase 450,000 shares of the Company’s common stock at an exercise price of
      $1.00 per share. The options have a ten year term, less one day. Twenty five
      percent (25%) of the options vested on the date of grant, and the remainder
      will
      vest in equal monthly installments over the two-year period from the date of
      grant, provided that Mr. Kouninis remains employed by the Company. If the
      Company undergoes a change in control, as defined in his employment agreement,
      the stock options granted above will fully vest upon the change in control.





On
      February 8, 2006, the Company entered into an employment agreement with Michael
      Bradley to serve as its Controller. The principal terms of the employment
      agreement are as follows: (i) Mr. Bradley will be paid a base salary of $140,000
      per year; (ii) any bonus payment made to Mr. Bradley will be at the discretion
      of the CEO; (iii) an automobile allowance in the amount of $7,800 per annum
      and
      (iv) Mr. Bradley will be eligible to participate in the Company’s existing
      benefit plans. In addition, the employment agreement will have a term of three
      years with provision for automatic renewal for successive one year terms. If
      Mr.
      Bradley is terminated by the Company for any reason other than cause, as defined
      in his employment agreement, or if he should resign for good reason, as defined
      in his employment agreement, Mr. Bradley will be entitled to receive, for a
      period of six months following termination, his base salary at the rate in
      effect on the date of termination. The obligation to pay severance is
      conditioned upon Mr. Bradley’s execution of a mutually agreeable release of
      claims against the Company. The Company also granted Mr. Bradley stock options
      to purchase 350,000 shares of the Company’s common stock at an exercise price of
      $1.00 per share. The options have a ten year term, less one day. Twenty five
      percent (25%) of the options vested on the date of grant, and the remainder
      will
      vest in equal monthly installments over the two-year period from the date of
      grant, provided that Mr. Bradley remains employed by the Company. If the Company
      undergoes a change in control, as defined in his employment agreement, the
      stock
      options granted above will fully vest upon the change in control.





**(b)
      Equity Financing:**





On
      January 26, 2006, the Company, entered into a Securities Purchase Agreement
      (the
“Purchase Agreement”) with accredited investors pursuant to which the Company
      sold 13,335,925 units consisting of one share of common stock and a warrant
      to
      purchase one share of common stock at an exercise price of $1.00 per share
      for
      $0.70 per unit. Emerging Growth Equities, Ltd., a Pennsylvania limited
      partnership, served as placement agent for the transaction. The gross proceeds
      to the Company at the closing of this private placement, exclusive of the
      exercise price of the warrants, were $9,335,148.




73


**TASKER
        CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**


The
      warrants also include a cashless exercise provision pursuant to which the
      warrants may be exercised without payment in cash to the Company of the exercise
      price in the event that, at any time after one year from the date of the
      issuance of the warrant, there is no effective registration statement
      registering the resale of the shares of common stock underlying the
      warrants.




Pursuant
      to the Purchase Agreement, the Company agreed to several covenants, including
      the following: (i) the Company has agreed to take all actions necessary,
      including the preparation of proxy materials and solicitation of the Company’s
      shareholders, to seek shareholder approval to increase the size of the existing
      Board of Directors of the Company from five to seven members; (ii) the Company
      has agreed to update, if necessary, and as soon as reasonably practicable,
      certain prospectuses filed with the Securities and Exchange Commission; (iii)
      the Company has agreed to take all action necessary to appoint an individual
      selected by the purchasers holding a majority of the units purchased in this
      private placement, and reasonably agreeable to the Company’s existing Board of
      Directors, to fill the current vacancy on the Company’s Board of Directors, to
      appoint such person to serve on the Compensation Committee and, if qualified,
      the Audit Committee, and to take all actions necessary to ensure that such
      person will be included on the Company’s slate of Board nominees submitted for a
      shareholder vote at the Company’s next scheduled annual meeting of shareholders;
      and (iv) the Company has agreed to permit the purchasers in this private
      placement to designate a person to attend and observe (in person or
      telephonically) presentations to and matters before the Company’s Board,
      provided that such observer will remove himself or herself prior to any Board
      vote or taking of formal Board action, if such removal is requested by the
      Board.




On
      January 26, 2006, the Company also entered into an Escrow Agreement (the “Escrow
      Agreement”), pursuant to which the subscription amounts from each purchaser were
      placed into escrow pending release upon the happening of certain specified
      conditions. All of these conditions were either met or waived at the closing
      that occurred on January 26, 2006. The escrow conditions included not only
      the
      agreements by the Company set forth above, but also several additional covenants
      including the following: (i) the Company has agreed to use no more that $500,000
      of the proceeds raised in the January 2006 private placement as payment for
      the
      Company’s past due payables existing as of December 31, 2005; (ii) the Company
      had to obtain a waiver of claims for liquidated damages relating to the
      Company’s September 2005 private placement of securities from shareholders
      representing at least a majority of all outstanding securities issued in
      connection with the September 2005 private placement, and the Company had to
      reprice the warrants issued to shareholders providing the waiver such that
      the
      exercise price of the warrants issued in connection with the September 2005
      private placement was reduced from $3.00 to $1.00; and (iii) all of the current
      members of the Company’s Board, with the exception of the Board member selected
      by the purchasers, had to subscribe for, in the aggregate, at least $150,000
      worth of common stock and warrants being sold in the private placement.




In
      addition to the Purchase Agreement and the Escrow Agreement, the Company also
      entered into a Registration Rights Agreement (the “Registration Rights
      Agreement”). Pursuant to the Registration Rights Agreement, the Company is
      required to file a registration statement covering the resale of the shares
      of
      common stock purchased pursuant to the Purchase Agreement and the shares of
      common stock receivable upon exercise of the warrants within 90 days after
      the
      closing of the private placement, and to have that registration statement
      declared effective within six months after the filing of the registration
      statement. The Company is also obligated to use its best efforts to respond
      to
      any comments of the SEC within fifteen calendar days of the receipt of comments.
      The Company is required to pay liquidated damages if the registration statement
      has not been filed or declared effective on or prior to the applicable deadline
      specified above, or if the Company fails to use best efforts to respond to
      SEC
      comments within fifteen calendar days. The Registration Rights Agreement
      requires the Company to pay the liquidated damages in additional common stock
      and warrants.




74


**TASKER
        CAPITAL CORP.** **AND SUBSIDIARIES**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**


The
      Company has covenanted to use the net proceeds from the January 2006 private
      placement for working capital purposes, including poultry processing, seafood
      processing, Unifresh® Footbath concentrate, and Unifresh® Pen Spray concentrate
      and other products and/or businesses the Company deems necessary, and not for
      the satisfaction of any portion of the Company’s past due payables outstanding
      as of December 31, 2005 (other than payment of past due payables outstanding
      as
      of December 31, 2005 in an amount not to exceed $500,000), to redeem any Company
      equity or equity-equivalent securities or to settle any outstanding litigation.




As
      compensation for acting as placement agent, Emerging Growth Equities, Ltd.
      received a cash payment equal to 6% of the gross proceeds from the private
      placement, and also received a warrant exercisable for shares of the Company’s
      common stock in an amount equal to 6% of the gross proceeds from the sale of
      the
      shares and warrants divided by $0.70. The warrant to Emerging Growth Equities
      has an exercise price equal to $1.00 and is exercisable immediately for a term
      of five years.





**Waivers
      of Liquidated Damages:**





In
      connection with the private placement described above, the Company also obtained
      waivers of all claims for liquidated damages relating to the inability of the
      Company to have the registration statement registering resale of securities
      purchased in the September 2005 private placement declared effective by the
      deadline specified in the Registration Rights Agreement. The Company received
      these waivers from shareholders representing more than a majority of all
      outstanding securities issued in connection with the September 2005 private
      placement. In consideration for obtaining the waiver, the Company repriced
      the
      warrants issued to shareholders providing the waiver such that the exercise
      price of the warrants issued in connection with the September 2005 private
      placement was reduced from $3.00 to $1.00. The Company also agreed to have
      the
      registration statement covering resale of the securities purchased in the
      September 2005 private placement declared effective by May 13,
      2006.








**(c)
      Common stock issuances:**





Through
      March 9, 2006, the Company issued an additional 15.6 million common shares
      in
      connection with the following:





January
                2006 private placement
            
            
            13,335,925Debenture
                conversions
            
            
            2,095,000Option
                exercises
            
            
            175,00015,605,925








75





**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.


TASKER
                CAPITAL
                CORP.Date: March
                31, 2006
              By:
              /s/ Stathis
                KouninisStathis
                KouninisChief
                Financial Officer




**POWER
      OF ATTORNEY**




KNOW
      ALL
      PERSONS BY THESE PRESENTS, that each person whose signature appears below
      constitutes and appoints Richard Falcone and Stathis Kouninis, and each of
      them
      individually, his true and lawful attorney-in-fact and agent with full power
      of
      substitution and resubstitution for him and in his name, place and stead, in
      any
      and all capacities, to sign any and all amendments to this Annual Report, and
      to
      file the same, with all exhibits thereto, and other documents in connection
      therewith, with the Securities and Exchange Commission, granting unto each
      such
      attorney-in-fact and agent, or his substitutes, full power and authority to
      do
      and perform each and every act and thing requisite and necessary to be done
      in
      and about the premises, to all intents and purposes and as fully as he might
      or
      could do in person, hereby ratifying and confirming all that each such
      attorney-in-fact and agent, or his substitutes, may lawfully do or cause to
      be
      done by virtue hereof.




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




By:
            /s/ Gordon
              DavisGordon
              Davis, Chairman of the BoardBy:
            /s/ Richard FalconeRichard Falcone, President, Chief Executive
                Officer
              (Principal Executive Officer) and
                DirectorBy:
            /s/ Stathis KouninisStathis Kouninis, Chief Financial Officer
              (Principal Financial and Accounting Officer)By:
            /s/ Albert CanosaAlbert
              Canosa, DirectorBy:
            /s/ Steven ZavagliSteven
              Zavagli, Director




Date:
      March 31, 2006







76




**EXHIBIT
      INDEX**





**EXHIBIT**
              **NUMBER**
            
            **DESCRIPTION**2.1
            
            Asset
                Purchase Agreement by and among Tasker Capital Corp. and Tasker Products
                IP Holdings Corp. (as “Buyers”) and Indian River Labs, L.L.C., pHarlo
                Citrus Technologies, Inc., pHarlo Citrus Properties Partnership,
                LLLP and
                Coast to Coast Laboratories, LLC (as “Sellers”) dated July 15, 2005
                (incorporated by reference to Exhibit 2.1 to the Registrant’s Form 8-K
                filed on July 21, 2005)3.1
            
            Articles
                of Incorporation of Tasker Capital Corp, as amended (incorporated
                by
                reference to Exhibit 3.1 to the Registrant’s Registration Statement on
                Form SB-2 filed August 30, 2005)3.2
            
            By-Laws
                of Tasker Capital Corp. (incorporated by reference to Exhibit 2.2
                to the
                Registration Statement of the Registrant on Form 10-SB filed with
                the SEC
                on November 27, 2000)4.1
            
            Cummins
                Lock-Up Agreement dated July 15, 2005 (incorporated by reference
                to
                Exhibit 4.1 to the Registrant’s Form 8-K filed on July 21,
                2005)4.2
            
            Creasey
                Lock-Up Agreement dated July 15, 2005 (incorporated by reference
                to
                Exhibit 4.2 to the Registrant’s Form 8-K filed on July 21,
                2005)4.3
            
            Dickinson
                Lock-Up Agreement dated July 15, 2005 (incorporated by reference
                to
                Exhibit 4.3 to the Registrant’s Form 8-K filed on July 21,
                2005)4.4
            
            Smith
                Lock-Up Agreement dated July 15, 2005 (incorporated by reference
                to
                Exhibit 4.4 to the Registrant’s Form 8-K filed on July 21,
                2005)4.5
            
            Form
                of Warrant from the September 2005 Private Placement (incorporated
                by
                reference to Exhibit 4.01 to the Registrant’s Form 8-K filed on
                September 26, 2005)5.1
            
            Opinion
                of Hale Lane (incorporated by reference to Exhibit 23.3 to the
                Registrant’s Registration Statement on Amendment 1 on Form SB-2 filed
                October 27, 2005)10.1
            
            April
                5, 2004 Non-qualified Stock Option Grant Agreement with Robert Appleby
                (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-KSB
                filed on April 15, 2005)10.2
            
            April
                5, 2004 Non-qualified Stock Option Grant Agreement with James Burns
                (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 10-KSB
                filed on April 15, 2005)10.3
            
            May
                11, 2004 Non-qualified Stock Option Grant Agreement with Robert Appleby
                (incorporated by reference to Exhibit 10.3 to the Registrant’s Form 10-KSB
                filed on April 15, 2005)10.4
            
            May
                11, 2004 Non-qualified Stock Option Grant Agreement with James Burns
                (incorporated by reference to Exhibit 10.4 to the Registrant’s Form 10-KSB
                filed on April 15, 2005)10.5
            
            May
                31, 2004 Employee Non-Statutory Stock Option Agreement with Barbara
                Longchamp (incorporated by reference to Exhibit 10.5 to the Registrant’s
                Form 10-KSB filed on April 15, 2005)10.6
            
            May
                31, 2004 Employee Non-Statutory Stock Option Agreement with Gordon
                Davis
                (incorporated by reference to Exhibit 10.6 to the Registrant’s Form 10-KSB
                filed on April 15, 2005)10.7
            
            August
                25, 2004 Employee Non-Statutory Stock Option Agreement with Robert
                Appleby
                (incorporated by reference to Exhibit 10.7 to the Registrant’s Form 10-KSB
                filed on April 15, 2005)10.8
            
            August
                25, 2004 Employee Non-Statutory Stock Option Agreement with James
                Burns
                (incorporated by reference to Exhibit 10.8 to the Registrant’s Form 10-KSB
                filed on April 15, 2005)10.9
            
            January
                1, 2005 Executive Employment Agreement with Robert P. Appleby
                (incorporated by reference to Exhibit 10.9 to the Registrant’s Form 10-KSB
                filed on April 15, 2005)10.10
            
            January
                1, 2005 Executive Employment Agreement with James Burns (incorporated
                by
                reference to Exhibit 10.10 to the Registrant’s Form 10-KSB filed on April
                15, 2005)


10.11
            
            November
                1, 2004 Executive Employment Agreement with Dennis Smithyman (incorporated
                by reference to Exhibit 10.11 to the Registrant’s Form 10-KSB filed on
                April 15, 2005)




77


EXHIBIT
      INDEX




10.12
            
            November
                15, 2004 Executive Employment Agreement with James Collins (incorporated
                by reference to Exhibit 10.12 to the Registrant’s Form 10-KSB filed on
                April 15, 2005)10.13
            
            November
                15, 2004 Executive Employment Agreement with Robert D. Jenkins
                (incorporated by reference to Exhibit 10.13 to the Registrant’s Form
                10-KSB filed on April 15, 2005)10.14
            
            Securities
                Purchase Agreement dated as of April 30, 2004, Registration Rights
                Agreement dated as of April 30, 2004, Form of Common Stock Purchase
                Warrant and Form of 7% Convertible Debenture for the April 2004 private
                placement (incorporated by reference to Exhibits 4.1, 4.2, 4.3 and
                4.4 to
                the Registrant’s Form 8-K filed on May 5, 2004)10.15
            
            Securities
                Purchase Agreement dated as of July 21, 2004, Registration Rights
                Agreement dated as of July 21, 2004, Form of Common Stock Purchase
                Warrant
                and Form of Convertible Debenture for the July 2004 private placement
                (incorporated by reference to Exhibits 4.1, 4.2, 4.3 and 4.4 to the
                Registrant’s Form 8-K filed on July 22, 2004)10.16
            
            Securities
                Purchase Agreement dated as of December 23, 3004, Registration Rights
                Agreement dated as of December 23, 2004, and Warrant issued to Emerging
                Growth Equities, LTD. for the December 2004 private placement (Equity
                financing that closed on 12/29/04) (incorporated by reference to
                Exhibits
                4.1, 4.2 and 4.3 to the Registrant’s Form 8-K filed on January 5,
                2005)10.17
            
            Exclusive
                Field of Use License Agreement with pHarlo Citrus Technologies, Inc.
                dated
                September 20, 2004 (incorporated by reference to Exhibit 10.17 to
                the
                Registrant’s Form 10-KSB filed on April 15, 2005)10.18
            
            Exclusive
                Field of Use License Agreement with pHarlo Citrus Technologies, Inc.
                dated
                September 16, 2004 (incorporated by reference to Exhibit 10.18 to
                the
                Registrant’s Form 10-KSB filed on April 15, 2005)10.19
            
            Exclusive
                Field of Use License Agreement & Product Sale Agreement between Wynn
                Starr Special Products LLC and Tasker Capital Corp. dated September
                16,
                2004 (incorporated by reference to Exhibit 10.19 to the Registrant’s Form
                10-KSB filed on April 15, 2005)10.20
            
            Promissory
                note with pHarlo Citrus Technologies dated November 28, 2004 (incorporated
                by reference to Exhibit 10.20 to the Registrant’s Form 10-KSB filed on
                April 15, 2005).10.21
            
            Promissory
                note with pHarlo Citrus Technologies dated November 12, 2004 (incorporated
                by reference to Exhibit 10.21 to the Registrant’s Form 10-KSB filed on
                April 15, 2005)10.22
            
            Promissory
                note with pHarlo Citrus Properties Partnership LLLP dated December
                15,
                2004 (incorporated by reference to Exhibit 10.22 to the Registrant’s Form
                10-KSB filed on April 15, 2005)10.23
            
            Promissory
                note with pHarlo Citrus Properties Partnership LLLP dated December
                30,
                2004 (incorporated by reference to Exhibit 10.23 to the Registrant’s Form
                10-KSB filed on April 15, 2005)10.24
            
            January
                10, 2004 Consulting Agreement with Thomas Brazil (incorporated by
                reference to Exhibit 10.24 to the Registrant’s Form 10-KSB filed on April
                15, 2005)10.25
            
            January
                20, 2004 Consulting Agreement with Stuart McPherson (incorporated
                by
                reference to Exhibit 10.25 to the Registrant’s Form 10-KSB filed on April
                15, 2005)10.26
            
            May,
                2004 Consulting Agreement with Arthur Bergeron (incorporated by reference
                to Exhibit 10.26 to the Registrants Form 10-KSB filed on April 15,
                2005)


10.27
            
            August,
                2004 Consulting Agreement with Wall Street Investor Relations
                (incorporated by reference to Exhibit 10.27 to the Registrant’s Form
                10-KSB filed on April 15, 2005)10.28
            
            December
                7, 2004 Settlement Agreement with Richard J. Kirby (incorporated
                by
                reference to Exhibit 10.28 to the Registrant’s Form 10-KSB filed on April
                15, 2005)10.29
            
            December
                27, 2004 Consulting Agreement with Avanti HR Placement & Consulting
                (incorporated by reference to Exhibit 10.29 to the Registrant’s Form
                10-KSB filed on April 15, 2005)10.30
            
            Promissory
                note by Barry Cummins to Tasker Capital Corp., dated January 10,
                2005
                (incorporated by reference to Exhibit 10.30 to the Registrant’s Form
                10-QSB filed on May 16, 2005)


10.31
            
            Promissory
                note by David Creasey to Tasker Capital Corp., dated January 3, 2005
                (incorporated by reference to Exhibit 10.31 to the Registrant’s Form
                10-QSB filed on May 16, 2005)




78


EXHIBIT
      INDEX




10.32
            
            Promissory
                note by David Creasey to Tasker Capital Corp., dated March 1, 2005
                (incorporated by reference to Exhibit 10.32 to the Registrant’s Form
                10-QSB filed on May 16, 2005)10.33
            
            Promissory
                note by David Dickinson to Tasker Capital Corp., dated January 10,
                2005
                (incorporated by reference to Exhibit 10.33 to the Registrant’s Form
                10-QSB filed on May 16, 2005)10.34
            
            Promissory
                note by David Dickinson to Tasker Capital Corp., dated March 4, 2005
                (incorporated by reference to Exhibit 10.34 to the Registrant’s Form
                10-QSB filed on May 16, 2005)10.35
            
            Loan
                Agreement by and between pHarlo Citrus Properties Partnership, LLLP
                and
                Tasker Capital Corp., dated January 20, 2005 (incorporated by reference
                to
                Exhibit 10.35 to the Registrant’s Form 10-QSB filed on May 16,
                2005)10.36
            
            Loan
                Agreement by and between pHarlo Citrus Properties Partnership, LLLP
                and
                Tasker Capital Corp., dated February 15, 2005 (incorporated by reference
                to Exhibit 10.36 to the Registrant’s Form 10-QSB filed on May 16,
                2005)10.37
            
            Loan
                Agreement by and between pHarlo Citrus Properties Partnership, LLLP
                and
                Tasker Capital Corp., dated March 7, 2005 (incorporated by reference
                to
                Exhibit 10.37 to the Registrant’s Form 10-QSB filed on May 16,
                2005)10.38
            
            Loan
                Agreement by and between pHarlo Citrus Properties Partnership, LLLP
                and
                Tasker Capital Corp., dated March 31, 2005 (incorporated by reference
                to
                Exhibit 10.38 to the Registrant’s Form 10-QSB filed on May 16,
                2005)10.39
            
            Loan
                Agreement by and between Coast to Coast and Tasker Capital Corp.,
                dated
                March 3, 2005 (incorporated by reference to Exhibit 10.39 to the
                Registrant’s Form 10-QSB filed on May 16, 2005)10.40
            
            Promissory
                Note by David Creasey to Tasker Capital Corp., dated March 28, 2005
                (incorporated by reference to Exhibit 10.40 to the Registrant’s Form
                10-QSB filed on May 16, 2005)10.41
            
            February
                3, 2005 sale of promissory note by Philip Georgas to Tasker Capital
                Corp.
                in the sum of $49,950 plus interest and services for 32,272 restricted
                common shares at US $1.65 share (incorporated by reference to Exhibit
                10.41 to the Registrant’s Form 10-QSB filed on May 16,
                2005)10.42
            
            Employment
                agreement between Tasker Capital Corp. and Mr. Richard Weiner dated
                April
                12, 2005 (incorporated by reference to Exhibit 10.42 to the Registrant’s
                Form 10-QSB filed on May 16, 2005)10.43
            
            Amendment
                No. 1 to Executive Employment Agreement, dated May 16, 2005, between
                Tasker Capital Corp. and Robert P. Appleby (incorporated by reference
                to
                Exhibit 10.43 to the Registrant’s Form 10-QSB filed on May 16,
                2005)


10.44
            
            Amendment
                No. 1 to Executive Employment Agreement, dated May 16, 2005, between
                Tasker Capital Corp. and James Burns (incorporated by reference to
                Exhibit
                10.44 to the Registrant’s Form 10-QSB filed on May 16,
                2005)10.45
            
            Amendment
                No. 1 to Executive Employment Agreement, dated May 16, 2005, between
                Tasker Capital Corp. and Robert D. Jenkins (incorporated by reference
                to
                Exhibit 10.45 to the Registrant’s Form 10-QSB filed on May 16,
                2005)10.46
            
            Loan
                Agreement by and between Pharlo Citrus Properties Partnership, LLLP
                and
                Tasker Capital Corp., dated April 20, 2005 (incorporated by reference
                to
                Exhibit 10.46 to the Registrant’s Form 10-QSB filed on August 15,
                2005)10.47
            
            Loan
                Agreement by and between Pharlo Citrus Properties Partnership, LLLP
                and
                Tasker Capital Corp., dated May 19, 2005 (incorporated by reference
                to
                Exhibit 10.47 to the Registrant’s Form 10-QSB filed on August 15,
                2005)10.48
            
            Loan
                Agreement by and between Pharlo Citrus Properties Partnership, LLLP
                and
                Tasker Capital Corp., dated June 14, 2005 (incorporated by reference
                to
                Exhibit 10.48 to the Registrant’s Form 10-QSB filed on August 15,
                2005)10.49
            
            Loan
                Agreement by and between Pharlo Citrus Properties Partnership, LLLP
                and
                Tasker Capital Corp., dated July 6, 2005 (incorporated by reference
                to
                Exhibit 10.49 to the Registrant’s Form 10-QSB filed on August 15,
                2005)10.50
            
            Loan
                Agreement by and between Coast to Coast Laboratories LLC and Tasker
                Capital Corp., dated May 25, 2005 (incorporated by reference to Exhibit
                10.50 to the Registrant’s Form 10-QSB filed on August 15,
                2005)10.51
            
            Loan
                Agreement by and between Coast to Coast Laboratories LLC and Tasker
                Capital Corp., dated June 29, 2005 (incorporated by reference to
                Exhibit
                10.51 to the Registrant’s Form 10-QSB filed on August 15,
                2005)10.52
            
            Loan
                Agreement by and between Pharlo Citrus Technologies and Tasker Capital
                Corp., dated May 11, 2005 (incorporated by reference to Exhibit 10.52
                to
                the Registrant’s Form 10-QSB filed on August 15,
                2005)




79




EXHIBIT
      INDEX




10.53
            
            Loan
                Agreement by and between Pharlo Citrus Technologies and Tasker Capital
                Corp., dated May 27, 2005 (incorporated by reference to Exhibit 10.53
                to
                the Registrant’s Form 10-QSB filed on August 15, 2005)10.54
            
            Loan
                Agreement by and between Pharlo Citrus Technologies and Tasker Capital
                Corp., dated June 2, 2005 (incorporated by reference to Exhibit 10.54
                to
                the Registrant’s Form 10-QSB filed on August 15, 2005)10.55
            
            Loan
                Agreement by and between Pharlo Citrus Technologies and Tasker Capital
                Corp., dated June 14, 2005 (incorporated by reference to Exhibit
                10.55 to
                the Registrant’s Form 10-QSB filed on August 15, 2005)10.56
            
            Loan
                Agreement by and between Pharlo Citrus Technologies and Tasker Capital
                Corp., dated June 27, 2005 (incorporated by reference to Exhibit
                10.56 to
                the Registrant’s Form 10-QSB filed on August 15, 2005)10.57
            
            Loan
                Agreement by and between Pharlo Citrus Technologies and Tasker Capital
                Corp., dated July 12, 2005 (incorporated by reference to Exhibit
                10.57 to
                the Registrant’s Form 10-QSB filed on August 15,
                2005)


10.58
            
            Loan
                Agreement by and between Indian River Labs and Tasker Capital Corp.,
                dated
                June 29, 2005 (incorporated by reference to Exhibit 10.58 to the
                Registrant’s Form 10-QSB filed on August 15, 2005)10.59
            
            Stock
                Purchase Agreement between Electric Aquagenics Unlimited, Inc. and
                Tasker
                Capital Corp., dated April 22, 2005 (incorporated by reference to
                Exhibit
                10.59 to the Registrant’s Form 10-QSB filed on August 15,
                2005)10.60
            
            Amendment
                No. 2 to Executive Employment Agreement, dated August 10, 2005, between
                Tasker Capital Corp. and Robert P. Appleby (incorporated by reference
                to
                Exhibit 10.60 to the Registrant’s Form 10-QSB filed on August 15,
                2005)10.61
            
            Amendment
                No. 2 to Executive Employment Agreement, dated August 10, 2005, between
                Tasker Capital Corp. and James Burns (incorporated by reference to
                Exhibit
                10.61 to the Registrant’s Form 10-QSB filed on August 15,
                2005)10.62
            
            Patent
                Technology Sublicense Agreement made as of July 15, 2005 by and among
                pHarlo IP, LLC, Tasker Capital Corp. and Tasker Products IP Holdings
                Corp.
                (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K
                filed on July 21, 2005)10.63
            
            Promissory
                Note executed by Tasker Capital Corp. to Indian River Labs, L.L.C.
                dated
                July 15, 2005 (incorporated by reference to Exhibit 10.1 to the
                Registrant’s Form 8-K filed on July 21, 2005)10.64
            
            Securities
                Purchase Agreement, dated as of September 21, 2005, by and among
                Tasker
                Capital Corp. and the Purchaser parties thereto (incorporated by
                reference
                to Exhibit 10.01 to the Registrant’s Form 8-K filed on September 26,
                2005)10.65
            
            Registration
                Rights Agreement, dated as of September 21, 2005, by and among Tasker
                Capital Corp. and the Purchaser parties thereto (incorporated by
                reference
                to Exhibit 10.02 to the Registrant’s Form 8-K filed on September 26,
                2005)10.66
            
            Amendment
                to Exclusive Field of Use License Agreement and Product Sale Agreement
                by
                and between Tasker Capital Corp., Wynn Starr Special Products, LLC,
                Pharlo
                Citrus Technologies, Inc., and Indian River Labs, LLC, retroactively
                effective to March 18, 2005 (incorporated by reference to Exhibit
                10.66 to
                the Registrant’s Form 10-QSB filed on November 14,
                2005).10.67*
            
            Settlement
                Agreement and General Lease, dated December 23, 2005, between Tasker
                Capital Corp. and Robert P. Appleby21.1
            
            Subsidiaries
                of the Registrant (incorporated by reference to Exhibit 21.1 to the
                Registrant’s Registration Statement on Form SB-2 filed on August 30,
                2005)23.1*
            
            Consent
                of Rothstein, Kass & Company, P.C.23.2*
            
            Consent
                of Morgan and Company31.1*
            
            Rule
                13a-14(a)/15d-14(a) Certification of Principal Executive
                Officer31.2*
            
            Rule
                13a-14(a)/15d-14(a) Certification of Principal Financial
                Officer32*
            
            Section
                1350 Certification of Principal Executive Officer and Principal Financial
                Officer







*  Filed
      herewith.




80